Tyson Foods 2008 Annual Report Download - page 61

59 2008 Annual Report
Notes to Consolidated Financial Statements (continued)
attorneys’ fees and costs to be awarded to the plaintiffs. In DeAsencio,
plaintiffs appealed a jury verdict and fi nal judgment entered in our
favor on June 22, 2006, in the District Court. On September 7, 2007,
the U.S. Court of Appeals for the Third Circuit reversed the jury verdict
and remanded the case to the District Court for further proceedings.
We sought rehearing en banc, which was denied by the Court of
Appeals on October 5, 2007. The United States Supreme Court
denied our petition for a writ of certiorari on June 9, 2008.
In addition to Fox and DeAsencio, additional private lawsuits were
fi led against us since the beginning of fi scal 2007 which allege we
failed to compensate poultry plant employees for all hours worked,
including overtime compensation, in violation of the Fair Labor
Standards Act. These lawsuits are Sheila Ackles, et al. v. Tyson Foods,
Inc. (N. Dist. Alabama, October 23, 2006); McCluster, et al. v. Tyson
Foods, Inc. (M. Dist. Georgia, December 11, 2006); Dobbins, et al. v.
Tyson Chicken, Inc., et al. (N. Dist. Alabama, December 21, 2006);
Buchanan, et al. v. Tyson Chicken, Inc., et al. and Potter, et al. v. Tyson
Chicken, Inc., et al. (N. Dist. Alabama, December 22, 2006); Jones, et
al. v. Tyson Foods, Inc., et al., Walton, et al. v. Tyson Foods, Inc., et
al. and Williams, et al. v. Tyson Foods, Inc., et al. (S. Dist. Mississippi,
February 9, 2007); Balch, et al. v. Tyson Foods, Inc. (E. Dist. Oklahoma,
March 1, 2007); Adams, et al. v. Tyson Foods, Inc. (W. Dist. Arkansas,
March 2, 2007); Atkins, et al. v. Tyson Foods, Inc. (M. Dist. Georgia,
March 5, 2007); and Laney, et al. v. Tyson Foods, Inc. and Williams, et
al. v. Tyson Foods, Inc. (M. Dist. Georgia, May 23, 2007). Similar to Fox
and DeAsencio, each of these matters involves allegations employees
should be paid for the time it takes to engage in pre- and post-shift
activities such as changing into and out of protective and sanitary
clothing, obtaining clothing and walking to and from the chang-
ing area, work areas and break areas. The plaintiffs in each of these
lawsuits seek or have sought to act as class representatives on behalf
of all current and former employees who were allegedly not paid for
time worked and seek back wages, liquidated damages, pre- and post-
judgment interest, and attorneys’ fees. On April 6, 2007, we fi led a
motion for transfer of the above named actions for coordinated pre-
trial proceedings before the Judicial Panel on Multidistrict Litigation.
The motion for transfer was granted on August 17, 2007. The cases
listed above and fi ve other cases subsequently fi led involving the
same allegations, including Armstrong, et al. v. Tyson Foods, Inc. (W.
Dist. Tennessee, January 30, 2008); Maldonado, et al. v. Tyson Foods,
Inc. (E. Dist. Tennessee, January 31, 2008); White, et al. v. Tyson Foods,
Inc. (E. Dist. Texas, February 1, 2008); Meyer, et al. v. Tyson Foods, Inc.
(W. Dist. Missouri, February 2, 2008); and Leak, et al. v. Tyson Foods,
Inc. (W. Dist. North Carolina, February 6, 2008), were transferred to
the U.S. District Court in the Middle District of Georgia, In re: Tyson
Foods, Inc., Fair Labor Standards Act Litigation (“MDL Proceedings”).
On January 2, 2008, the Judge in the MDL Proceedings issued a
Joint Scheduling and Case Management Order. The Order granted
Conditional Class Certifi cation and called for notice to be given to
potential putative class members via a third party administrator. The
potential class members had until April 18, 2008, to “opt-in” to the
class. Approximately 13,800 employees and former employees fi led
their consents to “opt-in” to the class. As of April 18, 2008, the
parties began conducting discovery for a period of 240 days at
eight of our facilities and our corporate headquarters in Springdale,
Arkansas. Discovery may be conducted at additional facilities in
the future. On October 15, 2008, the Judge in the MDL Proceedings
denied the plaintiffs’ motion for equitable tolling, which reduces the
time period for which the plaintiffs may seek damages.
On June 19, 2005, the Attorney General and the Secretary of the
Environment of the State of Oklahoma fi led a complaint in the U.S.
District Court for the Northern District of Oklahoma against us, three
of our subsidiaries and six other poultry integrators. This complaint
was subsequently amended. As amended, the complaint asserts
a number of state and federal causes of action including, but not
limited to, counts under Comprehensive Environmental Response,
Compensation, and Liability Act (“CERCLA”), Resource Conservation
and Recovery Act (“RCRA”), and state-law public nuisance theories.
The amended complaint asserts that defendants and certain contract
growers who are not named in the complaint polluted the surface
waters, groundwater and associated drinking water supplies of the
Illinois River Watershed (“IRW”) through the land application of
poultry litter. Oklahoma asserts that this alleged pollution has also
caused extensive injury to the environment (including soils and
sediments) of the IRW and that the defendants have been unjustly
enriched. Oklahoma’s claims cover the entire IRW, which encom-
passes more than one million acres of land and the natural resources
(including lakes and waterways) contained therein. Oklahoma seeks
wide-ranging relief, including injunctive relief, compensatory and
punitive damages, attorneys fees and disgorgement. We and the
other defendants have denied liability, asserted various defenses,
and fi led a third-party complaint that asserts claims against other
persons and entities whose activities may have contributed to the
pollution alleged in the amended complaint. The district court has
stayed proceedings on the third party complaint pending resolu-
tion of Oklahoma’s claims against the defendants. On November 14,
2007, Oklahoma fi led a motion under RCRA requesting a preliminary
injunction to halt the land application of poultry litter in the IRW.
Oklahoma’s motion for a preliminary injunction asserted that bacteria
from poultry litter are causing an imminent and substantial endan-
germent to human health and the environment throughout the IRW.
A multi-week evidentiary hearing on the preliminary injunction was
completed on March 6, 2008. On September 29, 2008, the court
entered an order denying the preliminary injunction. On October 17,
2008, Oklahoma fi led a notice of appeal of the district court’s denial
of the preliminary injunction in the United States Court of Appeals
for the Tenth Circuit. Discovery in Oklahoma’s case against defen-
dants is ongoing. Trial is currently scheduled for September 2009.