Tyson Foods 2004 Annual Report Download - page 61

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On June 22, 1999, 11 current and former employees of the Company
filed the case of M.H. Fox, et al. v. Tyson Foods, Inc. (Fox) in the
U.S. District Court for the Northern District of Alabama claiming
the Company violated requirements of the FLSA. The suit alleges the
Company failed to pay employees for all hours worked and/or
improperly paid them for overtime hours. The suit specifically alleges
that (1) employees should be paid for time taken to put on and take
off certain working supplies at the beginning and end of their shifts
and breaks and (2) the use of “mastercard” or “line” time fails to pay
employees for all time actually worked. Plaintiffs seek to represent
themselves and all similarly situated current and former employees
of the Company, and plaintiffs seek reimbursement for an unspecified
amount of unpaid wages, liquidated damages, attorney fees and costs.
At filing, 159 current and/or former employees consented to join
the lawsuit and, to date, approximately 5,100 consents have been
filed with the court. Plaintiff’s motion for conditional collective
treatment and court-supervised notice to additional putative class
members was denied on February 27, 2004. The plaintiffs refiled their
motion for conditional collective treatment and court-supervised
notice to additional putative class members on April 2, 2004.
Discovery in this case is largely completed. No trial date has been set.
On August 22, 2000, seven employees of the Company filed the case
of De Asencio v. Tyson Foods, Inc. in the U.S. District Court for the
Eastern District of Pennsylvania. This lawsuit is similar to Fox in that
the employees claim violations of the FLSA for allegedly failing to
pay for time taken to put on, take off and sanitize certain working
supplies, and violations of the Pennsylvania Wage Payment and
Collection Law. Plaintiffs seek to represent themselves and all
similarly situated current and former employees of the poultry
processing plant in New Holland, Pennsylvania, and plaintiffs seek
reimbursement for an unspecified amount of unpaid wages, liqui-
dated damages, attorney fees and costs. Currently, there are
approximately 560 additional current or former employees who
have filed consents to join the lawsuit. The court, on January 30,
2001, ordered that notice of the lawsuit be issued to all potential
plaintiffs at the New Holland facilities. On July 17, 2002, the court
granted the plaintiffs’ motion to certify the state law claims. On
September 23, 2002, the Third Circuit Court of Appeals agreed to
hear the Company’s petition to review the court’s decision to certify
the state law claims. On September 8, 2003, the Court of Appeals
reversed the district court’s certification of a class under the
Pennsylvania Wage Payment & Collection Law, ruling that those
claims could not be pursued in federal court. The appellate court
further ruled that the Company must reissue notice of their potential
FLSA claims to approximately 2,170 employees who did not previously
receive notice. The Court of Appeals remanded the matter to the
district court to proceed accordingly on September 30, 2003, and
notice was reissued. Further proceedings in the district court are
pending, and no trial date has been set.
Substantially similar suits have been filed against several other
integrated poultry companies. In addition, organizing activity
conducted by representatives or affiliates of the United Food and
Commercial Workers Union against the poultry industry has encouraged
worker participation in Fox v. Tyson and the other lawsuits.
On November 5, 2001, a lawsuit entitled Maria Chavez, et al. v. IBP,
Lasso Acquisition Corporation and Tyson Foods, Inc. (Chavez) was
filed in the U.S. District Court for the Eastern District of Washington
against TFM and the Company by several employees of TFM’s
Pasco, Washington, beef slaughter and processing facility alleging
various violations of the FLSA, 29 U.S.C. Sections 201–219, as well
as violations of the Washington State Minimum Wage Act, RCW
chapter 49.46, Industrial Welfare Act, RCW chapter 49.12, and the
Wage Deductions-Contribution-Rebates Act, RCW chapter 49.52.
The Chavez lawsuit alleges TFM and/or the Company required
employees to perform unpaid work related to the donning and
doffing of certain personal protective clothing and equipment,
both prior to and after their shifts, as well as during meal periods.
Plaintiffs further allege that similar prior litigation entitled Alvarez,
et al. v. IBP (Alvarez), which resulted in a $3.1 million final judgment
against TFM, supports a claim of collateral estoppel and/or is
res judicata as to the issues raised in this new litigation. Plaintiffs
are seeking reimbursement for an unspecified amount of damages,
exemplary damages, liquidated damages, prejudgment interest, attor-
ney fees and costs. TFM filed a timely Notice of Appeal in Alvarez
and plaintiffs filed a timely notice of Cross-Appeal. On August 5,
2003, the Ninth Circuit Court of Appeals affirmed the lower court’s
decision in part and reversed the lower court’s decision in part, and
remanded the case to the lower court for recalculation of damages.
If the ruling of the Ninth Circuit Court of Appeals is upheld in its
entirety, TFM will have additional exposure in Alvarez of approximately
$5 million. TFM filed a petition for rehearing by the panel of the
Ninth Circuit Court of Appeals that heard Alvarez or, in the alterna-
tive, a rehearing en banc, which was denied on December 2, 2003.
It also filed a petition to certify state law claims to the Washington
Supreme Court which was denied on September 23, 2003. On
December 5, 2003, TFM filed a Petition to Stay the Mandate indi-
cating it would file a Petition for Certiorari with the U.S. Supreme
Court seeking the Court’s review of the Ninth Circuit’s adverse
opinion. A Stay of the Mandate was ordered by the Ninth Circuit