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Chung v. Tyson Foods, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

January 25, 2017

JONAH CHUNG, individually and on behalf of all others similarly situated PLAINTIFF
v.
TYSON FOODS, INC.; DONNIE SMITH; and DENNIS LEATHERBY DEFENDANTS WILLIAM HUSER, individually and on behalf of all others similarly situated PLAINTIFF
v.
TYSON FOODS, INC.; DONNIE SMITH; and DENNIS LEATHERBY DEFENDANTS PATRICIA LALONDE, individually and on behalf of all others similarly situated PLAINTIFF
v.
TYSON FOODS, INC.; DONNIE SMITH; and DENNIS LEATHERBY DEFENDANTS HAROLD VOELLINGER, individually and on behalf of all others similarly situated PLAINTIFF
v.
TYSON FOODS, INC.; DONNIE SMITH; and DENNIS LEATHERBY DEFENDANTS

          OPINION & ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Currently before the Court are motions to consolidate, appoint lead plaintiffs, and approve lead counsel filed in the four cases captioned above. For the reasons stated herein, the Court CONSOLIDATES cases 16-cv-5354, 16-cv-5371, 16-cv-5362, and 16-cv-5340; APPOINTS as lead plaintiffs Employees' Retirement System of the State of Hawaii ("Hawaii ERS") and Blue Sky[1]; and APPROVES as lead counsel Hawaii ERS's and Blue Sky's choice of Bernstein Litowitz Berger & Grossmann LLP ("Bernstein Litowitz").

         I. BACKGROUND

         Plaintiffs in these cases were all shareholders of Tyson Foods, Inc. ("Tyson") during the time period from November 23, 2015 to November 18, 2016 (the "class period").[2] Tyson is a publicly traded corporation headquartered in Springdale, Arkansas that specializes in producing chicken, beef, and pork products. Donnie Smith served as the Chief Executive Officer of Tyson from November of 2009 through June 13, 2016. Dennis Leatherby has been the Chief Financial Officer of Tyson since June of 2008. The allegations made by Plaintiffs in each suit are materially identical for purposes of resolving the pending motions, and require only a broad overview.

         Plaintiffs allege that Defendants violated the Securities Exchange Act of 1934 by making certain misleading representations, statements, and material omissions in Tyson's Securities Exchange Commission ("SEC") filings, and elsewhere. These alleged misrepresentations, in turn, supposedly caused investors to incur substantial losses after the price of Tyson's stock fell significantly. More specifically, beginning with Tyson's November 23, 2015 SEC annual report, and continuing with its quarterly reports through August 8, 2016, Defendants made certain representations about Tyson's financial condition, competition, and operations. Defendants also made alleged misrepresentations on conference calls with investors during this same time. Those statements, according to plaintiffs, characterized the food industry as being intensely competitive. They also attributed increased margins in Tyson's chicken segment to certain operational changes made by the company.

         On September 2, 2016, a company named Maplevale Farms, Inc. filed a class action complaint against Tyson and several other chicken producers in the Northern District of Illinois. See Maplevale Farms, Inc. v. Koch Foods, Inc., et al., No. 16-cv-08637 (N.D. III.) (Dkt. No. 1). The complaint details a price-fixing conspiracy in the broiler chicken[3] industry, whereby the industry coordinated to decrease production and correspondingly increase margins. Following the Maplevale suit, eight other class action complaints were filed against Tyson and other poultry companies.

         On October 7, 2016, an analyst named Pivotal Research downgraded Tyson's stock from "Hold" to "Sell, " based on the allegations of price manipulation contained in the Maplevale litigation. In response, shares of Tyson fell $6.63, or 8.91%, to close at $67.75 on October 7. As of that day, shares of Tyson had decreased by $8.69, or 11.37%, since Maplevale filed its class action complaint.

         Two of the cases currently before the Court, Huser, 16-cv-5371, and Chung, 16-cv-5354, were filed on October 17, 2016, in the Central District of California and the Southern District of New York, respectively. Plaintiffs counsel in both cases published notice of the action, as required by the Private Securities Litigation Reform Act ("PSLRA"), 15 U.S.C. § 78u-4(a)(3)(A), on that same date. On November 28, 2016, Voellinger, 16-cv-5340, was filed in this Court, and four days later, on December 2, 2016, Lalonde, 16-cv-5362, was filed in the Southern District of Ohio. Huser, Chung, and Lalonde have all since been transferred to this Court.

         On December 16, 2016, the following parties filed motions for appointment as lead plaintiff, approval of lead counsel, and consolidation of the cases:[4]

• Hawaii ERS and Blue Sky;[5]
• John Schodowski and Lewis Miller;[6] and
• Patricia Lalonde.[7]

         As the deadline for moving to be appointed as lead plaintiff has now passed, see 15 U.S.C. § 78u-4(a)(3)(A)(i), these motions are ripe for decision. After setting forth the legal principles relevant to these motions, the Court will first determine whether to consolidate the actions, and then will turn to the appointment of lead plaintiffs and counsel.

         II. ...


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