XV. December 13, 1990-April 5, 1991: Chronology of 89c1113 and 89c1114 through the date that McDermott Will & Emery finally produced the Bio Trade Documents.

A. December 13: The Shumate deposition, and the obstruction of discovery regarding the definition of “adulteration” and its cognates.

Mervin Shumate was a former FDA official who set up a consulting firm when the left the agency.  During his time at the FDA, he investigated Everfresh for adding undeclared (but GRAS[1]) preservatives to orange juice.  He recommended criminal prosecution, but the Justice Department declined, on the ground that the crime was economic and did not threaten public health or safety.[2] 

Shortly after the FDA closed Shumate’s criminal investigation, Everfresh began importing and using a preservative that could not be detected by regulators or competitors—Oleum 320/IDEA.

Labatt retained Shumate in the Spring of 1989 for the limited purpose of arranging and attending the amnesty meetings with the FDA.  After those meetings concluded, he ceased his consulting work for Labatt.[3]

Shumate was deposed in Washington, D.C. on December 13, 1990. He was represented at the deposition by a McDermott lawyer.  Prior to Shumate’s deposition McDermott Will & Emery had made an issue over the proper use of the term “adulteration,” asserting in ipse dixit fashion that the term "adulteration” was inapplicable to the facts of the Grove Fresh cases.[4] 

Shumate had 31 years of experience at the FDA, including two years as Director of the Office of Enforcement.[5]  He was knowledgeable about the meaning of the term “adulteration.”  Nevertheless, McDermott, Will & Emery instructed him not to answer at least ten questions concerning the meaning of the term “adulteration.”[6] 

B. December 15: The failure, again, to prepare a Rule 30(b)(6) witness.

On October 2, 1990, Grove Fresh served Everfresh with another deposition notice under Rule 30(b)(6).[7]  Everfresh refused to make the designation required by Rule 30(b)(6).  On November 15, 1990, Grove Fresh presented a motion to compel discovery in accordance with the Rule 30(b)(6) Notice.  Judge Zagel granted this motion on November 15, 1990. 

In response to this court order, Everfresh once again designated Powell as its Rule 30(b)(6) witness.  After learning about this designation, I sent the McDermott lawyers the following cautionary note:[8]

Although you are free to designate whomever you want, in prior sessions of his deposition Mr. Powell demonstrated that he had virtually no knowledge of the subjects listed in the October 1990, 30(b)(6) notice. Therefore, we expect that he will have educated himself beyond what he has known in the past in order to competently answer each of the areas designated in our 30(b)(6) notice and to fulfill Everfresh’s obligation thereunder.

Powell appeared for the deposition on December 15, 1990.  He testified that he had first seen the 30(b)(6) Notice only the day before, December 14th, during a meeting with Weitzman, one of Everfresh's lawyers. Powell testified that, other than attending this meeting, he had done nothing to prepare for the deposition. He had not made any inquiries of any Labatt or Everfresh personnel concerning any of the subjects itemized in the 30 (b) (6) Notice.[9]

He also testified that he had made no inquires to determine what information on these subjects was available to the corporation.[10]

C. August-December: The systematic instructions not to answer deposition questions

Between August and December 1990, Grove Fresh deposed 13 witnesses who were present or former employees or agents of Everfresh. At one point or another, defense counsel instructed 12 of these 13 witnesses not to answer questions on grounds other than privilege. The subjects on which inquiry was blocked included the following:

  • A witness's salary.[11]
  • Everfresh's business practices prior to February 1986, and orange juice formulas in use prior to February 1986.[12]
  • The business operations of Holiday Juice.[13]
  • The identity of the independent auditor of the parent corporations.[14]
  • Whether Holiday Juice ever sold orange juice concentrate at wholesale to anyone other than Marshall.[15]
  • Questions which used the term “adulterate.”[16]
  • In the case of a witness who consented to testify under Rule 30(b)(6) but who lacked personal knowledge of the subjects listed in the Rule 30(b)(6) notice, that witness's understanding of his obligations to make inquiries about the listed subjects.[17] 

The defense also invoked the attorney-client privilege as the basis for instructing witnesses not to answer questions.  Two of the witnesses who were given such instructions were hourly-wage employees who belong to a union and are obviously outside the control group.[18]  Other questions related to foundational facts not subject to the privilege:

  • Whether a witness's fees were being paid by Everfresh.[19]
  • The identity of the witness's attorney.[20]
  • The subject matter of an alleged attorney-client relationship.[21]
  • Whether a purported client paid fees to an attorney for alleged legal advice.[22]

D. October-January: The defendants’ acknowledgement that the sources for the 90c50009 complaint came from the public domain. 

In the fall of 1990 Michigan Everfresh Inc., Home Juice and Henry Lang moved to dismiss the 90c5009 complaint on the ground that it was nothing more than an amendment to the February 1989 complaints “disguised by a different caption and docket number,” and that “[t]he new complaint entirely subsumes the original complaints ..."[23]  They argued that Grove Fresh did not meet the standards for amending the February 1989 complaints because the only new allegations in the 90c5009 complaint came from information that was publicly available to Grove Fresh as of February 1989, and that too much time had lapsed to permit Grove Fresh to use this public information in the August 1990 90c5009 complaint.

Home Juice and Lang made the following statements about the public sources for the 90c5009 complaint:

[M]uch of the information that is contained in the "new" complaint was drawn from public sources of information.  Many of [the] test results, for example, upon which the plaintiff relies came from the Florida Department of Citrus.  These were obtained voluntarily and not through service of process.  Others were obtained from public court files.[24] 

In a similar vein Everfresh stated:

The information that Grove Fresh claims it relied upon to "amend" was obtained from public agencies, which was, therefore, available prior to February 1989.  Grove Fresh should not be allowed to file [the February 1989 complaints] without any investigation [of these public sources], forego the extended time this Court gave it to amend, ...and claim it was permissible for it to wait to investigate its claims and amend its claims on the eve of the close of discovery.[25] 

E. January-February: The documents produced in response to Grove Fresh’s FOIA requests. 

After the October 1990 leak of the FDA report regarding Bosch’s whistleblower complaint, I filed a series of requests to the FDA under the Freedom of Information Act.  I received responses to these FOIA requests in January-February 1991.  The responses included documents disclosing the following:

  • In 1976, Purity Products triggered a criminal investigation of Ever Fresh, then a Home Juice subsidiary, by sending the FDA test results showing the presence of undeclared preservatives in its chilled orange juice. 
  • In 1977 the FDA referred the case to the Justice Department for prosecution.  The Justice Department declined to prosecute on the ground that the offense was merely an economic crime and not a public health hazard.[26] 
  • In 1983-84 the FDA received a series of anonymous complaints alleging that Everfresh was using a cold-fill sterilizer; that the supplier was Dr. Kohlbach; and that the active ingredient was DEPC.[27] 

I also obtained the records underlying the FDA’s approval of DEPC as an additive in wine, beer, and fruit juice-based beverages in the 1960s, as well as the records underlying the FDA’s ban of DEPC in 1972, after scientists found that it was a carcinogen.[28]

F. January-April:  The Medill School of Journalism’s project on court secrecy.

In January 1991, I received a telephone call from Elizabeth Leamey, a student in the M.A. program at Northwestern University’s Medill School of Journalism.  She and her classmates were working on a project concerning secrecy orders in Chicago courts.  She had heard about the seal on the 90c5009 case from a mutual friend and wanted to interview Mr. Troy and me. 

I agreed to meet with her.  I gave her access to the court files in 89c1113, 89c1114, and 89c1117, but not those in 90c5009.  I also let her review the documents I had received from the FDA regarding Everfresh and Kohlbach and Oleum 320/IDEA. 

Leamey eventually wrote a story on the illegal additive.  The story appeared in the spring 1991 issue of The Monitor, a newspaper published by Medill. 

G. March 20:  The order denying the motion to dismiss the 90c5009 amended complaint. 

On March 20, 1991, Judge Zagel denied the motions to dismiss the 90c5009 complaint.  The Memorandum Opinion and Order was notable in two respects—it rejected the grounds for the seal alleged in Everfresh’s emergency motion, and it perversely invited the defendants to file a Rule 11 motion against Grove Fresh for shortcomings due to Hines’s conflicts of interest.

1. The rejection of the grounds for a seal alleged in the 89c1113 defendants’ emergency motion for a seal.

The 89c1113 defendants’ emergency motion for a seal (see §XII-D, above) alleged two grounds for sealing what would be the 90c5009 complaint: that it was an improper attempt to amend the 89c1113 complaint, and that it was an attempt to escape the discovery plan and order entered earlier on August 8, 1990. 

The Everfresh defendants repeated those arguments in their motion to dismiss the 90c5009 complaint.  Judge Zagel “decline[d] to dismiss the [90c5009] complaint as duplicative litigation or as an unauthorized amendment to the original 89c1113 and 89c1117 complaints.”[29]  He also did “not regard the 90c5009 case as an escape route from [the court’s] earlier rulings” on discovery.[30]

2. The perverse invitation to the defendants to file a Rule 11 motion against Grove Fresh.

The Memorandum Opinion and Order accepted the defendants' characterization of the 90c5009 allegations as having come from public sources.  He addressed the alleged tardiness of Grove Fresh's investigation of public sources by suggesting that the defendants file a Rule 11 motion if they felt that they had been harmed by Grove Fresh's failure to include this public information in the February 1989 complaints:

Defendants cannot win dismissal of substantially similar claims in a different lawsuit based on previous defects which have since been cured.  However, given the defendants' arguments and the plaintiff's agreement that the information used to cure the RICO claims was obtained from public agencies without help from the defendants or a court order and therefore was available at the time the original complaints were filed, the defendants may have a Rule 11 remedy for the original "severely flawed" RICO claims.[31]

This invitation ignored the reason for the deficiencies in the complaints Grove Fresh filed in 1989—the undisclosed and unethical covenants restricting Hines’s right to practice law.

H. March 22:  The recall of Flavor Fresh’s cold-pack products.

As discussed in Memorandum 3-A,[32] in February 1991 an FDA agent discovered that one of Flavor Fresh’s co-packers (Peninsular Products) was adding pulp wash to a batch of chilled orange juice, in violation of the standard of identity for pure orange juice.  This discovery triggered a search of Peninsular Products’ books and records, which disclosed that for years the firm had treated all of its chilled juice products—including products bearing the “Flavor Fresh” label—with preservatives, and that for many of those years, the preservative of choice was Oleum 320/IDEA. 

On March 22, Peninsular Products initiated a voluntary, Class II recall of all juice products falsely labeled as “100% pure,” including products bearing the “Flavor Fresh” label. 

I. March 29: The subpoena duces tecum served on Marshall.

On March 29, 1991, I served Marshall with a deposition subpoena.  The document rider asked for, among other things, all documents referring or relating to Dr. Kohlbach, IDEA Ltd., Bio-Trade, Ltd., and DEPC.

J. April 5, 1991: The belated production of documents regarding Oleum 320/IDEA.

Seven days after I served Marshall with a subpoena, McDermott Will & Emery sent me copies of the Bio Trade documents that the firm had received from its client two years earlier, on February 21-22, 1989.[33]

The Bio Trade Documents should have been produced on April 19, 1990, in accordance with ¶10(b) of the 89c1114 settlement contract. 

The Bio Trade documents were relevant to the cross examination of at least 17 witnesses who were deposed in the 12 months between the date the documents should have been produced and the date they were actually produced.[34] 

K. Back to April 20, 1990: Impeaching McDermott Will & Emery’s credibility with Murray’s testimony and the Bio Trade Documents. 

On April 20, 1990, Judge Zagel had held a hearing on (among other things) whether any current Everfresh employees had knowledge of the firm’s criminal activities prior to January 1989.  Lazar Raynal told Judge Zagel and me that “nobody is there any longer to answer these questions” about pre-January 1989 activities.[35]  The Bio Trade Documents were the last pieces of a puzzle which suggested that Raynal flat-out lied when he made that representation:

  • Murray discovered the Bio Trade Documents in February 1989, during the audit supervised by McDermott Will & Emery.  See §XVIII-J, above. 
  • The Bio Trade documents identified Moser as a witness with knowledge of a criminal transaction in October-November 1987.
  • Raynal and his McDermott Will & Emery colleagues received a detailed report of Murray’s audit on February 21-22, 1989.  See §IV-E, above.
  • The following month (March 1989), Raynal met with Moser.  See §IV-F, above.
  • As of April 1990, Moser was still employed at Everfresh.

Thus, as of April 20, 1990, Raynal knew or should have known that: (a) Moser was still employed at Everfresh, and (b) Moser had personal knowledge of criminal activities that took place at Everfresh prior to January 1989. 

[1] Generally Recognized as Safe (GRAS) is an FDA designation that a chemical or substance added to food is considered safe by experts, and so is exempted from the usual food additive tolerance requirements of the FD&C Act.

GRAS exemptions are granted for substances that are generally recognized, among experts qualified by scientific training and experience to evaluate their safety, as having been adequately shown through scientific procedures (or, in the case of a substance used in food prior to January 1, 1958, through either scientific procedures or through experience based on common use in food) to be safe under the conditions of their intended use.

[2] Uncontested Facts, Appendix, Ex. 56.

[3] Uncontested Facts, Appendix II, Ex. 44 (Powell Dep. 148-51).

[4] See, e.g.,. Appendix II, Ex. 44 (Powell Dep. 38-58); Appendix II, Ex. 48 (Rule 30(b)(6) Powell Dep. 27-29); Appendix II, Ex. 24 (Letter from Lazar Raynal to John Messina, dated October 26, 1990).

[5] Uncontested Facts, Appendix II, Ex. 47 (Shumate Dep. 9-10).

[6] Uncontested Facts, Appendix II, Ex. 47 (Shumate Dep. 6-8, 10-15, 22).

[7] The subjects listed in the notice included the following:

  • The negotiations leading to Labatt's acquisition of Ever Fresh, including any discussions about representations and warranties by the sellers regarding compliance with labeling laws;
  • The names of every Labatt or Holiday Juice officer, director, employee or agent who had knowledge of the pendency of Purity Products. Inc. v. Ever Fresh Juice Co., No. JFM 86-963 (D. Md.) either before or after the acquisition;
  • The identity of every Labatt or Holiday Juice officer, director, employee, or agent who investigated the allegations of adulteration made in the Purity Products suit; and
  • The steps taken by Labatt or Holiday Juice after Labatt acquired Ever Fresh ensure that Ever Fresh did not manufacture adulterated orange juice.
  • The ingredients and the procedures followed in making adulterated juice at the Warren plant, and the sources of supply for the ingredients in the adulterated juice at Warren.

[8] A copy of the letter is at App. 1-27, Letter from Dorothy B. Zimbrakos dated November 26, 1990

[9] 12/15/90 Rule 30 (b) (6) Deposition of Hugo Powell, pp. 8-9.

[10] Uncontested Facts¶¶290-293

[11] Uncontested Facts Appendix II, Ex. 39 (Moser Dep. 32)

[12] Uncontested Facts, II, Ex. 39 (Moser Dep. 39-40, 89); Id., Ex. 42 (Wells Dep. 37-38); Id. Ex. 41 (Walker Dep. 42, 72-74); Id., Ex. 46 (Hesbon Dep. 19, 29, 115).

[13] Uncontested FactsII, Ex. 50 (Godzik Dep. 33-34, 79-80); Appendix II, Ex. 51 (Yannello Dep. 11-12).

[14] Uncontested Facts, Appendix II, Ex. 50 (Godzik Dep. 90-91).

[15] Uncontested Facts Appendix II, Ex. 46 (Hesbon Dep. 132).

[16] Uncontested Facts Appendix II, Ex. 48 (Rule 30 (b) (6) Powell Dep. 27-29).

[17] Uncontested Facts, Appendix II, Ex. 48 (Rule 30(b) (6) Powell Dep. 26-27, 34-36).

[18] Uncontested Facts, Appendix II, Ex. 42 (Wells Dep. 3-4, 24-25); Appendix II, Ex. 41 (Walker Dep. 3-6, 15, 42).

[19] Uncontested Facts, Appendix II, Ex. 36 (Zakoor Dep. 93-95); Appendix II, Ex. 51 (Yannello Dep. 30).

[20] Uncontested Facts, Appendix II, Ex. 49 (Silverman Dep. 22-23).

[21] Uncontested Facts, Appendix II, Ex. 36 (Zakoor Dep. 101-02).

[22] Uncontested Facts, Appendix II, Ex. 36 (Zakoor Dep. 102).

[23] 10/2/90 Memorandum of American Citrus Products Corp. In Support of its Motion to Strike the Complaint as an Unauthorized and Prejudicial Amendment, p. 2.

[24] Id., p. 10.

[25] 1/16/91 Everfresh Inc.'s Reply Memorandum in Support of its Motion to Dismiss the Complaint, p. 10.

[26] Uncontested Facts ¶¶41-48.

[27] Uncontested Facts ¶¶58-59.

[28] Uncontested Facts ¶¶136-45.

[29]  3/20/91 Mem. Op., p. 7.

[30] Id.

[31] 3/20/91 Mem. Op., p. 8 [emphasis added].  In June 1992 Everfresh acted on Judge Zagel’s suggestion and filed a Rule 11 motion in 89c1113.  See §XIX-G, below.

[32] See Memorandum 3-A, § III-D-5.

[33] See Memorandum 3-A, §VIII-F.  Copies of the Bio Trade Documents are posted on the website.

[34] The witnesses were: Hugo Powell; James Boden; Bruno Moser; John Walker; Doug Wells; Susan Guss; Glen Davis; Mary McDonald; Bruce Hesbon; Michael Allen; James Zakoor; James Marshall; David Murray; Robert Heritier; Patrick Crowley; Michael Godzik; and Mervin Shumate.

[35] See §XI-D-1, above.