Judge says Tyson won’t pay $1.28 billion verdict

MONTGOMERY, Ala. – While yet to make a final ruling, U.S. District Judge Lyle Strom has ruled that Tyson Foods Inc. won’t have to pay a record $1.28 billion jury recommendation. An Alabama jury, hearing a case brought by former Tyson cattlemen, made the damages recommendation.

Calling the damages recommendation an "irrelevant number" that “clearly overstates” Tyson’s responsibility, Strom said Arkansas-based Tyson (most widely known for its poultry division, although beef now accounts for some $12 billion of the company’s annual $24 billion in sales) may face nothing at all. The judge has made clear he is considering the company’s motion to have the jury’s verdict tossed.

"It was never the Court’s intention to enter judgment on that verdict," Strom wrote. "The court expressed that intent to the parties on multiple occasions."

The cattlemen’s lawsuit – brought eight years ago – was originally filed against a South Dakota company. Thousands of cattlemen claimed the company manipulated market prices through marketing contracts. Tyson purchased the company, IBP (now Tyson Fresh Meats Inc.), in 2001.

Explaining his decision in an eight-page ruling, Strom said the $1.28 billion represented the plunge in value for U.S. cattle in the mid-1990s. As only cattlemen that sold to the company on the open market are suing, the judge said awarding the total value of the price drop extended the award beyond the original filers.

However, the cattlemen didn’t lose everything. While Strom is still considering Tyson’s motion to have the jury’s verdict thrown out, he didn’t argue the jury’s finding that Tyson manipulated cattle prices – a violation of the federal Packers and Stockyards Act.

During trial, plaintiff attorneys argued that, by using marketing contracts, Tyson was able to purchase cattle at a fixed price when cash market prices got too high. By doing so in bulk, it was argued, the company lowered demand on the open market. Then, with lower demand depressing prices, Tyson again bought from the open market.

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