Verdict favors blueberry growers Jury awards $56 million in price-fixing lawsuit

loading...

ROCKLAND – A jury awarded Maine’s 500 wild blueberry growers more than $56 million Tuesday after concluding that three Down East processors conspired to fix prices in the late 1990s.

The verdict, certain to be appealed, shook processors and growers alike in a state that produces 25 percent of all blueberries, wild and cultivated, in North America.

After a two-week trial, a Knox County Superior Court jury decided in favor of the growers, one of whom had initiated the lawsuit three years ago.

It became a class-action lawsuit as well as an antitrust case, so the $18.68 million in damages awarded by the jury is automatically tripled – to $56.04 million.

In the lawsuit, Nathan Pease Jr. of Union, Alan S. Johnson of Rockport, Carl Cunningham of Waldoboro and Thomas Worcester of Columbia Falls – all blueberry growers – claimed that, from 1996 to 1999, Jasper Wyman & Son of Milbridge, Cherryfield Foods Inc. of Cherryfield, and Allen’s Blueberry Freezer Inc. of Ellsworth agreed to set artificially low field prices for the state’s wild blueberry crop.

The field price is the total amount paid to growers per pound for a particular year’s crop. Maine produces 60 million to 110 million pounds of wild blueberries a year.

Historically, growers earn an initial payment of 25 cents a pound when the fruit is delivered to the processor. The “field price” is set after the harvest has been completed and the fruit begins to sell. Then growers receive a supplemental payment in the fall or winter.

The supplemental amount was the focus of the trial.

“Justice has been served,” grower Cunningham said after the jury’s decision Tuesday.

“I think that it’s shocking,” said Melissa Hewey, the Portland attorney who represents Cherryfield Foods.

“Clearly, there was no evidence of conspiracy,” Hewey said. The verdict has “completely destroyed an industry,” she said, because the damages cannot be paid by the processors without putting them out of business in Maine.

Asked whether the jury’s decision would be appealed, Hewey said, “Absolutely – no question about it.”

Sid Reynolds of Cherryfield Foods, one of the defendants, said Tuesday afternoon that he was preparing to shut down operations in the wake of the verdict.

“It’s such a far-fetched decision,” he said.

“The blueberry industry is not a big industry,” Reynolds said. “Everyone thinks the pockets are deep.”

Not all growers lauded the verdict.

Vernon Hunter, 72, of Rockport has been in the blueberry cultivation business since 1940. He was also a professional educator and guidance counselor in public schools for 35 years.

Hunter, who said he cultivates 22 acres, had declined to join the plaintiffs in the suit.

“In my opinion, it didn’t make any sense,” he said Tuesday.

The prices being paid to growers in the years covered in the lawsuit “were higher than at any other time in years,” Hunter said.

The verdict “could very well put the processors out of business and leave the growers without a market,” he said.

The industry seemed to peak in the early 1990s, Hunter said. Since then, production has increased faster than the market demand, he said. “It’s grown and it’s faded,” he said of the industry. Last year was one of the worst Hunter has seen.

“I lost money last year,” he said.

Allen’s attorneys, Michael McAleer and Philip Buckley, and Wyman attorney James Kilbreth could not be reached later Tuesday for comment.

Merrill Blueberry Farms Inc. of Ellsworth, which was originally a defendant, settled out of court before the trial, said growers’ attorney William Robitzek of Lewiston.

“A variety of reasons” were involved in Merrill’s dropping out of the case, Robitzek said, noting that a court order bars him from talking about Merrill’s action.

Pease, 67, initiated the lawsuit in February 2000.

“Praise God. I’m elated to have this go the way it did. I’m happy for all the growers. It’s a historical event,” he said.

In the next breath, however, Pease said growers want to work with processors to restructure the industry in how it operates and determines product prices.

“We just want to get things on an even keel,” he said.

The verdict leaves many questions unanswered.

There is considerable work to be done involving a claims process, Justice Joseph Jabar said, asking the attorneys to set up a conference with him in a few weeks to sort out those issues.

“My suggestion is: Let the dust settle,” Jabar said.

The judge probably will assign a claims administrator, who would gather information from growers on the number of pounds of berries they sold from 1996 to 1999 to determine the amount of payment to each grower. The class-action lawsuit, Robitzek estimated, has 800 members, although state Extension information says the current number of growers is about 500.

Robitzek said he plans today to file a motion for attachment of assets to secure the judgment because the processors have threatened to go out of business and to file bankruptcy, he said.

Another matter for the judge to decide is whether to set aside the jury’s verdict, which Robitzek expects the defense to request.

In the four years from 1996 to 1999, growers were paid a per-pound field price of 55 cents, 43 cents, 45 cents and 50 cents, Robitzek said.

During the trial, the growers’ expert witness, John Solow of the University of Iowa, told jurors that the growers should have been paid an additional 19 cents, 21 cents, 2 cents and 16 cents, respectively, in those years.

The price that processors paid to growers was not a coincidence, Hewey said Monday. The attorney for Cherryfield Foods called the process “matching,” which is a legal way of competing.

At one point during the jury’s five hours of deliberations, the panel asked to be reinstructed on the antitrust burden of proof and on the circumstances that allow legal “matching.”

If the verdict stands, the defendants could attempt to negotiate a reduction in the amount of damages, Robitzek said.

“We would be glad to talk to them [regarding a] resolution that helps the growers,” he said.

“Essentially, [growers] have been shut out of the process,” he said. By restructuring, “everybody wins.”

NEWS writer Tom Groening contributed to this report.

Maine’s blueberries

The plant: Wild blueberries were first harvested commercially in the state in the 1840s. They come from ?low-bush? plants that hug the ground and produce fruit every two years. ?High-bush? blueberry plants are planted in rows, produce annually and are considered ?cultivated.? The state has about 500 growers of wild blueberries.

The industry: Maine is the world?s largest producer of wild blueberries, with a $75 million annual crop. Wild blueberries are grown on 60,000 acres in the state, which produces 25 percent of all blueberries in North America, including wild and cultivated production. Another 25 percent of the crop is produced in Nova Scotia, Quebec, New Brunswick, Prince Edward Island and Newfoundland. The remaining 50 percent of the crop is cultivated blueberries produced primarily in Michigan, New Jersey and British Columbia, Washington, Oregon, Georgia, Arkansas.

The case: Growers brought the civil lawsuit against the processing companies in February 2000. The suit alleged that the processors conspired to suppress competition by fixing the prices of unprocessed wild blueberries. The processors denied the charges. At least 12 attorneys were involved in the case, heard for more than two weeks in Knox County Superior Court in Rockland.

The processors: Seven companies operate processing plants that freeze and can berries. Ninety-nine percent of the crop is frozen, but 5 percent to 10 percent of those berries are canned after the harvest is complete. Less than 1 percent of the wild blueberry crop is sold fresh. The growers? lawsuit contended that four processors ? Jasper Wyman & Son, Allen?s Blueberry Freezer Inc., Cherryfield Foods Inc. and Merrill Blueberry Farms Inc. ? process about 85 percent of all wild blueberries grown in Maine. (Merrill later was dropped from the lawsuit.)

Sources: Court documents, David E. Yarborough, Extension blueberry specialist, University of Maine Cooperative Extension, Maine Wild Blueberry Commission.