Why shareholders are suing Costco over its rotisserie chickens

The complaint alleges Costco executives’ fiduciary duties to Costco and its shareholders in compelling Costco to abuse chickens through inhumane practices in violation of the law and with full knowledge of their wrongdoings. But the plaintiff shareholders are not looking for money. What they want is for Costco executives to be permanently banned from continuing to force the company to raise its chickens in the allegedly illegal way. They also seek access to Costco’s chicken farms from time to time because the plaintiff shareholders believe it is necessary to ensure legal compliance in Costco’s chicken farming practices. In addition, they want executives to reimburse Costco for all damages and liabilities (such as fines imposed by government authorities) that may arise because Costco broke the law, as well as court costs and legal fees for plaintiff shareholders. .

As reasonable as all of this may sound, it may nevertheless be a huge demand on Costco and its other shareholders, some of whom, presumably, have invested in Costco based on its current business model, which takes into account the fact that Costco has invested hundreds of millions in its current chicken production system, the legality of which is in issue here, via Law Street Media. A victory for the plaintiffs could mean a better life for the chickens, but if Costco’s ability to continue charging $4.99 per chicken depends on this system, changes are required. could spell losses for Costco. That said, here’s why Costco’s stock may be particularly resilient among retailers.

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