The life of a fishing deckhand is full of danger: Fishermen face storms, injuries, and the risk of capsizing while out of range of swift rescue. And they risk their lives every day for an income that averages just $35,000 a year. A new class action lawsuit suggests that the blame for the crabbing industry’s low pay may be related to the domination of just one company: Pacific Seafood.
Crabbers’ wages are typically dictated by the boat’s overall catch in a given season—the more fish (or crab) they catch, the more the worker earns. Income also depends on the market rate of the catch that year and can vary considerably due to environmental changes or fishing quotas set by local regulators.
But the emerging monopsony of Pacific Seafood, where the company acts as virtually the sole buyer of fresh crab, has allegedly squeezed crabber’s earnings by fixing the price of Dungeness crab along the West Coast. As a seafood harvester and processor, Pacific Seafood has the option to profit off both live and frozen crab yearlong–unlike crabbers, who can only sell fresh catch. The high costs of processing facilities has given Pacific Seafood free rein to become the ultimate buyer of at least half the crab in the region, the suit alleges.
The suit goes on to say that this power allows Pacific Seafood to control prices during preseason negotiations with crabbers and force them to accept lower buying prices for the crab they harvest. Negotiations frequently delay the start of the season while crabbers argue for a fair market value.
Crab is a holiday food: crabbing season begins in early December and drops significantly come January. But last year’s crabbing season didn’t kick off until mid-January so Pacific Seafood would have time to clear out its full freezers, according to the lawsuit. For a month and a half, when crabbers would typically be bringing home the catch that provided a large portion of their annual income, they instead stayed home. By the time Pacific Seafood allowed crabbers to head back to their boats, the holiday demand had dissipated. Crabbers had to sell to Pacific Seafood or other large processors rather than live buyers, who typically pay more. Without the option for fresh crab, consumers had no choice but to buy frozen at an inflated price during the busy holiday season. While the crabbers and consumers lost out, big crab processors benefited from the seasonal delay.
Year after year, the processing giant’s control of the crabbing season allows the company to artificially create a “buy low sell high” market that benefits only Pacific Seafood.
The lawsuit alleges that Pacific Seafood also engages in anti-competitive practices by boycotting and retaliating against crabbers and buyers who do not comply with their prices. The company allegedly punishes “non-compliant” buyers who offer lower prices to crabbers by “dumping” cheap live Dungeness crab into the geographic areas of its competitors to reduce the set price, or, in one case last season, by refusing to buy 1.3 million pounds of crab from a San Francisco buyer for “failing to comply with ex vessel prices.”
All these tactics mean one thing: more money for Pacific Seafood and less money for struggling fishermen and small businesses.
As the industry leader, Pacific Seafood has racked up nearly a million dollars in penalties since 2000 for violations related to employment, the environment, and workplace safety. Several of these cases include child labor or youth employment and retaliation against employees for fighting discrimination.
This lawsuit could be a warning not just for Pacific Seafood but also for dominant buyers in the poultry and fishing industries, too. No regulators can protect fishermen from storms at sea, but this vital antitrust lawsuit may hold industry superpowers accountable and help fishermen survive financially.