Tyson Foods 2005 Annual Report Download - page 58

>> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
TYSON FOODS, INC. 2005 ANNUAL REPORT
Tyson Foods, Inc. >> 56
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 work-
ing 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. There are approximately
560 additional current or former employees who have filed
consents to join the lawsuit. The District Court, on January 30, 2001,
ordered that notice of the lawsuit be issued to all potential plain-
tiffs at the New Holland facilities. On July 17, 2002, the District
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 District Court’s deci-
sion 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 those claims could not be pursued in federal court. The
Court of Appeals further ruled the Company must reissue notice
of its 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 proceed-
ings in the District Court are pending, and no trial date has been
set. The District Court has stayed the proceedings in this matter
pending the outcome of Alvarez and Tum presently before the
U.S. Supreme Court. On November 8, 2005, the U.S. Supreme Court
affirmed the Ninth Circuit decision in Alvarez and affirmed in part
and reversed in part the First Circuit decision in Tum. On November 9,
2005, Plaintiffs requested the stay be lifted and to set up a status
conference. A status conference was held on December 2, 2005,
and now the parties will engage in further pretrial proceedings.
In 1998, a lawsuit entitled Alvarez, et al. v. IBP (Alvarez) was filed
in the U.S. District Court for the Eastern District of Washington
against IBP (n/k/a Tyson Fresh Meats, Inc. or TFM) by employees
of its Pasco, Washington beef slaughter and processing facility.
Plaintiffs brought this action on behalf of themselves and TFM’s
Pasco employees alleging violations of the Fair Labor Standards Act,
29 U.S.C. Sections 201-219; the Washington Minimum Wage Act,
Revised Code of Washington (“RCW”) Chapter 49.46; the Industrial
Welfare Act, RCW Chapter 49.12; the Wages-Reductions-Contributions
Rebates Act, RCW Chapter 49.52; and related regulations. Eight
hundred fifteen plaintiffs sought additional compensation princi-
pally for the time required to (1) don and doff protective clothing
at the beginning and the end of the workday and at meal periods;
(2) walk between lockers or other locations where protective cloth-
ing was stored or distributed and their workstations; and (3) wash
protective clothing and other equipment items at the end of
the work shift. Trial was held from September 27, 2000, until
October 27, 2000. On September 14, 2001, the District Court
entered its Findings of Fact and Conclusions of Law, which
resulted in a $3.1 million judgment against TFM, comprising back
wages, exemplary damages, and liquidated damages, with as yet no
specified amount for prejudgment interest. On December 14, 2001,
the District Court awarded an additional $2 million for attorney
fees and costs. TFM filed a timely Notice of Appeal and Plaintiffs
filed a timely notice of Cross-Appeal. On August 5, 2003, the
Ninth Circuit Court of Appeals affirmed the District Court’s
decision in part and reversed in part, and remanded the case to
the District Court for recalculation of damages. If the ruling of the
Court of Appeals is upheld in its entirety, TFM will have additional
exposure in Alvarez of approximately $5 million. TFM filed a peti-
tion for rehearing by the panel of the Court of Appeals or, in the
alternative, 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 stating 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 on December 10, 2003. A Petition for Certiorari was filed
with the U.S. Supreme Court on February 26, 2004. After the parties
completed briefing on the Petition, on May 3, 2004 the Court
invited the U.S. Solicitor General to express its views on the pend-
ing Petition. On October 25, 2004, the Solicitor filed its response,
acknowledging the issues warranted further review but advising
that a First Circuit case (Tum) would be better suited for the Court’s
consideration of the issues. On February 22, 2005, the U.S. Supreme
Court granted certiorari on both the Alvarez and Tum petitions.
Oral argument was held before the U.S. Supreme Court, on
October 3, 2005. On November 8, 2005, the U.S. Supreme Court
affirmed the Ninth Circuit decision. The case will now be returned
to the District Court for an entry of judgment consistent with the
Ninth Circuit’s opinion.
On November 5, 2001, a follow-on lawsuit to Alvarez, 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 by employees of TFM’s Pasco,
Washington beef slaughter, processing and hides facilities, again