IV. June-September 1989: My introduction to the Grove Fresh litigation.

This section chronicles key events from June 1989, when Hines first contacted me, through September 1989, when the litigation received an unexpected boost from an FDA agent.  Irked at how the agency had handled the amnesty meetings with Labatt, the agent leaked summaries of those meetings to Mr. Troy.  See §G, below. 

The leaked documents included a record of Everfresh’s admission that it had made and sold adulterated orange juice from at least 1983 through early 1989.  This admission encouraged Mr. Troy—it meant that Grove Fresh’s Lanham Act claim in 89c 1113 had a potential value equal to at least six years of Everfresh’s illegal profits.

A. The disgorgement remedy that was material to my agreeing to represent Grove Fresh for a contingent fee.

The Lanham Act’s disgorgement remedy requires a culpable defendant to pay a plaintiff an amount equal to the illegal profits the defendant realized from sales of misbranded goods.[1]  The simplicity of this remedy was material to my agreeing to represent Grove Fresh for a contingent fee. See Legal Theories §A.

B. July: The disputes over the timing for discovery; the condition imposed by Judge Zagel in granting the defendants’ request for a stay.

Briefing on the motions to dismiss the complaints was completed in May 1989.  While these motions were pending Hines, during the last week of July 1989, served deposition notices and other discovery requests in 89c1113 and 89c1114.  These discovery notices and requests sought information for the years 1985 forward.

The four-year time period for discovery in these notices and requests was inconsistent with the oral concessions Hines allegedly had had made earlier that spring, purporting to limit Grove Fresh’s claims to a mere six months. 

In any event, defendants in both cases applied for stays of discovery pending the disposition of the motions to dismiss the complaints.  Judge Bua and Judge Zagel granted the stays. 

Judge Zagel granted the motion, but with the “understanding that the remainder of discovery, if the motion to dismiss was lost, would be conducted at the convenience of the plaintiff.”[2]

C. August 3: The grand jury subpoena served on Mr. Troy.

On August 3, 1989, Mr. Troy received a subpoena for all documents “which pertain to chemical and physical analyses of food products produced by and/or represented to be produced by the following companies: Olympic Gold, Inc.; Flavor Fresh, Inc.; Home Juice, Inc.; Ever Fresh, Inc. Very Fine, Inc.”

The subpoena was issued by a federal grand jury sitting in the Northern District of Illinois.  Mr. Troy promptly complied.

D. August 21: The reports by CBS This Morning and the Chicago Sun-Times

On August 21, 1989, Erin Moriarity of CBS This Morning broadcast a two-part report on orange juice adulteration.  The first part of her report concerned the recent indictment of ex-executives at Bodine’s, Inc., a Chicago juice processor.[3] 

The second part of Moriarity’s report concerned the Grove Fresh cases.  Her report triggered a follow-up story by P. J. Bednarski in the next day’s Chicago Sun-Times.  Bednarski connected one of the indicted former executives (Ed Boden, Sr.) to Olympic Gold Juice Co., the corporate defendant in 89c1118. 

E. August 28: Crain’s Chicago Business report on “Everfresh Inc., the U.S.-based fruit beverage subsidiary of Canadian brewer John Labatt Ltd.” 

On August 28, 1989, Crain’s Chicago Business published an article on “[t]wo Canadian juice companies [that] are trying to expand their presence in the United States with the launch of new products by their Chicago-based subsidiaries.”[4]  One of the firms was Everfresh:

Everfresh Inc., the U.S.-based fruit beverage subsidiary of Canadian brewer John Labatt Ltd., which has a stable of regional brands, plans to expand and promote Everfresh as its flagship label.

Labatt entered the juice business in 1983 with the acquisition of a Windsor, Ontario, juice maker.  In 1985, Labatt purchased several juice brands in the Midwest, including Wagner, Rich ‘N Ready and Detroit-based Everfresh, consolidating all of them under the Everfresh operation, now based in Franklin Park.  (emphasis added)

F. September 5: The suggestion of relatedness. 

At a status hearing in late August 1989, Judge Zagel noted that Grove Fresh’s five cases were probably “related” within the meaning of a local rule.  He invited Grove Fresh to file a suggestion of relatedness and to move for a consolidation of all five cases for purposes of pretrial discovery. 

Grove Fresh filed such a motion on September 5, 1989. 

G. Early September: Agent Mundo’s leak of FDA memos recording Everfresh’s admission to at least six years of illegal conduct.

Jim Mundo is an FDA agent.  He led the investigation that resulted in the July 1989 indictment of the ex-Bodine’s executives.[5] 

In September 1989, Mundo hand-delivered to Mr. Troy copies of two memorandums prepared by officials at FDA headquarters in Washington, D.C.  The memorandums summarized the amnesty meetings between the FDA and Labatt and Everfresh, which took place on May 5 and June 21, 1989.[6]  The June 21 memorandum recorded Everfresh’s admission that from about 1983 to early 1989, “the president [of Everfresh] and 3 employees had been systematically adulterating orange juice in this country with pulpwash, sugar, and a mix of chemical substances.”

Mundo first heard about the amnesty meetings in August 1989.  He was frustrated to learn that the meetings had been held without notice to the field agents at the FDA’s district office in Detroit, which had jurisdiction over the Everfresh plant in Warren, Michigan.  According to Mundo, the Detroit field agents knew many of the dirty secrets associated with the Warren plant; in his opinion, their knowledge made them better suited than the bureaucrats in Washington to vet the amnesty request. 

Because of the irregular circumstances in which Mr. Troy received the memorandums, we treated them as confidential.  We did not advertise to McDermott Will & Emery that we knew about the amnesty meetings. We eventually obtained official copies of these memorandums through a Freedom of Information Act request to the FDA.  

H. Labatt’s misstatements to the FDA, which suggested that Holiday Juice had been merged into the Michigan Everfresh Inc. 

[1] 15 U.S.C. §1117(a).

[2] 4/20/90 Tr. of Proceedings, p.7 (emphasis and punctuation added).

[3] From about 1978 to 1989, Bodine’s Inc. was the subject of multiple investigations by the Florida Department of Citrus, the FDA, and, beginning in 1986, a federal grand jury.  In July 1989 that grand jury returned a 19-count indictment charging former Bodine’s executives with using low-cost inferior ingredients in a product falsely labeled as pure unsweetened frozen concentrated orange juice.  Eventually, all three defendants entered guilty pleas.  The indictment of the former Bodine’s officials is discussed in Memorandum No. 3-A, p. 23. 

Moriarity’s report was a follow-up to a story she had done in 1986 on the FDA’s seizure of a large quantity of adulterated orange juice manufactured by Bodine’s.

[4] A copy of this article is attached as Appendix T. A copy has also been posted on the website at Crain's Report on Everfresh as Labatt's US-based fruit beverage subsidiary--August 20 1989.

[5] See Memorandum 3-B, §IX-A.

[6] Copies of these memos are attached to Memorandum No. 3-A as Appendices K and L.

[7] John Labatt Annual Report 1988, p. 20.