Smith v. Vachris: The Costco Lawsuit
Legal Impact for Chickens represented two Costco shareholders. The shareholders brought a derivative suit against Costco executives for making Costco neglect and abandon chickens.
The complaint followed a 2021 undercover investigation revealing that Costco’s chickens are bred to grow so fast that many can’t stand under their own weight.
On June 13, 2022, LIC’s shareholder clients filed the lawsuit in Washington State’s King County Superior Court. The suit alleged that Costco executives are causing the company to violate Nebraska and Iowa laws against livestock neglect. The complaint alleged that many of Costco’s young, disabled birds are unable to reach food or water, and that the company fails to provide them with individualized medical care. The complaint accused Costco’s executives of violating their basic fiduciary duty to act lawfully.
Costco has been involved in the breeding, raising, and slaughtering of chickens since 2019. It set up a company called Lincoln Premium Poultry in Fremont, Nebraska, in order to supply itself with cheap meat. Working through Lincoln Premium Poultry, Costco encouraged numerous people in Nebraska and Iowa to become chicken contract growers, despite those people lacking any prior experience farming chickens.
Costco breeds and slaughters approximately 100 million chickens per year.
The shareholders alleged that Costco—which has near-total control over the genetics, lives, and deaths of the birds it sends to these contract growers—had abdicated its legal obligation to protect the animals. Following the 2021 undercover investigation, conducted by Mercy for Animals, the Costco Rotisserie Chicken Facebook fan page owner even converted the page into a campaign against mistreatment of chickens.
The defendant executives filed a motion to dismiss the Costco case. Our clients responded in opposition.
On March 24, 2023, the court held a hearing on the motion. Unfortunately, the court decided to grant the defendants’ motion to dismiss. In so doing, the judge explicitly left open one avenue for our shareholder clients to have their animal-neglect concerns addressed: sending a formal demand to Costco’s board.
So, on July 1, 2023, we filed a formal demand upon Costco’s board, on behalf of the two shareholders. The shareholders demanded a realistic plan to ensure all Costco birds can reach water and food. In a letter dated August 15, 2023, Costco’s board stated that it had “formed a Board committee to review and investigate the demand’s allegations.” LIC’s shareholder clients then met with investigators retained by the committee. The committee eventually completed its investigation into LIC’s clients’ demand.
Sadly, on April 10, 2024, the committee recommended that the board reject the demand. And, on June 6, 2024, an SEC filing announced that Costco’s board had accepted the committee’s recommendation and decided to reject LIC’s clients’ demand.
LIC will never stop fighting for birds.
