Tyson Investors File Lawsuit

Shareholders Claim Company Failed to Disclose COVID-19 Damages

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A new class-action lawsuit alleges Tyson Foods failed to disclose COVID-19 conditions for plant workers. (DTN photo by Chris Clayton)

OMAHA (DTN) -- Tyson Foods withheld from investors information about how its plants were handling COVID-19 outbreaks, claims a new class-action lawsuit filed on Tuesday in a federal court in New York.

The lawsuit filed in the U.S. District Court for the Northern District of New York seeks damages for investors who bought Tyson securities from March 13, 2020, to Dec. 15, 2020. The lawsuit alleges Tyson public statements to the U.S. Securities Exchange Commission did not match reality for workers in the company's plants.

Tyson did not respond to DTN's request for comment.

On Dec. 15, 2020, New York City Comptroller Scott M. Stringer notified the SEC about the alleged disparities and requested a federal investigation.

Stringer said in a letter to the SEC, he is the custodian and trustee of five New York City Retirement Systems with $229 billion in assets, including long-held Tyson shares.

The lawsuit alleges Tyson didn't take proper steps to protect its workforce despite statements made to the SEC. Shareholders sustained losses when the company's stock value fell.

"As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the company's securities, plaintiff and other class members have suffered significant losses and damages," the lawsuit said.

Specifically, the lawsuit alleges Tyson "knew, or should have known, that the highly contagious coronavirus was spreading throughout the globe" yet did not "in fact have sufficient safety protocols" to protect employees at its plants.

"As a result, Tyson employees contracted and spread the coronavirus within the facilities," the lawsuit said. "As a result of the foregoing, Tyson would face negative impacts to its production, including complete shutdowns of certain facilities."

The plaintiffs allege because Tyson did not protect its employees, it did not disclose to the SEC it would "suffer financial harm related to its lowered production," and as a result, "defendants' public statements were materially false and/or misleading at all relevant times."

The lawsuit calls "false or misleading" a number of statements made by Tyson in SEC filings, including this statement from Tyson's 2020 financial report:

"To protect our team members, we have implemented and will continue to implement safety measures recommended by the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration in our facilities and coordinate with other health officials as appropriate."

The report said that included, "checking the temperature of team members as they enter company facilities, restricting visitor access, increasing efforts to deep clean and sanitize facilities, requiring the use of protective face coverings and making protective face coverings and other protective equipment available to team members and encouraging team members who feel sick to stay at home through relaxed attendance policies and enhanced benefits."

Tyson has 140 food-processing facilities in the U.S., and some are still operating below capacity. The Food and Environment Reporting Network database of food-processing infections shows Tyson has had more than 10,000 workers infected by the virus.

On Tuesday, Tyson announced a new pilot program to assess and monitor the effectiveness of the company's efforts to protect workers from COVID-19.

According to a news release, more than a dozen Tyson Foods plant locations, including some of the company's largest facilities, are participating in a program through Cleveland Clinic.

The program will include on-site assessments based on the latest guidelines from the federal government and state regulations.

"Our company has made tremendous progress in our efforts to protect our team members by transforming our facilities and implementing an always-on testing strategy," Tom Brower, senior vice president of health and safety at Tyson, said in the news release.

"We believe this certification by outside health experts confirms we're using best-in-class measures to combat the virus. And, what we learn from the plants where we're piloting this program can also be applied at other company locations across the country."

During fiscal 2020, the company said it invested $540 million to transform its U.S. facilities with protective measures, from walk-through temperature scanners and workstation dividers to social distance monitors and testing, as well as provide additional employee pay and benefits. In addition, Tyson said it hired a chief medical officer.

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley