Before jury selection even got under way, Jose Adolfo Tellez vs. Dole Food Co. Inc. stood out from the typical contract disputes and tort claims that dominate dockets at the Central Civil West Los Angeles Courthouse.
On one side of the case there were Nicaraguan farm workers bringing claims based on exposure to a pesticide while working on banana plantations three decades ago in their Central American homeland nowhere near Los Angeles, where they filed their case in 2004.
On the other side of the case: one of Southern California’s largest privately held companies, Dole Food, which operated the banana plantations, and Michigan-based Dow Chemical Co., the maker of the pesticide.
Unable to reach a settlement, Dole is now defending itself against the claims of 12 Nicaraguan plantation workers allegedly left sterile by exposure to the pesticide dibromochloropropane, or DBCP, in the late 1970s. As it does, the specter of four more L.A. trials in involving as many as 5,000 other workers with identical claims looms.
Those five cases represent just a fraction of the global claims against Dole. In all, the firm is facing 550 lawsuits related to its use of the pesticide, exposing it to $35.2 billion in possible judgments, by its own estimates.
The mountain of litigation faced in the DBCP cases by Westlake Village-based Dole and other large fruit producers such as Chiquita Brands International Inc. and Fresh Del Monte Produce Inc. hasn’t altered analysts’ views of the publicly traded food companies.
“Unfortunately, this is typical for large agricultural companies,” said Ann Gilpin, a Chicago-based food industry analyst at Morningstar Inc. “It doesn’t move the needle a lot for me.”
Unlike publicly traded Del Monte and Chiquita Brands, Dole is a privately held company, owned by Los Angeles billionaire David Murdock through his MDFC Holding Co. But much like its publicly traded brethren in the produce industry, company attorneys are quite familiar with the inside of a courtroom.
In addition to the DBCP lawsuits, in recent years Dole has faced lawsuits stemming from the e coli outbreak in spinach and for its alleged failure to secure shipping containers before Hurricane Katrina hit.
Dean Haskell, senior vice president of equity research at Morgan Joseph, has a buy rating for Chiquita Brands for reasons that have nothing to do with the lawsuits.
“We try to quantify the impact of a lawsuit as positive or negative, but then move on and look at the fundamentals of the business like supply and demand, pricing, positioning in the marketplace as being premiere factors in rating a company,” Haskell said.
Attorneys for Dow declined to comment on whether, or to what degree, the company would be covered on the claims by insurance. A Dole spokeswoman did not return phone calls and a company attorney declined to comment.
Verdicts, settlements abroad
While some of the cases were filed in U.S. courts, the vast majority were filed in the Central American countries where the plantations were located. Dole has been actively attempting to resolve the disputes in both foreign and American courts, but has so far been unable to reach a settlement with the L.A. cases.
Dole and Dow Chemical are facing $800 million in already rendered judgments in Nicaragua, but the companies refused to pay, challenging the jurisdictional and due process validity of the claims. So the aggrieved workers, with the help of California-based plaintiffs’ attorneys, brought the fight to Dole’s home turf and filed their claims in Los Angeles County Superior Court. While wholly foreign claims of this nature are rare in American courts, a judge is able to hear the case because Dole’s corporate headquarters is in the state.
In October, the company announced an agreement to establish a program to resolve claims stemming from its use of DBCP of banana plantations in Honduras (in addition to Honduras and Guatemala, foreign workers suing Dole also worked at fruit plantations in Costa Rica and Panama).
And two months later, Dole settled 16 U.S.-based lawsuits brought by workers of Central American banana plantations who claimed sterility after being exposed to DBCP, which was used to kill microscopic worms that attacked banana tree roots. In a written statement at the time, Dole challenged the validity of the workers allegations but said the settlement reflected its desire “to seek reasonable resolution of the pending claims.”
The statement also said, “The settlements will not have a material effect on Dole’s financial condition or results of operations.” In 2006, Dole, one of the world’s largest suppliers of fresh produce, generated $6.2 billion dollars in revenue.
Dole and Dow have dug in for the defense in the current case.
“These plaintiffs were not exposed to enough DBCP to have suffered any health effects whatsoever let alone the permanent sterility that they claim,” said Gennaro (Gus) Filice, an attorney representing Dow Chemical in the case. “They didn’t work with DBCP. They didn’t apply DBCP.”
Attorneys representing plaintiffs in the case did not return calls seeking comment. But Thomas Girardi, who is representing plaintiffs in some of the Los Angeles-based DBCP cases waiting in the wings, said, “There is no question that the pesticide is terrible. It was outlawed in the United States a million years ago but I guess it is pretty good for bananas so they continued to use it in Central and South American countries and in Hawaii.”
The pesticide was used in the United States until 1977 as a soil fumigant. At that time, the EPA suspended its use except in Hawaii, where Dole owns an island and grows pineapples. In 1985 all domestic use was prohibited, because of infertility, pulmonary, gastrointestinal and other health problems.
Plaintiffs’ attorneys are expected to take another two weeks to put on their case, and then lawyers for Dole and Dow Chemical will put on a combined defense.
Dow attorney Felice said the pesticide was not used at the plantations pertinent to the case after 1979.
Courtroom drama
The trial has delivered dramatic developments.
One occurred when Paul Sink, former Dole vice president of materials management, was being questioned by plaintiff’s attorney Duane Miller. Sink admitted the company continued to use the pesticide at Nicaraguan banana plantations despite warnings from Dow that it could cause sterility.
Dole’s president, David DeLorenzo, who worked for the company in Nicaragua, also testified that use of the pesticide continued even after alarms were raised about its possible link to sterility.
But a question of whether one of the plaintiffs was actually sterile became the focus of defense attorneys. Marcario Morales Mendoza testified during the trial that he and his wife were unable to have children. That contradicted a 2005 deposition in which he said that his wife gave birth to a son in 1981.
While Mendoza testified at the trial that the child was given to him and his wife by a woman who was single and poor, lawyers for Dole produced a birth certificate showing Mendoza and his wife as parents of the child.
