U.S. judges divided on role of litigation funder in Sysco cases

Two federal judges have issued conflicting rulings on whether litigation finance firm Burford Capital can take over as plaintiff in lawsuits brought by its financial client Sysco, Reuters reported.

In the latest order, U.S. District Judge Tunheim in Minnesota on Monday upheld the judge’s February decision requiring food distribution giant Sysco to remain a plaintiff in an antitrust lawsuit it filed accusing pork and beef suppliers of overcharging.

Tunheim’s order contrasted with a Chicago federal judge’s decision in March that found Burford’s Carina Ventures unit could replace plaintiffs in another Sysco antitrust lawsuit accusing chicken processors of price fixing.

The cases are closely watched by the litigation finance industry, which provides clients with financing in exchange for a portion of any settlement or other judgment. Court documents show that since 2019, Burford has spent $140 million supporting Sysco’s antitrust cases.

On Monday, Burford said he was reviewing Minnesota’s decision and had no further comment. Sisco declined to comment.

The substitution dispute arose after Sysco sought to settle some of its claims for amounts that Burford considered too low. Burford won an arbitration award barring Sysco from litigating his cases.

Burford and Sysco resolved the dispute, and Sysco voluntarily assigned its claims to the newly formed Burford Carina entity.

Meat suppliers, however, have opposed the substitution efforts, arguing that giving responsibility to a financing company is contrary to public policy, which favors litigants settling matters on their own terms.

In an earlier ruling in the Chicago case, U.S. District Judge Thomas Durkin said it was “as a general rule” not for him to “interfere with the business decisions of sophisticated parties.”

But Tunheim said in Monday’s order from Minnesota that granting a substitute could harm antitrust cases across the country. “The conduct of Sysco and Burford is precisely the type of conduct against which courts remain wary,” the judge wrote.

The Sysco cases in Illinois and Minnesota are in different federal appellate districts, which could lead to a broader division on the issue if the decisions are appealed.