An unexpected curtain call…

December 14, 2006

images.jpegOn Tuesday, when federal agents raided privately-held Swift & Co. plants in six states, shares of Tyson Foods (TSN), a publicly held competitor bounced despite the fact that an analyst at J.P. Morgan described the bounce as "unwarranted".

While Tyson wasn’t subject to the high-profile raids, it turns out that it has its’ own immigration problem, as disclosed in the 10-K it filed late yesterday. Buried in the lengthy legal disclosures was this item:

On April 2, 2002, four former employees of the Company’s Shelbyville, Tennessee, chicken processing plant filed the case of Trollinger et al. v. Tyson Foods, Inc. in the U. S. District Court for the Eastern District of Tennessee. The case was filed as a putative class action against the Company, raising allegations under the Racketeer Influenced and Corrupt Practices Act (RICO), and specifically alleged the Company, in conjunction with employment agencies and recruiters, engaged in a scheme to hire illegal immigrant workers in 15 of its processing plants to depress wages paid to hourly wage employees at those plants….On October 10, 2006, the District Court granted plaintiffs’ motion for class certification. On October 24, 2006, defendants filed with the Sixth Circuit Court of Appeals a petition for interlocutory review of the District Court’s class certification decision. That petition is pending. No trial date has been set. A class management conference has been scheduled for January 29, 2007.

We’re sure that it’s merely a coincidence that this disclosure reappeared yesterday after being absent from Tyson’s filings for nearly three years. (Hint: do an Edgar full-text search for Trollinger and you’ll find this). The last time Tyson mentioned this, it lacked this kind of detail, perhaps becasue a court had dismissed the initial claim. Still, once the appeal was overturned and with discovery going on since September 2004, one would have expected Tyson to have provided some sort of update to its investors, particularly when the explosive charge that Tyson had "conspired with certain Hispanic civil rights groups to hire illegal immigrant workers" (emphasis added) was filed as part of an amended complaint in June 2005.

Last night, on the NewsHour, I heard a spokesman for one of Swift’s unions say that throughout history, the meat industry was "built on immigrant workers". No doubt, as anyone who’s read The Jungle knows. But as additional discovery begins next year, this could be one curtain-call that Tyson doesn’t want to take.

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And now for all those last-minute gift-seekers out there: if you’re still looking for the perfect holiday gift for your favorite investor/SEC filings geek, I’m happy to send a signed copy of "Financial Fine Print" for a $40 donation to the site. If you’re interested, send me a note with the subject line "book" and the name of the person you’d like the book made out to.

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