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Arkansas
Supreme Court Upholds Lower Court Ruling, Hog Farmer Case To Go Before
Jury
The Arkansas Supreme Court ensured that former Tyson finished
hog and feeder pig farmers from Arkansas and eastern Oklahoma will have
the opportunity to have their case against Tyson heard by a judge and
a jury. The Court issued the ruling February 19th denying Tyson's appeal
of their motion to compel arbitration, upholding Pope County Circuit Judge
Ken Coker's February 21, 2003, decision.
The decision is good news to the hundred plus hog farmers working to hold
Tyson accountable for the tremendous damages the farmers sustained as
a result of Tyson's broken commitments and sets a positive precedent for
all Arkansas farmers signing production and marketing contracts. It also
highlights the need for timely federal action to provide consistent and
unquestionable protection of farmers' constitutional right to a fair trail.
"We are elated with the Court's decision, and we look forward to
bringing this case before a jury of Arkansas citizens, Hare, Wynn, Newell
& Newton, L.L.P. (Hare Wynn) attorney Clark Mason of Little Rock said.
"Thankfully, we can continue to move forward and the farmers will
have the fair trial they deserve."
The Court's ruling comes a year and a half after the August 18, 2002 telephone
calls that Tyson Foods Inc. made to the hog farmers, informing them of
Tyson's intention to terminate their working relationship. Hare Wynn filed
a lawsuit on behalf of more than 80 farmers in the Pope County Circuit
Court on September 12, 2002, citing Tyson's disregard for their corporate
responsibility in the abandonment of its farmers, and the financial devastation
the profit- driven decision has and will cause. Since that time, the number
of farmers represented by Hare Wynn has grown to more than 100, as additional
farmers have joined the suit.
"This case has certainly illustrated how long and tedious the legal
process can be," Mason said. "A lot of patience has been required
on the part of these tireless farmers, but the waiting is well worth it
now that justice has been served and Tyson has been unsuccessful in their
attempt to avoid facing a jury."
The Arkansas Supreme Court upheld the lower court ruling that the arbitration
clause within the Tyson hog contracts was unenforceable because it fails
to meet the contract standards established by Arkansas courts. Specifically,
it fails to meet the test of "mutual obligation." In one section
of the Tyson hog contract it requires any dispute which arises between
the parties to be submitted to arbitration. In another section it states
that if Tyson decides the producer has failed to honor the producer obligations,
Tyson has the right to take over the producer's swine facilities and "may
also pursue any other remedies at law or equity."
In delivering the Opinion, Arkansas Supreme Court Associate Justice Donald
L. Corbin said: "This court has recognized that mutuality of contract
means that an obligation must rest on each party to do or permit to be
done something in consideration of the act or promise of the other; thus,
neither party is bound unless both are bound. ... [I]t is clear from our
cases discussing mutuality that one party cannot limit another party to
the exclusive remedy of arbitration, while retaining the ability to pursue
other judicial remedies for themselves. We have repeatedly stated that
there is no mutuality where one party uses an arbitration agreement to
shield itself from litigation, while at the same time reserving its own
ability to pursue relief through the court system."
While the Arkansas Supreme Court upheld the growers' right to a fair trial,
it referenced established Arkansas contract construction standards that
included mutual obligation.
Not every state has the same standards. A number of courts have found
that this lack of mutuality is not enough to make an arbitration clause
unenforceable. In states such as Oklahoma and Alabama, contract farmers
could be forced to waive their judicial rights while the company retains
full access to our American judicial system.
Congress has recognized the potential for mandatory, pre-dispute arbitration
clauses to be abused by the more powerful party in a contract with regard
to other sectors of our economy. In 2002, legislation was enacted with
broad bipartisan support that prohibits the use of pre-dispute, mandatory
arbitration clauses in contracts between car dealers and car manufacturers
and distributors. Likewise, the US Senate passed a similar amendment to
the Senate Farm Bill that concerned livestock and poultry contracts. (The
amendment was dropped in conference.)
In 2003, Senators Grassley (R- IA) and Feingold (D- WI) introduced the
Fair Contracts for Growers Act of 2003 (S. 91), which would simply give
farmers a choice of venues to resolve disputes associated with livestock
and poultry contracts.
This legislation would not prohibit arbitration. Instead, it would ensure
that the decision to arbitrate is truly voluntary and that the rights
and remedies provided for by our judicial system are not waived under
coercion. As with the car dealer arbitration provision enacted in 2002,
the bill would require both parties to agree voluntarily to arbitration
after a dispute arises. The bill has been referred to the Senate Judiciary
Committee.
If the Fair Contracts for Growers Act had been enacted, these Arkansas
hog farmers, who lost almost everything when their contracts were abruptly
ended, would not have had to invest the time, money and resources of the
last year and a half just to win the right have their complaint heard.
For a copy of the Arkansas Supreme Court decision: http://courts.state.ar.us/opinions/2004a/20040219/03-649.htmlhttp://courts.state.ar.us/opinions/2004a/20040219/03-649.html
For more information on the Fair Contracts for Growers Act of 2003 (S.
91) visit the RAFI-USA Campaign
for Contract Agriculture Reform web page on the RAFI-USA web site.
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Tyson Foods Fails to Honor the Term of the Contract for Certain
Growers
In Florida, Tyson has taken the position that it can cease
bringing chicks to a farm even if there are months or years left on the
contract and does not have to pay the grower for the remainder of the
contract. This could undermine the security of any long term Tyson contract,
whether in the poultry, beef or pork industry.
Two former poultry growers from the Jacksonville, Florida area are currently
suing Tyson for damages the growers claim they suffered when Tyson closed
its Jacksonville operation in December 2002. The growers allege numerous
acts of wrongdoing that Tyson has denied. Tyson does not deny the growers'
contracts have not expired and that Tyson is not compensating these growers
for the lost income.
One of the two former growers signed a year long contract, the other signed
a three year long contract; both contracts were due to expire on March
1, 2003, approximately 85 days after the plant closure was announced.
Tyson notified all growers in writing that even if they refused to sign
a settlement with Tyson, the company would honor the contract and pay
them a calculated daily rate through the end of the contract even though
the grower would not have any more flocks. Tyson calculated how much each
grower had received in gross flock income on a daily basis. Growers who
signed the settlement and release received payment based on the per diem
rate for the number of days left on each grower's contract.
However, Tyson refused to pay the calculated daily rate to the two growers
who would not sign the settlement and release even though the company
admits that the contracts did not expire until March 1, 2003, that it
did not cancel the contracts before March 1, 2003, and that it did not
accelerate the term ending date of March 1, 2003.
Though Tyson did pay Jacksonville growers for the remainder of their contracts
if they signed a release, the clear implication is that Tyson has determined
that it has no legal obligation to pay growers through the expiration
date of contracts if it chooses to quit placing birds with a grower.
For more information contact: Clay Fulcher, attorney at 479-636-7899 or
Laura Klauke, RAFI-USA at 919-542-1396.
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News & Resources
Jury Awards $1.3 Billion to Cattlemen in Pickett
v. Tyson
On February 17th, a Montgomery, Alabama federal court jury awarded
$1.28 billion to a group of cattlemen after finding that the nation's
largest beef packer, Tyson Fresh Meats Inc. (formerly IBP), used their
contract or "captive" supplies to unfairly manipulated cattle
prices downward. The verdict is a major victory for independent cattlemen
and the fight to keep agricultural fair and competitive. Tyson has promised
to appeal.
"The plaintiffs experts showed that Tyson depressed prices by an
average of 5.1% over the 8 year class period," said Michael Stumo,
OCM general counsel, who assisted plaintiff's counsel throughout the trial.
"This means that Tyson received one out of every 20 cattle free due
to their manipulation of inventories that allowed them to depress prices."
"Tyson argued that they needed to use captive cattle to procure quality
cattle, keep their plants full, and reduce transaction costs," continued
Stumo. "The jury found that those alleged business justifications
were contrived and not true."
The case was filed in 1996 against IBP. The named plaintiffs are Lee Pickett
(AL), Mike Callicrate (KS), Chris Abbot (NE), Robert Rothwell (NE), Johnny
Smith (SD), and Pat Goggins (MT). They represent a class of approximately
30,000 cattlemen who sold to IBP exclusively on the cash market from 1994
to 2002. IBP was purchased by Tyson in 2002, and thus the case is now
entitled Pickett v. Tyson Fresh Meats, Inc.
For more information contact Steve Cady, Organization for Competitive
Markets at 402-792-0041 or www.competitivemarkets.com.
To review legal documents related to the case:
http://endcaptivesupply.lawoffice.com/.
Remembering the Life of Betsy Lydon
With great sadness RAFI-USA mourns the loss of Betsy Lydon
who passed away this month after a long, hard-fought battle with breast
cancer. Betsy had an incredible inner spirit and fought off her cancer
as long as she could by embracing life to its fullest at every moment.
Betsy was a passionate advocate for sustainable agriculture and was, according
to Wendy Gordon, the heart that propelled Mothers & Others for a Livable
Planet in New York forward. She gave incredible energy to the National
Organic Standards Board, the National Campaign for Sustainable Agriculture,
Greener Fields, Just Food, and Sustainable Agriculture & Food Systems
Funders group as its coordinator several years ago, from which we all
benefit.
She is survived by her husband, Jeff, and their two amazing teenagers,
Gardner and Lucy. There will not be a service immediately but, as Betsy
wished, a party in celebration of her life sometime later this spring.
Information will be in future E-Bulletins about where donations can be
made in Betsy's name.
Country Music Television premieres Farm Aid: The Fight Goes On
March 5 at 10pm
Country Music Television will premiere its new documentary Farm
Aid: The Fight Goes On on Friday, March 5, 2004 at 10pm Eastern/9pm Central.
The documentary showcases the history of Farm Aid, the work it supports
around the country, and how issues facing farmers have changed since Farm
Aid was founded 18 years ago. Interviews with artists and farmers as well
as memorable music performances will be featured. Check local listings
for channel information.
RAFI-USA Fundraiser at Weaver Street Market's Panzanella
on March 24
Weaver Street Market in Carrboro, NC will be hosting a fundraiser for
RAFI-USA at their Panzanella restaurant on Wednesday, March 24, 2004.
Panzanella will donate 10% of the restaurant's receipts to support RAFI-USA
programs. RAFI-USA staff will be on-hand to discuss and answer questions
about current and future projects. Come enjoy wonderful food and wine
and support important work in sustainable agriculture.
For information and directions to Panzanella visit http://www.panzanella.com/.
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