All disputes can get heated, but this one started out pretty hot. Underwood Ranches, growers of chiles used in Huy Fong Foods’ incredibly popular Sriracha sauce recently won $23.3 million in a breach of contract suit. According to news sources, the family-owned Underwood farm was once the exclusive supplier of the chile peppers at the core of Huy Fong’s rooster-labeled sauces.
The trial, which began in early June, came to a close last week when a civil jury determined that Irwindale-based Huy Fong breached its contract with the chile grower and committed fraud by intentionally misrepresenting and concealing information.
“It certainly isn’t our nature to give up. We felt we had been wronged, so we were hoping we could right that through the court,” said Underwood, who manages the Camarillo farm. “When the verdict came down, there was a lot of celebrating. We celebrated at lunch. We celebrated at dinner. And then we celebrated the next day.”
Underwood said it was an emotional moment because the dissolution of the relationship with Huy Fong had hit the grower’s finances hard.
Historically, Huy Fong would prepay Underwood Ranches for the estimated costs associated with growing and harvesting the chiles. The agreement was “partly oral, partly written and partly established by the parties’ practice,” court records show.
By January 2017, the relationship had soured to the point that the parties stopped working together.
Huy Fong’s legal team plans to fight the decision.
“Obviously, we disagree with the verdict. We’re going to challenge it post-trial in motions and then ultimately on appeal,” Martin said. “As far as the financial impact of the verdict on the client, the company is going to continue to conduct business as usual.”
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