The $1.28 billion judgment on Tuesday by a federal jury said the company manipulated the cattle market and must change its buying practices.
The ruling by the Montgomery, Alabama, jury in the eight-year-old case could have a far-reaching impact on the $70 billion U.S. beef industry. If the decision stands, beef plants would have to change the way they buy up to 45 percent of their cattle, industry sources said.
“It means the cattle business has a real chance to remain in the hands of independent producers, and not fall solely to contract growers controlled by integrated slaughterhouse companies,” David Domina, the plaintiff’s lead attorney, said in a statement.
He said the jury found Tyson manipulated cash cattle prices downward between Feb. 1, 1994 and Oct. 31, 2002.
Tyson said it will ask the judge to set aside the verdict, and will appeal the decision if the judge does not act. The verdict should not affect the company’s operations or liquidity, the company said in a statement.
“The verdict is a disappointment to our company and thousands of cattle producers who want to maintain the right to market cattle the way they want,” said Tyson in a statement.
In an unrelated matter, Tyson on Tuesday said it planned to cut its work force by 5 percent, or nearly 6,000 people, and spend close to $70 million in 2004 to further automate some facilities.
The Springdale, Arkansas-based company said it will reduce its work force primarily through attrition.
The case dates back to 1996 when IBP Inc., now a Tyson unit, was sued by the plaintiffs who accused the company of controlling large supplies of cattle that kept cattle prices low.
“I think we proved that Tyson used contract, or what’s called captive supply, to depress the cattle market,” said Randy Beard, attorney for the plaintiffs. “We believe that this verdict takes away Tyson’s ability to manipulate and fix the price that it pays for fed cattle.” Continued … 1| 2 Next