Tyson Foods 2001 Annual Report Download - page 54

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC. 2001 ANNUAL REPORT
advanced by the DOJ. On October 12, 2001, a Second and Final
Partial Consent Decree was lodged with the U.S. District Court,
which, combined with a Partial Consent Decree entered on May 19,
2000, would fully and finally resolve all allegations raised in this
lawsuit for a total civil penalty of $4.1 million. In addition, pursuant
to the Second and Final Partial Consent Decree, IBP agreed to
make additional wastewater improvements at its Dakota City
facility including the installation of a full nitrification system. On
the same date, an amended complaint was filed adding Clean
Water Act and RCRA allegations involving IBP’s former Palestine,
Texas, facility, Clean Water Act allegations involving IBP’s Gibbon,
Nebraska, facility, as well as EPCRA/CERCLA alleged violations
for other IBP facilities located in Region VII. These issues are fully
resolved in the Second and Final Partial Consent Decree proposed
to the court. Also on the same date, a separate administrative
consent agreement with EPA was entered resolving alleged
EPCRA/CERCLA claims at IBP’s Joslin, Illinois, facility for a $200,000
civil penalty. Notice of the Second and Final Partial Consent
Decree was published in the Federal Register on November 15,
2001, for a 30-day comment period. After completion of the
comment period, it is anticipated that the Second and Final
Partial Consent Decree will be approved and entered by the U.S.
District Court in Nebraska, which will end this litigation.
On October 23, 2001, a putative class action lawsuit was filed
in the District Court for Mayes County, Oklahoma, against Tyson
Foods, Inc. by R. Lynn Thompson and Deborah S. Thompson on
behalf of all owners of Grand Lake O’ the Cherokee’s littoral
(lake front) property. The suit alleges that the Company “or enti-
ties over which it has operational control” conducts operations in
such a way as to interfere with the putative class action plaintiffs’
use and enjoyment of their property, allegedly caused by dimin-
ished water quality in the lake. On November 1, 2001, the suit
was removed to the U.S. District Court for the Northern District
of Oklahoma. To date, the court has taken no action. The
Company believes that the allegations in the complaint are
unfounded and intends to vigorously defend the case.
The Company has been advised by the U.S. Attorney’s Office
for the Western District of Missouri that the government intends
to seek an indictment of the Company for alleged violations of
the Clean Water Act related to activities at its Sedalia, Missouri,
facility. The Company is presently discussing the possible resolu-
tion of this matter but neither the likelihood of an unfavorable
outcome nor the amount of the ultimate liability, if any, with respect
to this matter can be determined at this time.
Securities Matters In February 2000, several lawsuits were filed
against IBP by certain shareholders in the U.S. District Court for
the District of Nebraska seeking to certify a class of all persons
who purchased IBP stock between March 25, 1999, and January 12,
2000. The complaints allege that IBP violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
thereunder, and claims IBP issued materially false statements
about the company’s compliance with environmental laws in
order to inflate the company’s stock price. On February 14, 2001,
lead plaintiffs filed a motion for leave to amend the amended
consolidated complaint to add additional claims on behalf of all
persons who purchased IBP stock between March 25, 1999, to
January 25, 2001. The proposed new claims are substantially
similar to those alleged in the South Dakota and New York
actions described below alleging that IBP violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
thereunder. On May 21, 2001, the Magistrate Judge issued two
opinions recommending (1) the denial of plaintiffs request to
amend the amended consolidated complaint, and (2) dismissal
of the complaint in its entirety for failure to state a claim. Plaintiffs’
appeal to the District Court judge was denied, and a final judg-
ment was entered dismissing the case. Plaintiffs appealed the
decision, but on November 7, 2001, signed a Stipulation of
Dismissal of Appeal, dismissing their appeal, with prejudice.
Between January and March 2001, a number of lawsuits were
filed by certain shareholders in the U.S. District Court for the
District of South Dakota and one suit filed in the U.S. District
Court for the Southern District of New York seeking to certify a
class of all persons who purchased IBP stock between February 7,
2000, and January 25, 2001. The plaintiff in the New York action
has voluntarily dismissed and refiled its complaint in South
Dakota. The complaints, seeking unspecified damages, allege that
IBP and certain members of management violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
thereunder, and claims IBP issued materially false statements about
the company’s financial results in order to inflate the company’s
stock price. IBP intends to vigorously contest these claims.