After months managing the public relations nightmare following the E. coli outbreak, Dole Food Co. has another battle shaping up in its back yard.
Nicaraguan field workers, who have filed 570 lawsuits against Dole and other companies, claim the Westlake Village produce supplier exposed them to a toxic pesticide called DBCP that causes sterility and other health problems.
They've won $1 billion in judgments against Dole and other defendants. But that was in Nicaragua, and the companies have appealed and refused to pay, citing a lack of due process in the Central American country.
Some field workers have escalated the fight by taking their case to the United States. Dole is scheduled to go to trial in February in Los Angeles Superior Court.
"This is going to be the first case to go to trial in California involving issues of the impacts of DBCP on the sterility of banana plantation workers," said Mike Axline, an attorney with Miller Axline & Sawyer PC, who is representing 13 plaintiffs seeking unspecified damages. "We're looking forward to providing our clients with their day in court."
A spokesman for Dole said the company planned to defend itself vigorously and denied any wrongdoing.
"This is a pesticide that was used by many companies over 25 years ago and as soon as it was banned, we stopped using it," said Marty Ordman, Dole's vice president of marketing and communications. "We feel the pending lawsuits against us are blatantly fraudulent in their basis and the company is defending itself against these claims."
Dole is owned by Los Angeles billionaire David Murdock, who took the company private in 2004 and now controls it through his MDFC Holding Co., which also contains his vast real estate portfolio.
With nearly $6 billion in annual revenues, Dole is one of the world's largest suppliers of fresh produce. And while analysts believe the litigation does not pose a catastrophic financial risk to the company even though worldwide DBCP litigation seeks some $37.5 billion in damages from various defendants it comes at a time when Dole has a number of problems on several fronts.
Aside from the E. coli lawsuits, Dole has been sued for its alleged failure to secure shipping containers in New Orleans before Hurricane Katrina hit. And the company also has been restructuring its flower business, involving cutbacks in several South American countries (though the business has never amounted to more than 2 percent of total revenues since its inception in the late 1990s.)
Moreover, the company's net income reported in a Securities and Exchange Commission filing because of Dole's public debt plummeted more than 40 percent to $18.5 million in the quarter ended June 17.
"I would say at this point the litigation for Dole is one of the (financial) elements we're looking at, but I wouldn't say it's the overriding factor here," said Peter Abdill, a debt analyst for Moody's Corp. "Operating performance, challenges in their banana business in Europe, ability to adapt and pass along higher fruit costs a number of things are teaming up at once."
DBCP (also known as 1,2 Dibromo-3-Chloropropane) was used in the United States until 1977 as a soil fumigant, when the EPA suspended its use except in Hawaii where Dole owns an island and grows pineapples. However, in 1985 all domestic use was prohibited, because of infertility, pulmonary, gastrointestinal and other health problems.
All told, Dole has been hit with 17 judgments involving hundreds of plantation workers in Nicaragua since 2002, including a $46.4 million judgment last year. There also are 32 active cases in the Central American country, where Dole still grows a portion of its banana crop.
Nicaragua has been a hotbed of litigation since the country passed a law that made it easier for plaintiffs to sue Dole and the other companies.
"The Nicaraguan environment is unique," Ordman said of the legislation. "It allowed people to file claims without due process for us to address it. We expect to continue to show that any judgment based on those laws is unconstitutional. There was no potential for due process and we can't defend ourselves effectively."
However, the field workers have taken their fight to the United States, and any judgment from a U.S. court would be harder to avoid.
Dole and other companies are facing 25 lawsuits in California and Texas. The Los Angeles case is the furthest along, except for one in Houston, and names as defendants Dole and three associated companies, as well as Dow Chemical Co. and Amvac Chemical Corp.
In the Los Angeles lawsuit, 13 plaintiffs accuse the company of using the chemical years after it was banned in the United States and even longer after the company learned that the chemical caused infertility.
The lawsuit states the chemical was commonly applied by mixing it with sprinkler irrigation water or by directly injecting it into the ground, exposing workers through inhalation, skin contact and by the drinking of contaminated groundwater at nearby housing on the plantations.
"As a result, plaintiffs ingested and bathed in DBCP contaminated water and were habitually exposed to DBCP vapors," the lawsuit states.
The suit states that the litigation comes years after the alleged exposure because the workers did not know that they were sterile and that the chemical could be a cause of the problem.
Tom Clarke, a partner at Ropers Majeski Kohn Bentley LLP and an expert in pesticides and toxic tort litigation, said he doubts bringing the cases to the United States will be successful, given the difficulties in pursuing such cases in U.S. courts.
"With all of these kinds of toxic tort cases, one of the problems any plaintiff has is what's called causation, proving the substance at issue caused the damage that's alleged," said Clarke, who believes that Dole may continue to a hard line against settling the cases.
However, Dole recently set up a program in Honduras to handle worker claims, even as it denied there was any scientific basis to conclude agricultural applications of the chemical could cause human health problems.
"Dole has consistently demonstrated its willingness to compensate those workers who meet minimum criteria, consistent with reliable science, in an effort to resolve disputed claims," said Michael Carter, Dole's executive vice president, general counsel and corporate secretary, in a statement made while announcing the program.
He added Dole is "committed in finding a prompt resolution to the DBCP claims in Nicaragua, and is prepared to pursue a structured worker program with science-based criteria."
Cesare Romano, an international law professor at Loyola Law School, said she believes Dole will likely seek to settle all the judgments against it, despite its position that the Nicaraguan litigation is the result of a lack of due process.
"I'm sure Dole will try to settle these claims outside the courts before they get dangerous," Romano said. "If you get 570 claims and each gets $10 million, you're much better reaching a lump sum settlement with the claimants and end it there."
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