Tyson Foods 2001 Annual Report Download - page 56

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TYSON FOODS, INC. 2001 ANNUAL REPORT
v. Tyson, et al., C.A. No. 01-463 GMS; Meyers, et al. v. Tyson
Foods, Inc., et al., C.A. No. 01-489; Binsky v. Tyson Foods, Inc.,
et al., C.A. No. 01-495; Management Risk Trading LP v. Tyson
Foods, Inc., et al., C.A. No. 01-496; and Stark Investments, L.P.
et al. v. Tyson et al., C.A. No. 01-565 allege that the defendants
violated federal securities laws by making, or causing to be
made, false and misleading statements in connection with the
Company’s attempted termination of the Merger Agreement.
The plaintiffs allege that, as a result of the defendants’ alleged
conduct, the purported class members were harmed. The
defendants intend to vigorously defend these claims.
General Matters In July 1996, a lawsuit was filed against IBP by
certain cattle producers in the U.S. District Court, Middle District
of Alabama, seeking certification of a class of all cattle produc-
ers. The complaint alleges that IBP has used its market power
and alleged “captive supply” agreements to reduce the prices
paid to producers for cattle. Plaintiffs have disclosed that, in
addition to declaratory relief, they seek actual and punitive
damages. The original motion for class certification was denied
by the District Court; plaintiffs then amended their motion,
defining a narrower class consisting of only those cattle produc-
ers who sold cattle directly to IBP from 1994 through the date of
certification. The District Court approved this narrower class in
April 1999. The 11th Circuit Court of Appeals reversed the
District Court decision to certify a class, on the basis that there
were inherent conflicts amongst class members preventing the
named plaintiffs from providing adequate representation to the
class. The plaintiffs then filed pleadings seeking to certify an
amended class. The Court denied the plaintiffs’ motion on
October 17, 2000. Plaintiffs’ motion for reconsideration of the
judge’s decision was denied, and plaintiffs now seek to certify a
class of cattle producers who have sold exclusively to IBP on a
cash market basis. This motion, as well as the company’s
motions for summary judgment on both liability and damages,
is now pending. Management continues to believe that the
company has acted properly and lawfully in its dealings with
cattle producers.
On August 8, 2000, the Company was served with a com-
plaint filed in the U.S. District Court for the District of Arizona
styled Lemelson Medical, Education & Research Foundation,
Limited Partnership v. Alcon Laboratories, et al., CIV00-0661
PHX PGR. The plaintiff sued the Company, along with approxi-
mately 100 other defendants in the food, beverage, drug,
cosmetic and tobacco industries, claiming that the defendants
infringed various patents held by the Foundation. The alleged
patent infringement is based on the defendants’ use of the
Foundation’s automatic identification patents that relate to the
use of bar coding and/or the Foundation’s patents that relate to
machine vision. The Foundation seeks treble damages for the
defendants’ alleged infringement. The case is currently stayed
pending the resolution of related litigation.
The Company has been indicted in the Eastern District
of Tennessee for alleged violations of the Immigration and
Naturalization Act at several of the Company’s locations. The
Company will vigorously defend this matter and believes it has
meritorious defenses to the government’s theories of recovery;
however, the outcome of this matter and any potential liability
on the part of the Company cannot be determined at this time.
On October 17, 2000, a Washington County (Arkansas)
Chancery Court awarded the Company approximately $20 mil-
lion in its lawsuit alleging trade secret misappropriation by
ConAgra, Inc. and ConAgra Poultry Company. Subsequently,
on December 4, 2000, as a result of an opinion issued by the
Arkansas Supreme Court, the Chancery Court reversed its
finding that the Company’s nutrient profile was a trade secret
and reversed the jury’s $20 million verdict against the ConAgra
entities. On January 3, 2001, the Company filed a notice
of appeal appealing the Chancery Court’s reversal of the
trade secret determination and of the jury verdict. This appeal
is still pending.