Tyson Foods 2009 Annual Report Download - page 14

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sought injunctive relief and an unspecified amount of compensatory damages, punitive damages, attorneys’ fees and costs. While the
District Court certified a class, on October 4, 2005, the Court of Civil Appeals of the State of Oklahoma reversed, holding the
plaintiffs’ claims were not suitable for disposition as a class action. This decision was upheld by the Oklahoma Supreme Court and
the case was remanded to the District Court with instructions that the matter proceed only on behalf of the three named plaintiffs.
Plaintiffs seek injunctive relief, restitution and compensatory and punitive damages in an unspecified amount in excess of $10,000.
We and the other defendants have denied liability and asserted various defenses. Defendants have requested a trial date, but the court
has not yet scheduled the matter for trial.
In 2004, representatives of our subsidiary, Tyson Fresh Meats, Inc. (“TFM”), met with the U.S. Environmental Protection Agency
(“USEPA”) staff to discuss alleged wastewater and late report filing violations under the Clean Water Act relating to the 2002 Second
and Final Consent Decree that governed compliance requirements for TFM’s Dakota City, Nebraska, facility. TFM vigorously
disputed these allegations. The U.S. Department of Justice (“DOJ”), on behalf of USEPA, recently requested that TFM enter into a
tolling agreement concerning possible civil penalties and injunctive relief for Clean Water Act violations, which was executed in July
2008, and enter into negotiations with DOJ and USEPA regarding a potential settlement of this matter. Pursuant to negotiations with
DOJ and USEPA, a settlement in principal was reached on December 30, 2008, which would require the payment of $2,026,500 in
penalties. On August 20, 2009 a Joint Stipulation Motion was filed in the U.S. District Court for the District of Nebraska
documenting the settlement agreement. The Court approved the settlement on August 31, 2009. The penalties were paid by TFM on
September 15, 2009, and the matter was resolved.
On January 9, 2003, we received a notice of liability letter from Union Pacific Railroad Company (“Union Pacific”) relating to our
alleged contributions of waste oil to the Double Eagle Refinery Superfund Site in Oklahoma City, Oklahoma. On August 22, 2006,
the United States and the State of Oklahoma filed a lawsuit styled United States of America, et al. v. Union Pacific Railroad Co. in the
United States District Court for the Western District of Oklahoma seeking more than $22 million (the amount sought has
subsequently increased to more than $30 million) to remediate the Double Eagle site. Certain Tyson entities joined a “potentially
responsible parties” group on October 31, 2006. A settlement between the “potentially responsible parties” group, the United States,
and the State of Oklahoma was reached and the Tyson entities paid $625,586 (for 135,997 alleged gallons of waste oil) into escrow
towards the settlement of the matter. In furtherance of finalizing the settlement, on June 20, 2008 the DOJ filed a complaint styled
United States of America, et al. v. Albert Investment Co., Inc. et al. against numerous alleged responsible parties, including various
Tyson entities (the “Litigation”). A proposed Consent Decree addressing all alleged liability of Tyson for the site was lodged on June
27, 2008. On August 15, 2008, Union Pacific submitted to the United States its Comments and Objections to the proposed Consent
Decree. In its Comments and Objections, Union Pacific claimed that the Tyson entities' alleged gallons of waste oil should be 160,819
rather than the 135,997 gallons set forth in the proposed Consent Decree. On October 10, 2008, Union Pacific initiated litigation to
challenge the proposed Consent Decree by filing a motion to intervene in the Litigation, which the court denied. Union Pacific
appealed this decision to the United States Court of Appeals for the Tenth Circuit. The "potentially responsible parties" group and
other parties filed briefs in the Tenth Circuit, and oral arguments occurred on September 21, 2009. If the proposed Consent Decree is
entered, the escrowed amount will be paid to the United States and the State of Oklahoma.
In November 2006, the Audit Committee of our Board of Directors engaged outside counsel to conduct a review of certain payments
that had been made by one of our subsidiaries in Mexico, including payments to individuals employed by Mexican governmental
bodies. The payments were discontinued in November 2006. Although the review process is ongoing, we believe the amount of these
payments is immaterial, and we do not expect any material impact to our financial statements. We have contacted the Securities and
Exchange Commission and the U.S. Department of Justice to inform them of our review and preliminary findings and are cooperating
fully with these governmental authorities.
Since 2003, nine lawsuits have been brought against Tyson and several other poultry companies by approximately 150 plaintiffs in
Washington County, Arkansas Circuit Court (Green v. Tyson Foods, Inc., et al., Bible v. Tyson Foods, Inc., Beal v. Tyson Foods,
Inc., et al., McWhorter v. Tyson Foods, Inc., et al., McConnell v. Tyson Foods, Inc., et al., Carroll v. Tyson Foods, Inc., et al., Belew
v. Tyson Foods, Inc., et al., Gonzalez v. Tyson Foods, Inc., et al., and Rasco v. Tyson Foods, Inc., et al.) alleging that the land
application of poultry litter caused arsenic and pathogenic mold and fungi contamination of the air, soil and water in and around
Prairie Grove, Arkansas. In addition to the poultry company defendants, plaintiffs sued Alpharma, the manufacturer of a feed
ingredient containing an organic arsenic compound that has been used in the broiler industry. Plaintiffs are seeking recovery for
several types of personal injuries, including several forms of cancer. On August 2, 2006, the Court granted summary judgment in
favor of Tyson and the other poultry company defendants in the first case to go to trial and denied summary judgment as to Alpharma.
The case was tried against Alpharma and the jury returned a verdict in favor of Alpharma. Plaintiffs appealed the summary judgment
in favor of the poultry company defendants and the Court stayed the remaining eight lawsuits pending the appeal. On May 8, 2008,
the Arkansas Supreme Court reversed the summary judgment in favor of the poultry company defendants. The remanded trial in this
case against the poultry company defendants began on April 30, 2009 and on May 14, 2009, the jury returned a verdict in favor of us
and the other poultry company defendants. On July 13, 2009, plaintiffs filed a notice of appeal to the Arkansas Supreme Court.