Tyson Foods 2002 Annual Report Download - page 56

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In December 2001, a stockholder derivative lawsuit was filed in the Court of Chancery of the state of Delaware against the
Company’s Board of Directors and nominally, the Company. The complaint concerns the alleged violations of immigration laws that
are the subject of the indictment by the U.S. Department of Justice (see below). In general, the complaint alleges that the members
of the Company’s Board failed to exercise reasonable control and supervision over the Company’s employees and processes,
implement adequate internal controls, adequately inform themselves, or take adequate and good faith remedial actions with respect
to the Company’s immigration practices and matters giving rise to the indictment. The complaint seeks unspecified damages against
the individual Board members; no relief is sought against the Company. The Company and members of its Board have filed a motion
to dismiss in the Chancery Court of Delaware and intend to vigorously defend these claims.
General Matters On or around February 15, 2002, the Company learned that a processing facility owned by Zemco Industries, Inc.,
a subsidiary of IBP, is the subject of an investigation by the U.S. Attorney’s office in Bangor, Maine, into allegedly improper testing
and recording practices. The Company acquired Zemco as part of the Company’s acquisition of IBP on September 28, 2001.
Zemco has responded to grand jury subpoenas and is cooperating fully with the U.S. Attorney’s office. Neither the likelihood
of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this matter can be determined at this time.
In December 2001, the Company, two current employees and four former employees were indicted in the U.S. District Court
in the Eastern District of Tennessee. The indictment alleges these six employees conspired to violate and did violate immigration laws
involving approximately 15 named individuals at one of the Company’s poultry processing facilities. The indictment also alleges that
the Company utilized the services of temporary employment agencies in furtherance of the alleged conspiracy. The indictment
seeks fines and forfeiture of amounts not specified. Trial for this matter is expected in February 2003. The Company intends
to vigorously defend this indictment and believes it has meritorious defenses to the government’s theories of recovery; however,
neither the likelihood of an unfavorable outcome nor the amount of ultimate liability, if any, with respect to this case can be
determined at this time.
Consistent with the forfeiture theory advanced in the indictment referred to above, private plaintiffs filed the following
three lawsuits.
On April 10, 2002, plaintiffs filed Trollinger, et al. vs. Tyson Foods, Inc., No. 4:02-cv-23 (E.D. Tenn.) in the U.S. District Court for
the Eastern District of Tennessee (Winchester Division), a purported class-action lawsuit against Tyson, on behalf of all current and
former employees of 15 named Tyson facilities who had been legally authorized to work in the United States. The complaint in that
action asserts a claim against Tyson under the Racketeer Influence and Corrupt Organizations (RICO) statute. The complaint alleges
that Tyson engaged in a scheme to depress its employees’ wages by hiring illegal aliens and seeks unspecified trebled-damages. The
Company has moved to dismiss the complaint. On July 17, 2002, the court granted the Company’s Motion to Dismiss the case
for failure to state a claim upon which relief could be granted. Plaintiffs have filed a Notice of Appeal. The Company intends to
vigorously defend these claims; however, neither the likelihood of an unfavorable outcome nor the amount of ultimate liability,
if any, with respect to this case can be determined at this time.
On March 6, 2002, plaintiffs filed Baker, et al. vs. IBP, inc., C.A. No. 02-4019 (C.D. Ill.) in the U.S. District Court for the Central
District of Illinois (Rock Island Division), a purported class-action lawsuit, on behalf of all current and former employees of IBP’s
Joslin, Illinois, facility who had been legally authorized to work in the United States. The complaint asserts a claim against IBP under
the RICO statute. The complaint alleges that IBP engaged in a scheme to depress its employees’ wages by hiring illegal aliens and
seeks unspecified trebled-damages. The Company has moved to dismiss the complaint. On October 21, 2002, the court granted
the Company’s Motion to Dismiss the case for failure to state a claim upon which relief could be granted. Plaintiffs have filed a
Notice of Appeal. The Company intends to vigorously defend these claims; however, neither the likelihood of an unfavorable
outcome nor the amount of ultimate liability, if any, with respect to this case can be determined at this time.
On April 17, 2002, plaintiff Cynthia Cruz filed Cruz vs. Tyson Foods, Inc., C.A. No. 02 C 2761 (N.D. Ill.), a purported class-action
lawsuit against Tyson and others on behalf of all persons with Hispanic surnames whose identities and social security numbers were
allegedly “stolen” and misused by the named defendants. The complaint asserts a claim under the RICO statute, a claim for violation
of the federal civil rights statute, and common-law claims for defamation, violation of privacy and property rights, fraud, and tortious
Tyson Foods, Inc. 2002 annual report