Tyson Finished With Hudson Legal Problems

A final chapter of the Hudson Foods story has officially closed. And it’s a chapter neither founder James “Red” Hudson or Tyson Foods Inc., which purchased Hudson Foods in 1998, cares to rehash.

A $15 million class-action lawsuit filed in October of 1997 by Little Rock law firm Cauley Geller Bowman & Coates was finally dismissed March 16 by Judge Chris Piazza in Little Rock circuit court. Bob Still, a senior partner with Bassett Law Firm in Fayetteville, represented Tyson in the case. Tyson was liable for all claims against Hudson Foods.

Tyson legal experts confirmed to the Northwest Arkansas Business Journal via spokesman Ed Nicholson that “the dismissal of the Hudson legal action on summary judgement does bring to a close all legal matters related to the e. coli recall.”

The suit was filed following Hudson’s announced recall of beef patties, the largest beef recall in U.S. history. The e. coli had been detected in ground beef coming from Hudson’s Columbus, Neb. plant. A number of people in Little Rock claimed they had contracted the e. coli bacteria after eating at a Burger King restuarant on Rodney Parham Road, while others claimed they had eaten the hamburger pattys from a Little Rock Sam’s Club and another at a Little Rock ballpark.

The United States Department of Agriculture said about 25 million pounds of ground beef was recalled, but that only about 10 million was recovered. That figure was disputed, but Cauley Geller Bowman & Coates filed a claim based on $1 per pound of ground beef not recovered contending that Hudson received profits from that beef.

Still said every individual who had purchased the recalled meat and requested a refund received one.

Hudson’s core business was poultry, but the state-of-the-art Nebraska plant Hudson had built was solely for servicing its Burger King account. However, the way in which Hudson ground its meat made it impossible to isolate one particular day’s production.

Leftover meat from one day’s production would be frozen and used the next day, making it virtually impossible to determine the actual source of the e. coli. Cattle were not slaughtered at the Nebraska plant. All of the beef there was taken in frozen, then made into patties.

Later, nine cases of e. coli were reported in the Denver area and the Colorado Department of Health declared it an outbreak.

Hudson was charged and later acquitted of criminal acts of misleading the USDA.

A DNA test that was used against Tyson early on in the claim against Hudson was later proved to be innacurate. There are several strains of e. coli, and the ones Hudson was blamed for were off by one or two bands, Still said.

The 0157:H7 e. coli, which comes from a cow’s stomach, is the dangerous one, invading the colon and releasing toxins. It can be especially dangerous to the very young and elderly, causing kidney damage.

Still said even ground beef with 0157:H7 e. coli is not harmful if cooked thoroughly at 160 degrees. Food specialists say no one should eat rare hamburger meat. But e. coli can be contracted from cross contamination in such items as prepackaged salads, etc.

The USDA’s media assault on Hudson led to the company’s demise, something U.S. Sen. Dale Bumbers (D-Ark.) called a “tragedy.”

Red Hudson founded the company in Rogers in 1972 after spending 26 years with Ralston Purina. Hudson Foods had $1.7 billion in sales during its last year of operation before selling to Tyson for 5.9 million shares of Tyson stock and $82 million cash.

On the same day the suit against Hudson was dropped, Cauley Geller Bowman & Coates filed another class action suit in the United States District Court for the District of South Dakota on behalf of all individuals and institutional investors who purchased the common stock of IBP Inc. between Feb. 7, 2000, and March 13, 2001.

The complaint charges that IBP and some of its officials violated the federal securities laws by providing materially false and misleading information about IBP’s business and financial condition, and as a result of these false and misleading statements IBP’s stock traded at artificially inflated prices during the class period.

On March 29, Tyson backed off the attempted acquisition of IBP.