7) Legal Claims and Actions
The company’s subsidiaries have been involved in several legal matters spanning commercial disputes, workplace safety violations, and intellectual property litigation over the past decade and beyond.
Tyson Refrigerated Processed Meats, Inc. was involved in a significant contract dispute with Zwanenberg Food Group USA (ZFG) that culminated in February 2009. ZFG filed a declaratory judgment action seeking to avoid paying a $500,000 transition payment to Tyson Refrigerated Processed Meats, claiming breach of contract and breach of the implied covenant of good faith and fair dealing. The case involved substantial financial exposure, with ZFG seeking $549,019.65 in damages for alleged breach of contract and damages exceeding $1,000,000 plus consequential damages for the breach of implied covenant claim. ZFG also pursued costs and attorney fees. Tyson Refrigerated Processed Meats’ motion for partial judgment on the pleadings regarding the implied covenant claim was denied, indicating the court found merit in ZFG’s allegations.
Foodbrands America, Inc. faced critical intellectual property litigation involving patent infringement, misappropriation of trade secrets and proprietary information claims brought by C&F Packing Company, Inc. The lawsuit, which preceded an acquisition involving subsidiary KPR, centered on alleged patent infringement related to Italian sausage production processes. The company assessed the potential disgorgement of profits as potentially material if ordered by the court. This litigation had historical precedent, as a previous related lawsuit against Doskocil (Foodbrands America’s predecessor) was settled in 1991, resulting in a license agreement and consent decrees. In 1995, Foodbrands America and KPR filed a declaratory judgment action against C&F seeking a ruling that KPR’s process did not violate C&F’s patents or breach the consent decrees, but C&F’s motion to dismiss this declaratory judgment action was granted in April 1996. The company characterized the litigation as complex with an outcome that could not be determined at the time.
Madison Foods, Inc. was cited by the Secretary of Labor for three separate OSHA violations in November 1978, with the case decided on September 18, 1980. The Occupational Safety and Health Administration found the subsidiary failed to maintain a proper maintenance program for hoisting equipment, resulting in a $100 penalty. The company was also cited for failing to provide a standard guardrail on a hog-shaving platform, though this violation was deemed nonserious with no penalty assessed. Additionally, Madison Foods was penalized $50 for failing to provide tongue guards on two grinders as required by federal safety regulations. The US Court of Appeals for the Eighth Circuit affirmed the Commission’s order, upholding all findings and penalties.