Tyson Foods may face $70 million claim first filed against Sara Lee

Tyson Foods was notified earlier this month that it could be liable for up to $70 million in damages dating back two decades to a plant closing in the Philippines operated by Sara Lee in 1995. The case predates Sara Lee being acquired by Hillshire Brands and ultimately Tyson Foods.

In a Tuesday (Dec. 20) filing with the U.S. Securities and Exchange Commission, Tyson said the National Labor Relations Council of the Department of Labor in the Philippines recently ruled against an appeal in the 21-year old case involving the closure of an apparel factory owned by Sara Lee Corp. Not long after the plant closed, Sara Lee was sued by a labor union and former employees, and the case has been in dispute since.

“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,” said David Van Bebber, executive vice president and general counsel for Tyson Foods. “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.”

The NLRC notes Sara Lee, and its subsequent owners are jointly and severally liable for approximately $70 million in damages, based upon today’s exchange rate to roughly 6,000 former employees involved in the plant closure. The NLRC approved a settlement for 1,081 former employees totaling $1.5 million, but then sought to increase the total damages again in 2004 to cover the remaining 4,922 former workers.

“We intend to file a motion for reconsideration with the NLRC. If that motion is denied, the company will seek a stay of the damages award pending completion of an appeal to the Philippine courts,” Tyson noted in the federal filing.