Tyson Foods takes on long-running litigation

by Erica Shaffer
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SPRINGDALE, Ark. – A long-running labor dispute between a subsidiary of the former Sara Lee Corp. and a union in the Philippines recently took another turn, leaving Tyson Foods Inc. to address the issue.

The National Labor Relations Council (NLRC) of the Dept. of Labor and Employment in the Philippines denied an appeal related to the 1995 closing of an apparel manufacturing plant operated by a Sara Lee subsidiary. A labor union and employees sued Sara Lee after the plant closure and the case has been in litigation since. Tyson Foods acquired The Hillshire Brands Company, formerly known as Sara Lee Corp., in 2014.

Tyson Foods explained in a filing with the Securities and Exchange Commission (SEC), that in 2004 a labor arbiter found The Hillshire Brands Company, Aris Philippines (a dissolved Sara Lee subsidiary), Sara Lee Philippines (sold in 2010) and Fashion Accessories Philippines Inc., an unaffiliated entity, are jointly and severally liable for approximately $70 million in damages based on the current exchange rate, to approximately 6,000 former employees of Aris Philippines.

In the latest action, the NLRC approved a settlement agreement previously reached with 1,081 former employees for approximately $1.5 million. But the agency significantly increased the total damages awarded by the labor arbiter in 2004 to former employees who had not settled. The NLRC awarded those former employees approximately $300 million, based upon the current exchange rate, for back pay from 1995 when the plant was closed until the present;  severance benefits based on a years of service calculation for each employee that included the years the since the plant was closed in 1995; “moral damages”; punitive damages; and attorney’s fees.

“This latest ruling is excessive and directly contrary to two prior arbitration rulings that concluded that the 1995 closure was proper and all required severance benefits had been paid by Sara Lee Corporation to employees,” David L. Van Bebber, executive vice president and general counsel for Tyson Foods, said in a statement. “We’re considering all appellate options including asking the NLRC to reconsider its ruling and the Philippine courts to overturn the ruling. As Hillshire Brands does not have any operations in the Philippines, we don’t expect this decision to have any impact on our business.”

According to the SEC filing, Tyson Foods’ financial statements since the acquisition of The Hillshire Brands Company have included an accrual for the case “at an amount substantially below the labor arbiter’s 2004 finding.”

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