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Mike

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Arkansas Supreme Court Upholds Lower Court Ruling, Hog Farmer Case To Go Before Jury

The Arkansas Supreme Court ensured that former Tyson finished hog and feeder pig farmers from Arkansas and eastern Oklahoma will have the opportunity to have their case against Tyson heard by a judge and a jury. The Court issued the ruling February 19th denying Tyson's appeal of their motion to compel arbitration, upholding Pope County Circuit Judge Ken Coker's February 21, 2003, decision.

The decision is good news to the hundred plus hog farmers working to hold Tyson accountable for the tremendous damages the farmers sustained as a result of Tyson's broken commitments and sets a positive precedent for all Arkansas farmers signing production and marketing contracts. It also highlights the need for timely federal action to provide consistent and unquestionable protection of farmers' constitutional right to a fair trail.

"We are elated with the Court's decision, and we look forward to bringing this case before a jury of Arkansas citizens, Hare, Wynn, Newell & Newton, L.L.P. (Hare Wynn) attorney Clark Mason of Little Rock said. "Thankfully, we can continue to move forward and the farmers will have the fair trial they deserve."

The Court's ruling comes a year and a half after the August 18, 2002 telephone calls that Tyson Foods Inc. made to the hog farmers, informing them of Tyson's intention to terminate their working relationship. Hare Wynn filed a lawsuit on behalf of more than 80 farmers in the Pope County Circuit Court on September 12, 2002, citing Tyson's disregard for their corporate responsibility in the abandonment of its farmers, and the financial devastation the profit- driven decision has and will cause. Since that time, the number of farmers represented by Hare Wynn has grown to more than 100, as additional farmers have joined the suit.

"This case has certainly illustrated how long and tedious the legal process can be," Mason said. "A lot of patience has been required on the part of these tireless farmers, but the waiting is well worth it now that justice has been served and Tyson has been unsuccessful in their attempt to avoid facing a jury."

The Arkansas Supreme Court upheld the lower court ruling that the arbitration clause within the Tyson hog contracts was unenforceable because it fails to meet the contract standards established by Arkansas courts. Specifically, it fails to meet the test of "mutual obligation." In one section of the Tyson hog contract it requires any dispute which arises between the parties to be submitted to arbitration. In another section it states that if Tyson decides the producer has failed to honor the producer obligations, Tyson has the right to take over the producer's swine facilities and "may also pursue any other remedies at law or equity."

In delivering the Opinion, Arkansas Supreme Court Associate Justice Donald L. Corbin said: "This court has recognized that mutuality of contract means that an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; thus, neither party is bound unless both are bound. ... t is clear from our cases discussing mutuality that one party cannot limit another party to the exclusive remedy of arbitration, while retaining the ability to pursue other judicial remedies for themselves. We have repeatedly stated that there is no mutuality where one party uses an arbitration agreement to shield itself from litigation, while at the same time reserving its own ability to pursue relief through the court system."


While the Arkansas Supreme Court upheld the growers' right to a fair trial, it referenced established Arkansas contract construction standards that included mutual obligation.

Not every state has the same standards. A number of courts have found that this lack of mutuality is not enough to make an arbitration clause unenforceable. In states such as Oklahoma and Alabama, contract farmers could be forced to waive their judicial rights while the company retains full access to our American judicial system.

Congress has recognized the potential for mandatory, pre-dispute arbitration clauses to be abused by the more powerful party in a contract with regard to other sectors of our economy. In 2002, legislation was enacted with broad bipartisan support that prohibits the use of pre-dispute, mandatory arbitration clauses in contracts between car dealers and car manufacturers and distributors. Likewise, the US Senate passed a similar amendment to the Senate Farm Bill that concerned livestock and poultry contracts. (The amendment was dropped in conference.)

In 2003, Senators Grassley (R- IA) and Feingold (D- WI) introduced the Fair Contracts for Growers Act of 2003 (S. 91), which would simply give farmers a choice of venues to resolve disputes associated with livestock and poultry contracts.

This legislation would not prohibit arbitration. Instead, it would ensure that the decision to arbitrate is truly voluntary and that the rights and remedies provided for by our judicial system are not waived under coercion. As with the car dealer arbitration provision enacted in 2002, the bill would require both parties to agree voluntarily to arbitration after a dispute arises. The bill has been referred to the Senate Judiciary Committee.

If the Fair Contracts for Growers Act had been enacted, these Arkansas hog farmers, who lost almost everything when their contracts were abruptly ended, would not have had to invest the time, money and resources of the last year and a half just to win the right have their complaint heard.
 

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