LOS ANGELES, CA -- (Marketwire) -- 07/01/09 -- Overhill Farms, Inc. (NYSE Amex: OFI) today announced that it has filed a lawsuit against Nativo Lopez and six other leaders of an unlawful campaign aimed at coercing the company to violate federal law by rehiring former employees who have no legal right to work in the United States.

The complaint includes charges of extortion, defamation and intentional interference with the company's relationships with its customers, its employees, and the union which represents the majority of those employees.

The lawsuit, filed in Orange County Superior Court, seeks damages, penalties and an injunction barring the defendants and others acting on their behalf from making untrue statements about the company, interfering with its business or engaging in other unfair business practices.

The complaint says the defendants have been making "maliciously false and recklessly misleading and inflammatory statements" about the company to the news media, the public and customers and employees of Overhill Farms.

As part of their campaign to coerce the company to rehire the illegal employees, the defendants have repeatedly made statements and distributed literature claiming that Overhill Farms is a racist company. This ignores the fact that while a majority of the dismissed employees were Hispanic and women, so were their replacements.

The defendants have also made defamatory allegations of discriminatory firings by the company, intentional violations of its union contract, unfair labor practices, and violations of state and federal employment laws, all of which are false.

The activities that triggered the lawsuit arose following the May 31, 2009, dismissal by the Company of 260 employees who were found to be working without valid social security numbers and who had furnished false information to the company.

The company dismissed the employees after being alerted by the Internal Revenue Service of the invalid social security numbers following a routine payroll tax audit. The affected employees were given more than seven weeks to show that their social security numbers were valid, but none did so.

If the company had continued to use the numbers, knowing they were invalid, it would have been subject to criminal and civil penalties including fines of up to $2.6 million and imprisonment for its executives for up to five years. Under federal law, the illegal employees themselves may also be subject to fines and imprisonment.

Following the dismissal of the employees, Lopez and the other defendants "organized a campaign intended to force Overhill Farms to rehire" the illegal employees, even though Lopez was aware that they had furnished false social security numbers and/or identities to the company.

According to the complaint, Lopez met with the company and urged it to overlook the former employees' conduct even if their conduct was criminal and despite the fact that doing so would expose the company and employees to civil and/or criminal liability.

The defendants knew that it would be illegal for Overhill Farms to knowingly rehire or continue to employ anyone who was working illegally in the United States, but according to the complaint, the defendants engaged in a campaign of extortion, making maliciously false statements, including charges of racism, aimed at coercing the company to violate applicable laws.

Mr. Lopez has announced that he intends to file a class action lawsuit against the company on behalf of the illegal employees, alleging unspecified labor law violations and discrimination. He has also called for a boycott of Overhill Farms and the products of its customers.

The company said the threatened lawsuit and boycott were simply further attempts to coerce the company to employ illegal workers, and will not succeed.

Mr. Lopez, AKA Larry Lopez, is a resident of Orange County and is, according to the complaint, "a self-styled community organizer with a checkered past." In 2001 he headed a nonprofit organization, Hermandad Mexicana Nacional Legal Center, which was indicted by a federal grand jury on six counts of defrauding the government. The Orange County Register reported that federal officials alleged Mr. Lopez wrongly diverted money meant for immigrant education, and the organization had to repay $600,000 in federal grants. According to public records, Mr. Lopez has been a defendant in 11 civil suits. He also was the object of a successful 2003 recall vote that removed him from the Santa Ana Unified School District board. In March of 2009 he filed for personal bankruptcy, listing himself as unemployed and receiving unemployment benefits. On June 25, 2009, he was charged by the State of California with four felony counts related to voter fraud, including perjury.

The complaint notes that Mr. Lopez has claimed that Overhill Farms somehow orchestrated the voter fraud charges and arrest, an allegation the company called patently absurd.

James Rudis, Chairman and CEO of Overhill Farms, said, "We feel compassion for our former employees. For more than 40 years our company has provided a positive, non-discriminatory working environment. In this situation, the company took the only action that was legally open to us. We believe Mr. Lopez, whose record speaks for itself, is taking gross advantage of the misfortune of our former employees to promote his own agenda."

Overhill Farms, based in Vernon, California, supplies high quality custom prepared frozen foods for branded retail, private label, foodservice and airline customers.

This news release contains disclosures that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs. For this purpose, statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "goal," "target," "prospects," "optimistic," "confident" or similar expressions. In addition, any statements concerning possible future actions of and impacts on the company, the defendants and third parties of the matters and the planned or threatened actions described in this release are also forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results and events may differ materially depending on a variety of important factors, including future actions of the company, the defendants, the court, governmental authorities and third parties, and those factors as may be discussed in the company's Annual Report on Form 10-K for the year ended September 28, 2008, Quarterly Report on Form 10-Q for the quarter ended March 29, 2009 and other reports filed with the Securities and Exchange Commission.