(UPDATED COVERAGE, Oct. 8) Produce suppliers have filed lawsuits that could total as much as $12 million in Federal District Court in Fresno, Calif. against Fresno-based Z&S Fresh Inc., related companies and principals for violations of the Perishable Agricultural Commodities Act.

Z&S Fresh abruptly closed its doors June 8. A few days earlier, a related packinghouse, ZM Fresh Inc., Reedley, Calif., shut its doors.

At the time of the Z&S Fresh closing, a statement released by the company said it was “seeking to protect the interests of its growers and creditors through an orderly cessation of business activities.”

The first suit filed May 22 by Onions Etc. Inc., Stockton, Calif., seeks payment of $258,000, according to court documents.

“Since then, many more suppliers have joined the case,” said attorney Katy Esquivel of Meuers Law Firm PL, Naples, Fla., which is representing several of the plaintiffs. “The claims are potentially in the $8-million to $12-million range.”

In 2006, Z&S Fresh entered into a licensing agreement with General Mills Inc., Minneapolis, to sell a variety of packaged Mexican foods under the Minnesota company’s Old El Paso label. The inventory of Old El Paso products marketed by Z&S Fresh expanded to include salsa kits, prepared salsas, peppers, bell peppers, onions, avocados and citrus.

Claims against Z&S Fresh totaled 73, according to court documents Oct. 7. Once the initial suit was filed, other suppliers were forced to take similar action, said Timothy Jones, an attorney with Fresno-based Sagaser, Jones and Helsley, who is representing Crown Jewels Marketing & Distribution LLC, Fresno.

The court has approved interim distributions to a number of the claimants, including Crown Jewels, Jones said.
“I don’t think they have the assets to pay in full based on what’s been provided to the court,” Jones said. “There’s a pool of money, but the number of claims has increased and the claims are higher than the money available.”

Court-approved claims may receive less than 50% of the amount sought, he said.

Several major grower-shippers are among the plaintiffs in the suit.  Among them:

  • Booth Ranches LLC, Orange Cove, Calif.;
  • Calavo Growers Inc., Santa Paula, Calif.;
  • C.H. Robinson Worldwide Inc., Eden Prairie, Minn.;
  • Del Monte Fresh Produce NA Inc., Miami;
  • Duda Farm Fresh Foods Inc., Salinas, Calif.;
  • Giumarra Farms Inc., a division of Giumarra Bros. Fruit Co. Inc., Los Angeles;
  •  Pandol Bros. Inc., Delano, Calif.; and
  • Seald Sweet International, Vero Beach, Fla.

A hearing on all of the motions filed in the case is scheduled for Oct. 30, according to court documents.

Some of those motions will be objections by some creditors to the claims of other creditors, Jones said.

“Once the rejections are resolved, the money can be divvied up,” he said. 
 
(Note on correction: The dollar amount of claims against Z&S Fresh was incorrect in the original version of this story.)