Tyson Foods 2003 Annual Report Download - page 63

Tyson Foods, Inc. 61
notes to consolidated financial statements
TYSON FOODS, INC. 2003 ANNUAL REPORT
Action Complaint. The plaintiffs allege that, as a result of
the defendants’ alleged conduct, the purported class
members were harmed. On January 22, 2002, the
defendants filed a motion to dismiss the consolidated
complaint. By memorandum order dated October 23,
2002, the court granted in part and denied in part the
defendants’ motion to dismiss. On October 6, 2003, the
court certified the class proposed by plaintiffs. Factual
discovery in the case is in the process of concluding.
General Matters In July 1996, certain cattle producers
filed Henry Lee Pickett, et al. vs. IBP, inc. in the U.S. District
Court, Middle District of Alabama, seeking certification of
a class of all cattle producers. The complaint alleged that
IBP used its market power and alleged “captive supply”
agreements to reduce the prices paid by IBP on purchases
of cattle in the cash market in alleged violation of the
Packers and Stockyards Act (“PSA”). Plaintiffs are seeking
injunctive and declaratory relief, as well as actual and
punitive damages. After Plaintiffs failed a number of times
to get a class certified, the District Court in December
2001 certified a class of cattle producers who have sold
to IBP exclusively on a cash market basis from approxi-
mately 1994 to 2002. IBP sought permission to appeal the
class certification to the 11th Circuit Court of Appeals,
but the Court of Appeals denied that appeal on March 5,
2002. IBP’s motions for summary judgment on both
liability and damages were denied on April 29, 2003.
On November 19, 2003, the District Court judge upheld
the admissibility of an amended Plaintiffs’ expert report
which calculates total class damages, exclusive of pre-
judgment interest, in excess of $2.1 billion. Management
believes IBP’s use of marketing agreements and other
contracts for the purchase of cattle do not violate the
PSA and that IBP has acted properly and lawfully in its
dealings with cattle producers. The case is set for trial on
January 12, 2004.
On September 12, 2002, 82 individual plaintiffs filed
Michael Archer, et al. v. Tyson Foods, Inc. and The Pork
Group, Inc., CIV 2002-497, in the Circuit Court of Pope
County, Arkansas. On August 18, 2002, the Company
announced a restructuring of its live swine operations
which, among other things, will result in the discontinu-
ance of relationships with 132 contract hog producers,
including the plaintiffs. In their complaint, the plaintiffs
allege that the Company committed fraud and should be
promissorily estopped from terminating the parties’ rela-
tionship. The plaintiffs seek an unspecified amount of
compensatory damages, punitive damages, attorney
fees and costs. The Company has filed a motion to Stay
All Proceedings and Compel Arbitration which was
denied, and briefing has begun in the Arkansas Court of
Appeals. Oral argument has not yet been set.
The Company is pursuing various antitrust claims relating
to vitamins, methionine and choline. In partial settlement
of these claims, the Company received approximately
$167 million in 2003. Additional settlements of much
lesser amounts are anticipated in fiscal 2004. Amounts
received for these claims are recorded as income only
upon receipt of settlement proceeds.