Tyson Foods 2011 Annual Report Download - page 72

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Additionally, we enter into future purchase commitments for various items, such as grains, livestock contracts and fixed grower fees.
At October 1, 2011, these commitments totaled:
in millions
2012
$886
2013
63
2014
18
2015
16
2016
15
2017 and beyond
61
Total
$1,059
Contingencies
We are involved in various claims and legal proceedings. We routinely assess the likelihood of adverse judgments or outcomes to
those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. We record accruals for such matters
to the extent that we conclude a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable.
Such accruals are reflected in the Company’s Consolidated Financial Statements. In our opinion, we have made appropriate and
adequate accruals for these matters and believe the probability of a material loss beyond the amounts accrued to be remote; however,
the ultimate liability for these matters is uncertain, and if accruals are not adequate, an adverse outcome could have a material effect
on the consolidated financial condition or results of operations. Listed below are certain claims made against the Company and/or our
subsidiaries for which the potential exposure is considered material to the Company’s Consolidated Financial Statements. We believe
we have substantial defenses to the claims made and intend to vigorously defend these matters.
Several private lawsuits are pending against us alleging that we failed to compensate poultry plant employees for all hours worked,
including overtime compensation, in violation of the Federal Labor Standards Act (FLSA). These lawsuits include DeAsencio v.
Tyson Foods, Inc. (DeAsencio), filed on August 22, 2000, in the U.S. District Court for the Eastern District of Pennsylvania. This
matter involves similar allegations that 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 changing area, work areas
and break areas. They seek back wages, liquidated damages, pre- and post-judgment interest, and attorneys’ fees. Plaintiffs appealed a
jury verdict and final judgment entered in our favor on June 22, 2006, in the U.S. District Court for the Eastern District of
Pennsylvania. 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. The new trial date has not been set.
The other private lawsuits referred to above 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.D.
Alabama, December 21, 2006); Buchanan, et al. v. Tyson Chicken, Inc., et al. and Potter, et al. v. Tyson Chicken, Inc., et al. (N.D.
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.D. Mississippi, February 9, 2007); Balch, et al. v. Tyson Foods, Inc. (E.D. Oklahoma, March 1, 2007);
Adams, et al. v. Tyson Foods, Inc. (W.D. Arkansas, March 2, 2007); Atkins, et al. v. Tyson Foods, Inc. (M.D. Georgia, March 5,
2007); Laney, et al. v. Tyson Foods, Inc. and Williams, et al. v. Tyson Foods, Inc. (M.D. Georgia, May 23, 2007) (the Williams Case).
Similar to DeAsencio, each of these matters involves allegations that 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 changing 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 filed a motion for transfer of the above
named actions for coordinated pretrial proceedings before the Judicial Panel on Multidistrict Litigation, which was granted on
August 17, 2007. These cases and five other cases subsequently filed involving the same allegations (i.e., Armstrong, et al. v. Tyson
Foods, Inc. (W.D. Tennessee, January 30, 2008); Maldonado, et al. v. Tyson Foods, Inc. (E.D. Tennessee, January 31, 2008); White,
et al. v. Tyson Foods, Inc. (E.D. Texas, February 1, 2008); Meyer, et al. v. Tyson Foods, Inc. (W.D. Missouri, February 2, 2008); and
Leak, et al. v. Tyson Foods, Inc. (W.D. 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 September 2, 2011, the
parties executed a settlement agreement and filed a joint motion with the court seeking its approval of the settlement. The court
approved the settlement on September 15, 2011, and Tyson will pay at least $12.25 million but no more than $17.5 million in back
pay and damages to eligible class members. The settlement agreement provides a process for identifying and certifying eligible class
members, which includes a 75-day notice period for certain class members to become eligible for payment under the settlement. In
addition, the settlement agreement provides that plaintiffs’ attorneys must file an application for fees with the court but that no more
than $14.5 million in attorneys’ fees and costs will be paid. Plaintiffs’ attorneys filed their fee application on October 11, 2011.