While Judge Conrad acknowledged that the pandemic hindered Smithfield’s processing capabilities, he pointed out that the company’s capacity far exceeded Maxwell’s output, allowing Smithfield to have processed the entire supply.
Smithfield also filed counterclaims against Maxwell, accusing it of acting in bad faith when it decided to halt its hog operations in August 2020 due to severe financial losses. However, Judge Conrad sided with Maxwell, saying that the company’s decision was justified given the significant financial challenges it faced. He noted that Smithfield had accepted the risk of limited hog availability since the contract did not require Maxwell to produce a minimum number of hogs.
Maxwell also accused Smithfield of violating a “most-favored-nation” (MFN) clause in their original 1994 agreement, which ensured Maxwell would receive the same pricing and benefits as Smithfield’s other major swine suppliers. Maxwell argued that Smithfield gave better pricing to at least six suppliers without offering Maxwell the same terms. However, Judge Conrad ruled that the MFN clause referred only to the suppliers listed in the 1994 agreement, which did not include these six suppliers.
