March 29, 2024
Business

Allen’s Blueberry Freezer to pay $1M to growers to settle suit

Allen’s Blueberry Freezer of Ellsworth has agreed to pay $1 million to Maine growers of wild blueberries as a settlement in a class-action lawsuit that caused financial uncertainty in the industry last winter.

If the Superior Court judge who has presided over the civil case for more than four years approves the deal, the settlement would bring to a close the turmoil in an industry that until last year operated on handshakes.

“It’s good to bring this to a conclusion because it’s been a long time since we actually won the case,” William Robitzek, the Lewiston attorney who represents the growers, said Thursday. “Once we get approval and the appeals get dismissed, we will be able to finally make distributions [to the growers].”

Allen’s and three other blueberry processors had been charged with fixing prices paid to growers for four years in the 1990s.

The smallest of the four, Merrill’s Blueberry Farms of Ellsworth, settled with the growers for $85,000 last October, days before the case went to a jury trial in Knox County Superior Court.

Two other processors, Cherryfield Foods Inc. of Cherryfield and Jasper Wyman & Son of Milbridge, were found guilty of price-fixing alongside Allen’s last November.

Cherryfield Foods and Wyman’s reached post-verdict settlements through a mediator in February. Those were approved by Justice Joseph Jabar in late June. Rather than coughing up their shares of a $56 million judgment, Cherryfield Foods agreed to pay growers $2.5 million and Wyman’s agreed to pay them $1.5 million.

Allen’s had been the lone holdout all along, challenging even the settlements reached by Cherryfield Foods and Wyman’s.

The terms of the Allen’s settlement involve an up-front payment of $500,000 and payments amounting to $500,000 more over three years.

Allen’s attorneys, Jeffrey Thaler and Robert Keach, could not be reached for comment Thursday afternoon.

In the last set of settlement discussions with the four original plaintiffs, the $1 million figure was raised but rejected. Allen’s had wanted to spread out payments of $200,000 over five years. Wary of possible bankruptcy that Allen’s had repeatedly threatened since the jury verdict, the growers wanted all the money up front.

As recently as July 1, Allen’s filed with the Maine Supreme Court in Portland an appeal of the judge’s approval of the $4 million settlement that Maine’s estimated 500 growers will share.

Allen’s was preparing to argue against both the approved settlement and the original guilty verdict. A hearing date had not yet been set. Now, once a formal dismissal of the case arrives at the court, the case will be dismissed.

Both the Cherryfield Foods and Wyman’s settlements involve considerations beyond money – and those terms the attorneys for Allen’s found objectionable.

They believed that the price guarantees all but set up a new marketplace that would challenge smaller processors to match prices paid for product just to stay competitive.

Cherryfield Foods’ agreement guarantees a minimum price of 34 cents per pound for the growers for the next four years. The company and its growers would be able to negotiate premiums for volume and quality on top of the guaranteed minimum.

Wyman’s new pricing method under its settlement involves “price sharing,” or guaranteeing that growers will receive 35 percent of the final price that Wyman’s receives for its berries.

The new structures for pricing were intended to change the way processors buy from growers. The civil jury had found that Cherryfield Foods, Wyman’s and Allen’s had underpaid growers during the 1996-1999 seasons after colluding on prices.

After negotiating through the summer, Allen’s and the growers reached their agreement.

“Ultimately this is the best option to move the business forward,” Robitzek said.

The $1 million is the amount that a state-appointed negotiator had floated as a fair settlement figure for Allen’s back in February. The company scoffed at the suggestion, then countered through the spring with offers of $400,000 and then $500,000.

Once the sides determined that $1 million would be the working figure, Allen’s agreed to make payments over three years, rather than the five years the company had been pressing for.

Next come more courtroom formalities. The parties will present the settlement agreement to the judge for his preliminary approval. All class members will be notified of the terms. Then a final hearing will be held to affirm the results.


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