Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, October 19, 2016
Food processor Tyson Foods Inc. takes crisis center stage after being accused of rigging poultry prices. Lawsuits filed against Tyson allege the company and other producers engaged in fixing prices for its poultry products, prompting one analyst to issue a report suggesting the issue could become a big problem for Tyson—news that sent the company’s stock price lower. Other reports struck a different tone about the company, and the stock rebounded the next week.
Tyson sent out a statement in which it vowed to defend itself against the allegations, saying: “While we don’t normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court.”
Using the company’s statement, the experts break down its response, how well it communicated its message, and what it should do next?
Davia Temin, president and CEO, Temin and Co.: “Tyson Foods felt it had to respond when an industry analyst advising hedge funds issued a report that sent the company’s share price into a dive. And probably, to its lawyers, it did seem like a spirited and substantive response–but not really. In reality it was a three-sentence statement that said almost nothing.”
“Terse corporate responses to lawsuits have turned into an art form. Less is almost always more. Usually words like ‘frivolous,’ ‘we intend to defend ourselves vigorously’ and ‘without merit’ are invoked. But old hands in this game can learn a lot by what is said and what isn’t. For example, Tyson did not say the lawsuit was without merit…only that it ‘dispute(s) the allegations.’ Without merit means it’s totally untrue. Saying we dispute allegations doesn’t quite mean it that strongly, it’s one step less severe and means we will dispute some of the allegations but possibly not all of them–which could mean there might be some elements that are true. In reality the company made a denial that isn’t completely a denial–which only raises more questions. This breaks crisis rule No. 1.
“Moreover, in repeating the allegation in its denial, it broke crisis rule No. 2: Never repeat the allegation, otherwise, the denial only serves to convince folks the allegation is true. What should Tyson Foods do, then, as the issue is clearly not dying down as quickly as it might like? Ideally, it should come back with an even stronger statement that is a little less expected–one is often far more believable when one’s denial is unique and authentic. Or, its lawyers could craft a persuasive legal response and then quote parts of it in the company’s public response.
“Or, if neither of those two strategies is practicable, Tyson should–like its fellow defendants–hunker down, say nothing further, fight in court or settle and soldier through it. After all, the business is not going away, it has experienced challenges like this before and the public still likes its chicken.”
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