The J.R. Simplot agribusiness company is seeking a preliminary injunction against a potential food supply disruption stemming from a dispute with business partner Frank Tiegs.
Simplot and Tiegs are engaged in a legal battle over the control of two jointly owned food processing companies: Gem State Processing of Heyburn, Idaho, and Pasco Processing of Pasco, Wash.
Ownership of the National Frozen Food Co. of Seattle, a subsidiary of Pasco Processing, is also at stake in the litigation.
Tiegs, a large-scale Washington farmer and business owner, filed a lawsuit claiming that Simplot effectively forfeited ownership of Pasco Processing due to a deadlock over whether to infuse the company with a $6 million capital contribution.
Simplot has filed a counterclaim alleging that Tiegs has grossly mismanaged Pasco Processing and Gem State Processing to his own financial benefit by forcing them to buy excessive amounts of poor-quality crops from his farming affiliates.
Although Tiegs’ takeover of Pasco Processing is invalid, he has nonetheless claimed to lenders and employees to have sole ownership of the company, according to Simplot.
These claims have been used to “intimidate critical witnesses” employed by the National Frozen Food Co. while Tiegs has threatened to “cut off Simplot’s supply of critical products” with little time to find alternative sources, the company argues.
Simplot has asked U.S. District Judge Rosanna Malouf Peterson for a preliminary injunction prohibiting Tiegs from taking any action based on his claim of full ownership of Pasco Processing.
Pasco Processing supplies roughly 42 percent of Simplot’s “vegetable and specialty inventory,” which equates to about $54 million in sales for the company, said Michael Johnston, vice president of manufacturing and supply chain at Simplot, in a court filing.
Since the conflict erupted, the facility is has provided “dismal service levels” and may soon stop supplying Simplot altogether, he said.
“If Tiegs were to act upon his threat to cease production for Simplot, it would quite literally put Simplot out of the vegetable and specialty businesses, result in multi-million-dollar losses, and have a devastating effect on Simplot’s customer relationships because of failure to meet contractual obligations,” Johnston said.
Joe VanLeuven, an attorney representing Tiegs, said that Pasco Processing does not plan to cut off food supplies to Simplot.
The processing facility’s operator — Washington Potato Co., which is owned by Tiegs — has agreed to continue supplying Simplot through the end of its fiscal year in early September and is willing to negotiate a new supply agreement beyond that date, VanLeuven said.
“It’s very frustrating to read this in a motion when the reality is so different,” he said.
Before the ownership dispute, Simplot bought products from Pasco Processing but did not operate the facility, VanLeuven said. “Whether we’re the sole owner or not, doesn’t mean they’re not a customer.”
There’s also no evidence of intimidation of witnesses employed by the National Frozen Food Co., he said.
An attorney for National Frozen Food Co. was simply notified that Simplot no longer had an ownership interest in Pasco Processing and that it’s inappropriate for NFF employees to insert themselves into the dispute, other than to provide evidence in an impartial manner, VanLeuven said.