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Yucaipa Sued for Back Pay by AFA Foods Meat-Plant Workers

Yucaipa Cos.’ AFA Foods, the ground-beef processor, was sued for back wages by workers who lost their jobs when the company sought bankruptcy protection after publicity about “pink slime” meat filler.

About 200 meat-plant workers were fired without being given the 60 days’ notice required under the federal Worker Adjustment and Retraining Notification Act, according to a complaint filed today against Yucaipa and AFA in U.S. Bankruptcy Court in Wilmington, Delaware.

AFA filed for bankruptcy April 2 after reports of so-called pink slime curbed demand for its products. The company said it was forced into Chapter 11 in part because of reduced sales and increased costs spurred by media coverage of the substance, which ground-beef processors sometimes add to their product. Celebrity chef Jamie Oliver is among food activists who dubbed it “pink slime.”

The company, based in King of Prussia, Pennsylvania, listed assets of $219 million and debt of $197 million in Chapter 11 papers. It told the judge overseeing the bankruptcy that it would try to sell assets as quickly as possible to preserve jobs and raise money to pay creditors, who probably won’t recover all they are owed.

Boneless Trimmings

The beef industry calls the meat filler boneless, lean-beef trimmings. It’s produced by treating finely ground beef scraps with ammonia hydroxide to kill pathogens. U.S. Agriculture Secretary Tom Vilsack said March 28 that it’s safe to eat.

AFA used the product only when requested by its customers, which include restaurants and large grocery stores, the company said in court last month. AFA also said increased competition cost it business from some key food-service customers.

Frank Quintero, a spokesman for Los Angeles-based Yucaipa, didn’t immediately return an e-mail sent before business hours seeking comment on the workers’ lawsuit. An AFA bankruptcy attorney, Tobias S. Keller, didn’t immediately return a phone call to his San Francisco office before business hours.

The case is In re AFA Investment Inc., 12-11127, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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