Synopsis

Introduction

In 1989 and 1990, Grove Fresh Distributors, Inc. filed six unfair competition suits; each case named multiple defendants. This synopsis focuses on five corporate defendants—four orange juice processors and John Labatt Ltd., a billion-dollar holding company that, for a period of time, owned two of the four processors.

The evidence connected Labatt and the four processors to a scheme to make and sell adulterated orange juice that was falsely labeled and sold as “100% pure.” The scheme affected markets in at least 26 states and lasted 30 years. For at least ten of those years the illegal additives included a cold-fill sterilant with a mystery ingredient that may have been a carcinogenic agent.

The defendants paid $2,000,000 to settle Grove Fresh’s claims, but Grove Fresh was the least of their concerns. The illegal practices that caused Grove Fresh to sue also exposed the five corporations, and more than a dozen of their officers, directors, and managers, to felony criminal charges. In the end, however, only one of the five corporations (Flavor Fresh Foods Corp.), and only two individuals (both Flavor Fresh officers), were indicted.

The illegal practices also exposed the corporations to class action claims for consumer fraud. Under applicable law, all five corporations were jointly and severally liable. That meant that the deepest pocket among them—Labatt—could be required to pay the entire bill for the economic harm suffered by consumers and honest competitors during the 30-year life of the scheme, even though Labatt joined the scheme 24 years after the scheme began.

The staggering scope of Labatt’s potential liability can be inferred from evidence presented at one of the sentencing hearings in the criminal case. That evidence showed that during a six-year segment of the 30-year scheme, Flavor Fresh and a co-packer manufactured 36,616,814 gallons of adulterated, misbranded orange juice products for which consumers paid $151,000,000. The government’s expert witness calculated that the harm to consumers who bought those adulterated products was $45,000,000, which represented the difference between what consumers paid and what the products were truly worth.

This evidence suggests that the aggregate harm to consumers over the 30-year life of the scheme was in the hundreds of millions of dollars. In the end, though, Labatt and the four processors settled the class action claims for a relative pittance—they issued coupons that, depending on the rate of redemption, would cost them somewhere between $225,000 to $4,050,000. See Other Litigation §J-8.

All things considered—30 years of white collar crimes affecting untold numbers of consumers and competitors in more than half of the United States—the wrongdoers implicated by the Grove Fresh litigation escaped from their legal predicaments in far better shape than they had any right to expect.

The defense lawyers responsible for these results include:

Kowal, Stone, Stetler, and Duffy have since become Fellows of the American College of Trial Lawyers, an honor that is limited to 1% of the total lawyer population of any state. According to the American College of Trial Lawyers' website:

Fellowship is extended only by invitation, after careful investigation, to those experienced trial lawyers who have mastered the art of advocacy and whose professional careers have been marked by the highest standards of ethical conduct, professionalism, civility and collegiality.

Kowal’s, Stone’s, Stetler’s, and Duffy’s conduct in the Grove Fresh litigation, however, fell far short of the standards of ethical conduct, professionalism, civility and collegiality that the American College of Trial Lawyers expects from its Fellows. An examination of the Grove Fresh litigation will show that they, along with Weitzman and Raynal, obtained favorable outcomes for their clients through deceitful and unethical means, including the following:

These and other acts of misconduct were regularly brought to the attention of Judge Zagel, but he never called the defendants or their lawyers to account. Instead, for reasons that he is in the best position to explain, he regularly issued orders that protected them from the consequences of their misconduct. Among other things these orders:

Sections A through C of this Synopsis present an overview of the facts that support the claims I have just made regarding the misconduct of the defendants, their lawyers, and Judge Zagel. Those facts are presented in detail in the History.

A. Overview of the Grove Fresh litigation through the April 1993 settlement.

1. Cecil Troy and Grove Fresh

Cecil Troy was born and raised in the rural south and moved to Chicago as a young man.  He and his wife, Mary, started Grove Fresh in 1961 with $1,000 in capital. Troy was 46.

In Grove Fresh’s early years the firm distributed a wide variety of food products to retailers on Chicago’s south side.  By 1975 Grove Fresh had expanded its market to include most of the metropolitan area and parts of Northern Indiana.  The firm acquired a warehouse and a fleet of a dozen or so refrigerated trucks.  In 1979, its best year, Grove Fresh had $3.2 million in revenues ($9.3 million in 2009 dollars) and paid Mr. Troy a salary of $68,500 ($200,000 in 2009 dollars).  That year The Chicago Reporter ranked Grove Fresh 21st among black-owned businesses in the Chicago metropolitan area.

Mr. and Mrs. Troy built their business around single-strength orange juice products that they marketed under the “Grove Fresh” label with the Florida “seal of approval.”  These products were packaged by independent tertiary juice processors in the Midwest using concentrated orange juice for manufacturing (“COJM”) made from Florida-grown oranges.  From the mid-1960s until 1993, when Grove Fresh closed its doors for good, orange juice accounted for 50-60% of Grove Fresh’s annual revenues.

The development of Grove Fresh’s orange juice business was part of a national expansion of the orange juice processing industry beyond the state of Florida.  As of 1972, only 15% of Florida’s COJM was shipped to processors in other states.  By 1984, that figure had increased to 45%.

Grove Fresh’s fortunes took a turn for the worse during the 1980s.  One measure of its troubles was the salary it paid Mr. Troy for his full-time services.  In six years (1981, 1982, 1983, 1984, 1986, and 1989) Grove Fresh could afford to pay Mr. Troy only $5,000 or less.  In 1987, when Grove Fresh was forced to terminate its pension and profit sharing plan, Mr. Troy took a lump-sum distribution and then loaned most of the distribution back to the company for working capital.  In 1988, Grove Fresh paid Mr. Troy $50,000 in salary, but after paying income taxes, he loaned the net amount back to the company for working capital.

Grove Fresh’s financial troubles coincided with a series of freezes in the late 1970s and early 1980s that reduced the supply of fresh oranges and jacked up the price of all orange juice products.  These market conditions increased the economic incentive for dishonest processors to cut their orange juice with lower-cost substitute ingredients and to falsely market the resulting product as “100% pure orange juice from concentrate.”  The lower cost of these adulterated products put Grove Fresh and other honest competitors at a disadvantage.

When I first met Mr. Troy in 1989 he was a widower, 74 years old, and in reasonably good health.  In 1990 he suffered a stroke and was hospitalized for a lengthy period of time.  He suffered another stroke and was hospitalized again in about 1991.  He died in March 1994, shortly after turning 79.  His death came eleven months after the Grove Fresh litigation was settled.[1]

Mr. Troy’s failing health was a key reason why, in March 1993, I signed the Legal Services and Consulting Agreement (“Consulting Agreement”) that the defendants demanded as a condition of settlement. They demanded the Consulting Agreement for the purpose of restricting my right to practice law, and not for the purpose of using my services as a lawyer. See §5, below.

2. Purity Products, Inc. and its attorney, Jeffrey Hines.

Purity Products, Inc. was a Baltimore orange juice distributor.  During the 1970s and 1980s, Purity’s competitors in Baltimore included several companies that also competed with Grove Fresh in Chicago:

Beginning in 1976, Purity and its attorney, Jeffrey Hines, filed a series of lawsuits against these firms, alleging that they competed unfairly by making and selling adulterated orange juice falsely labeled as 100% pure. Each case was settled prior to trial.

In July and August 1988, Hines and Purity settled two lawsuits that they had filed earlier that year against American Citrus and Holiday Juice, respectively.  The settlement with American Citrus included a covenant barring Hines from representing clients who had claims against American Citrus for any acts or omissions occurring before the date of settlement. 

The settlement with Holiday Juice included a similar covenant protecting not only Holiday Juice, but also its parent, Labatt, and its affiliates, which by then included Everfresh. (See History §I-J, for the text of this covenant.)

3. Grove Fresh’s February 1989 lawsuits. 

In April 1988 Troy read a report about the lawsuits that Hines was then prosecuting against American Citrus and Holiday Juice.  Reading about those lawsuits led Troy to realize that Grove Fresh had grounds for getting legal relief against competitors who were “dirty”—the trade’s term for juice makers who adulterated their products.

In September 1988 Troy arranged to get copies of the complaints Hines had filed for Purity in Maryland federal court.  He then called Hines and asked if Hines would investigate Grove Fresh’s competitors and sue any who were found to be “dirty.” 

Hines agreed to represent Grove Fresh.  He didn’t tell Troy about the recent covenants restricting his freedom to sue American Citrus, Everfresh, Holiday Juice, and Labatt.

In September 1988 Hines hired an independent analytic chemist (Dr. Alan Brause) to collect and test samples of orange juice products made by six of Grove Fresh’s competitors.  The test results showed that five were “dirty.”  On February 10, 1989, Grove Fresh sued the five “dirty” competitors; three of those suits are the focus of this Synopsis:

Grove Fresh’s complaints alleged that the defendants competed unfairly by making and selling products falsely labeled as “100% pure orange juice from concentrate.”  In fact, Grove Fresh alleged (and had the evidence to prove), the defendants’ products were adulterated with numerous inferior ingredients that were cheaper than the ingredients in genuine orange juice.  Grove Fresh sought damages under the Lanham Act, RICO, and the common law on the ground that defendants’ use of cheaper, inferior ingredients gave them an unfair competitive advantage. 

4. The 90c5009 complaint—sealed without explanation.

I entered the Grove Fresh litigation in July 1989 when Troy hired me as his local counsel. See §IV. I took over as lead counsel in November 1989, when Troy fired Hines after learning about the covenants restricting Hines’s freedom to represent Grove Fresh. See History §V.

Over the next nine months I investigated the claims that Hines’s conflicts had precluded him from pursuing. I completed that research on August 28, 1990, and filed a new case—Grove Fresh Distributors, Inc. v. John Labatt Ltd., et al., No. 90c5009 (“90c5009”). The 90c5009 Complaint alleged that:

Shortly before I filed the 90c5009 complaint, the 89c1113 defendants presented an emergency motion to require that the new complaint be filed under seal. They alleged that the 90c5009 complaint was an unauthorized amendment to the 89c1113 complaint.

I stipulated to filing the new complaint under seal pending a hearing on the claim by the 89c1113 defendants. Judge Zagel later rejected their claim, but he kept the case sealed nevertheless, without ever explaining why. See History §XV-G. Equally problematic was that he suppressed the creation of a docket, so there was no official record of the case. See History §XXII-F.

The 90c5009 case was consolidated for pretrial purposes with 89c1113, 89c1114, and 89c1117.

5. The April 1993 settlement.

In September 1992 the defendants in the consolidated cases proposed that the parties suspend litigation and enter into settlement negotiations; Grove Fresh agreed.

The negotiations dragged on for seven months. The sticking point was the defendants’ demand for a restriction on my right to practice law as a condition of settlement—they did not want me to represent any more of their adversaries. In particular, they did not want me to represent consumers in a class action suit.

Their demand violated Rule of Professional Conduct 5.6(b), which prohibits any “agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.” I refused to negotiate over their demand. See History §§XXII-A, C, D.

Over my objection, co-counsel then negotiated a $2.2 million settlement package that allocated $200,000 to a Consulting Agreement that purported to create an attorney-client relationship between the defendants and me. The consulting fee would be paid in four $50,000 installments over a 30-month period. See History §XXIII-M.

In fact, the defendants had no intention of ever using my services. Rather, the purpose of the Consulting Agreement was to create the appearance of an attorney-client relationship between them and me, so that the rules on conflicts of interest would bar me from representing consumers.

For more than a month I resisted executing the Consulting Agreement. I relented when Troy, conscious of his failing health, asked me to do whatever I could to assure a settlement while he was still alive. See History §§XXIII-M, R-U.

The settlement closed in April 1993. See History §XXIII-W. Believing that my consent to the Consulting Agreement had been coerced, I escrowed the initial $50,000 consulting fee, and thereby preserved my right to rescind the Consulting Agreement within a reasonable period of time. I exercised that right in August 1993. See History §§ XXIII-V, XXV-E.

6. Judge Zagel’s theory that the defendants had “bought” the 90c5009 case file, in derogation of Seventh Circuit policy. 

In the meanwhile, in September 1991 the Ad Hoc Coalition for In Depth Journalism intervened in 90c5009 to challenge the seal. See History §XIX-A. Fourteen months later Judge Zagel rejected their challenge, but he still didn’t state his reasons for having imposed the seal in the first place. See History §XXII-F.

The Coalition appealed, but the appeal stalled because (a) there was no docket, so there was no official record for the court of appeals to review; (b) Judge Zagel had removed the case file to his chambers and refused to release it to the clerk of court for transmission to the Seventh Circuit. See History §§XXII-G; XXIII-B, H, I, J, Q, Y.

On April 29, in accordance with the settlement agreement, Judge Zagel dismissed 89c1113, 89c1114, 89c1117, and 90c5009 with prejudice. Without notice to the Coalition, the defendants presented a motion that was intended to moot the Coalition’s claim for access to the 90c5009 file—they moved to withdraw from the courthouse all of the 90c5009 records except for the amended complaint, the answers, and the stipulated order of dismissal.  Judge Zagel granted that motion. 

When the Coalition’s lawyers learned about this development, they moved for a stay of the removal of the records pending the outcome of the appeal.  Judge Zagel denied their motion on the ground that the defendants had “bought” the case: 

THE COURT:               There is as far as I am concerned no case.  The defendant bought the case from the plaintiff.  And absent some strong reason not to permit that, which nobody has brought to my attention, there is no case.  And the only decision – in fact, technically it is not, I think, a decision.  It simply confirmed what the parties have worked out.  And you are roughly in the same position as you were as if the case had never been filed in the first place

(5/11/93 Tr.6.)[emphasis added] 

The notion that the defendants could “buy” the court file derogated from the Seventh Circuit’s policy that judicial records are “created at cost to the public and other litigants [and cannot] be a bargaining chip in the process of settlement.”   Matter of Memorial Hospital of Iowa County, Inc., 862 F.2d 1299, 1302 (1988).

The Seventh Circuit stayed the order authorizing the removal of the records, but the appeal proceeded without a docket, so there was still no official record of this case even after three years of complex litigation.

B. The defendants’ use of an unsafe additive—and their schemes for concealing the evidence of that usage.

For years, Everfresh, Holiday Juice, American Citrus, Flavor Fresh, and Peninsular Products Co.—a Flavor Fresh co-packer, but not a defendant in the Grove Fresh litigation— surreptitiously[2] used Oleum 320/IDEA to extend the shelf-life of their adulterated products. Oleum 320/IDEA was a sterilizing agent manufactured in Europe during the 1970s-1990s. When added to orange juice, it had the same effect as pasteurization, but without the destructive effects that heat has on taste and texture.

The active ingredient in Oleum 320/IDEA has never been identified to a legal certainty. It was either an antibiotic (natamycin) or a carcinogen (diethyl pyrocarbonate [“DEPC”]). See FDA Investigations §§III-C, D, E, F; III-F, G. Whatever the ingredient may have been, it was not approved for use in orange juice, so it was unsafe as a matter of law. 21 U.S.C. §348(a).

During the first phase of the Grove Fresh litigation (1989-93), Labatt and its lawyers at McDermott Will & Emery deceived the government and Grove Fresh regarding Everfresh’s and Holiday Juice’s use of Oleum 320/IDEA. (§§2, 4, below). Their deceptions were motivated by three concerns:

1. Labatt’s and McDermott Will & Emery’s culpable knowledge of the unsafe additive.

Labatt acquired Everfresh in December 1986, with notice that Everfresh was making and selling adulterated orange juice.[3] Under United States v. Park, 421 U.S. 658, 672 (1975), Labatt had an affirmative duty to correct Everfresh’s illegal practices; it didn’t. Over the next two years, Everfresh made and sold 3.2 million gallons of adulterated products falsely labeled as 100% pure. See History §XI-P. Under Park, the Labatt officers who had permitted Everfresh to continue its illegal practices were subject to strict criminal liability.

Then, in October 1988, Everfresh fired Duane Bosch—but not because he was violating the food purity laws; he wasn’t. Rather, Bosch was fired because he had questioned the propriety of adding Oleum 320/IDEA to orange juice. 

Three months later, Bosch sued Everfresh under the Michigan Whistleblower’s Protection Act, alleging that he had been wrongfully fired because Everfresh knew that he would be complaining to state and federal regulators about Everfresh's manufacturing practices.

Dean Kitts, Labatt’s general counsel, learned about Bosch's suit by early February 1989. Under United States v. Park, Kitts and his corporate employer had “a positive duty to seek out and remedy [the] violations” implicated by Bosch’s allegations. That duty prompted Kitts to hire William Appler and his law firm, McDermott Will & Emery, for “advice on how this matter should be handled, including what information should be conveyed to the FDA.”  (Appler Affidavit¶3.) 

Appler advised Kitts to conduct an internal audit of the operations at the Everfresh and Holiday Juice plants. Following this advice, David Murray, Labatt’s Director of Technical Services, conducted such an audit and summarized the results in a written report submitted to McDermott Will & Emery on February 21-22, 1989. Attached to the report were business records documenting an October-November 1987 transaction whereby Everfresh purchased 10 jerry cans of Oleum 320/IDEA for $39,682.50. This transaction occurred ten months after Labatt had acquired Everfresh—in other words, ten months after Labatt officers had failed to execute their duty under Park to correct Everfresh’s illegal practices.

From the initial report by Murray, and from follow-up interviews and document reviews conducted in February-March 1989, McDermott Will & Emery learned the following facts:

(Appler Affidavit,¶¶3-8; EF-27809-17; EF-28222-26; 1990 Murray Dep. 131-32; 1992 Murray Dep. 110-12.)[4]

Subsequent investigations showed that between March 1987 and July 1988, Everfresh made six separate purchases of Oleum 320/IDEA for which it paid a total of $257,075.50.

Everfresh settled Bosch's claims in November 1989 for a payment of $4,000.

2. Labatt’s and McDermott Will & Emery’s deception of the government in May-June 1989.

The McDermott lawyers had two ethical alternatives that they could present in response to Labatt’s request for “advice on how this matter should be handled, including what information should be conveyed to the FDA.” (Appler Affidavit,¶3.) One alternative, however, had expensive consequences, while the other carried a high risk of criminal charges that could otherwise be avoided:

Labatt did not pursue either of these ethical alternatives.

The advice the McDermott lawyers actually gave to Labatt is confidential, but it can be inferred from Labatt’s actions in the four months after Labatt hired the firm. That advice, one may infer, was to deceive the FDA, as follows:

Labatt officials and lawyers from McDermott Will & Emery did meet with FDA officials on May 5 and again on June 21, 1989. They disclosed some (but hardly all) of the facts about economic adulteration at Everfresh. See History §III. They said nothing at all about Everfresh’s ten-year history of using Oleum 320/IDEA.

After the conclusion of the second meeting with the FDA, Labatt and its orange juice subsidiaries had a blanket amnesty for all of their prior wrongs.

Labatt’s and McDermott Will & Emery’s silence about the unsafe additive, in addition to securing amnesty for Labatt and its orange juice subsidiaries, had one other effect—it delayed for two years the discovery that another McDermott client (Flavor Fresh) had also used Oleum 320/IDEA. (see §3, next).

3. McDermott Will & Emery’s unethical agreement to represent Flavor Fresh.

After McDermott Will & Emery agreed to advise Labatt on “what information should be conveyed to the FDA,” but before any communication took place, the firm agreed to represent Flavor Fresh in 89c1114, with Labatt footing the bill for the representation.

This representation created three incurable conflicts of interest.  First, Flavor Fresh’s strategic objectives were at odds with Labatt’s. Flavor Fresh had zero interest in communicating with the FDA because it had no intention of ending its illegal, but highly profitable, manufacturing practices. Flavor Fresh would continue those practices for two more years.

Labatt, on the other hand, had already directed its orange juice subsidiaries to end their illegal practices; it was also considering whether to seek amnesty from the FDA. Obtaining amnesty honestly would require Labatt to be candid about operations at both of its orange juice subsidiaries, but the requisite candor would harm Flavor Fresh:

McDermott Will & Emery’s duty of loyalty to Flavor Fresh precluded it from participating in any communication with the FDA that might implicate Flavor Fresh in either of these schemes. Therefore, implicit in McDermott’s agreement to represent Flavor Fresh, and in Labatt’s agreement to pay the fees for that representation, was a decision by McDermott and Labatt that they would not disclose either scheme to the FDA—in other words, that they would, in concert, deceive the FDA in ways that protected both Labatt and Flavor Fresh.

Second, Flavor Fresh’s founding principal (James Marshall) was an adverse witness against Everfresh, Holiday Juice, and several current or former executives and managers of each of those entities. See Conflicts of Interest §II-A.

If the 89c1113 case were to go to trial, and Grove Fresh called Marshall as a witness, a lawyer diligently representing the Labatt subsidiaries would attack Marshall’s credibility.  A McDermott Will & Emery lawyer could not mount such an attack, however, because the firm was also counsel of record for Flavor Fresh/Marshall.  As such, the lawyer would owe a duty of loyalty to Marshall that would bar the lawyer  from attacking Marshall.

Thus, representing Marshall was “directly adverse” to Labatt and its orange juice subsidiaries within the meaning of R.P.C. 1.7(a). See Comment, M.R.P.C. 1.7 (2004) (a directly adverse conflict occurs “when a lawyer is required to cross-examine a client who appears as a witness in a lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit.”)

Third, Everfresh’s and Holiday Juice’s business records included evidence adverse to Flavor Fresh that would be subject to subpoena by Grove Fresh in 89c1114.  See Conflicts of Interest §IV-E-2. Adverse documentary evidence presents the same core conflict issues as does adverse testimony. ABA Formal Opinion 92-367, Lawyer Examining a Client as an Adverse Witness, or Conducting Third Party Discovery of the Client, p. 1 (1992).

4. The obstruction of Grove Fresh’s discovery.

On the day litigation commenced in February 1989 and again in December 1989, Grove Fresh served discovery requests that, if answered truthfully, would have revealed that the defendants had used an unsafe additive to extend shelf life. See Hines's Interrogatories to Everfresh; see also History §VI-A.

Truthful answers, however, would have exposed Labatt executives to criminal charges under United States v. Park, supra, because (a) the executives had failed to correct Everfresh’s illegal practices after Labatt acquired the firm in December 1986, and (b) they had failed to initiate a recall of tainted products after Murray completed his audit report on February 21-22, 1989.

To shield Labatt and its executives from such criminal charges, McDermott Will & Emery obstructed Grove Fresh’s discovery of the unsafe additive in the following respects, among others:

5. The related criminal case against Flavor Fresh, Peninsular Products, and Friedrich Kohlbach.

In February 1991 the FDA discovered serendipitously that Peninsular Products was treating all of its chilled juice products—including products bearing the “Flavor Fresh” label—with an unsafe additive. A few weeks later the FDA learned that in prior years, Peninsular Products had used Oleum 320/IDEA on all of its products, including those bearing the “Flavor Fresh” label. 

On March 22, Peninsular Products initiated a voluntary recall of all juice products falsely labeled as “100% pure,” including products bearing the “Flavor Fresh” label.  Under government supervision, Peninsular destroyed 94,400 pounds of tainted juice products. The FDA also published information about the recall and the destruction of the tainted products in its newsletters.

Neither Peninsular Products nor Flavor Fresh ever recovered from these financial and public-relations setbacks. Peninsular filed for bankruptcy in 1991; Flavor Fresh was dissolved involuntarily in 1993.

In February 1993 Flavor Fresh and its principals, along with Peninsular Products and several of its officers and managers, were indicted for scheming to sell consumers adulterated orange juice. United States v. Peninsular Products Co., et al., 93 CR 21 (W.D. Mich.).

Also indicted was Friedrich Kohlbach, a German national and the principal in Bio Trade Ltd., the Liechtenstein firm that supplied Flavor Fresh and Peninsular with Oleum 320/IDEA. (Kohlbach and Bio Trade also supplied Everfresh, Holiday Juice, and American Citrus, but those transactions were not included in the indictment.)

Eventually, all of the defendants pleaded guilty. See FDA Investigations, §IV-H.

6. The October 1993 perjury suborned by Labatt.

In October 1993 Labatt suborned perjury from Bruno Moser, the Everfresh employee who for years had maintained the firm’s supply of Oleum 320/IDEA. These are the facts:

As part of the amnesty arrangement with the FDA, Labatt made Moser available to the government as a witness in the sentencing proceedings against Kohlbach. The government sent Moser’s lawyer a draft of a declaration under penalty of perjury describing Moser’s dealings with Kohlbach.

Moser’s lawyer, whose fees were being paid by Labatt, requested one change: he asked the government to insert into ¶12 a statement that Everfresh had stopped using Oleum 320/IDEA in “1986 when Labatts [sic] purchased Everfresh and we were directed to discontinue its use.” This proposed statement was false; Everfresh did not stop using Oleum 320/IDEA in 1986. As noted earlier, in 1987-88, Everfresh made at least six purchases of Oleum 320/IDEA for which it paid $257,155. The records of these purchases even include a note to Moser from Ilse Kohlbach (Friedrich’s wife, I believe) dated March 18, 1987.

Nevertheless, the government agreed to the change. See History §XXVI-V. Moser executed the false declaration on October 19, 1993. Nine days later, the Department of Justice filed Moser's declaration in the criminal case. 

7. The four purposes served by the October 1993 perjury.

As of October 1993, the business records that would expose Moser’s false statement were under seal in 90c5009. So long as that seal remained in place, and so long as the other Everfresh employees with knowledge remained quiet, Moser’s false statement could not be challenged.

If accepted as true, the false statement in Moser’s declaration would accomplish four things for Labatt and its orange juice subsidiaries:

C. The Contempt Order.

On June 9, 1995, Judge Zagel issued a five-year prior restraint on my speech. The predicates for the restraint were four contempt citations and a Rule 11 citation, for which he imposed fines totaling $5,000. He also ordered me to pay the defendants’ attorneys’ fees and costs, which he eventually set at $149,554.45.

The contempt citations and Rule 11 citation were set forth in a 60-page Memorandum Opinion and Order Containing Findings of Fact and Conclusions of Law, reported as Grove Fresh Distributors, Inc. v. John Labatt, Ltd., 888 F. Supp. 1427 (N.D. Ill. 1995) [“Contempt Order”].

These are the essential facts:[5]

1. The post-settlement disputes.

As part of the April 1993 settlement, Grove Fresh had agreed not to participate in the Coalition’s appeal from the order denying its members access to the 90c5009 records.

Three months later, the 90c5009 defendants filed their Seventh Circuit brief opposing that appeal. Their defense of the seal rested on a defamatory attack on my character and integrity. They argued that the seal was justified because the complaint—a document I had researched, drafted, signed, and filed—had falsely accused them in order “to extract a large settlement.” See History §XXV-D. After learning about these arguments, I served the defendants with a notice that:

The defendants refused to retract. Instead, on August 21, 1993, they filed with Judge Zagel, under seal, an FRCP 60(b) motion for specific enforcement of the Consulting Agreement or in the alternative, to undo the settlement and require Grove Fresh to return the $2,000,000 settlement proceeds. Essential to the court’s purported Rule 60(b) jurisdiction was an allegation that I was still a Grove Fresh attorney as of the date the Rule 60(b) motion was filed. See History §XXVI-A.

While the defendants’ Rule 60(b) motion was pending I filed a motion for a hearing in the Seventh Circuit that: (a) disputed their explanation for the seal, (b) described the investigation that preceded the filing of the 90c5009 complaint, (c) summarized the evidence corroborating the complaint’s allegations, and (d) asked for a hearing.

The defendants successfully moved to strike my papers, but on a ground that contradicted the jurisdictional predicate for their Rule 60(b) motion—they alleged that I lacked standing because Grove Fresh had allegedly discharged me as its attorney nine months earlier, on January 21, 1993. (The events of January 21, 1993, are discussed in History §§XXIII-E, F.)

Seven times over the course of the post-settlement proceedings, the defendants made an issue of my status as a Grove Fresh attorney post-January 21, 1993. When the issue concerned Judge Zagel’s Rule 60(b) jurisdiction over me, they alleged, three times, that I had continued as a Grove Fresh attorney after that date. When the issue was whether I had any right to be heard, they alleged, four times, that I had been discharged as of that date. See Respondent's Second Motion to Dismiss All Charges ¶¶23-29.

2. The contempt petition.

On Sunday, October 31, 1993, the New York Times published a front-page story on orange juice adulteration. The story concerned the related criminal case in Michigan, civil cases in California and Texas, and the Grove Fresh litigation. The report on the Grove Fresh litigation included information from the papers I had filed in the Seventh Circuit.

On November 9, 1993, the Seventh Circuit granted defendants’ motion to strike my papers. That same day American Citrus filed a petition in the district court for a rule to show cause why I should not be held in contempt. American Citrus alleged that my Seventh Circuit papers had disclosed information allegedly protected by the seal. Implicit in this argument was a claim that the seal operated as an implied gag on any speech about the litigation. Under Seventh Circuit precedent, however, there can be no such thing as an implied gag order. See History §XII-J.

Even though American Citrus and its co-defendants had published their defamatory statements in the Seventh Circuit’s public files, where they were found by the New York Times reporter, they argued that I had no right to publish my rebuttal in those same public files. 

3. The evidence of the defendants’ unclean hands.

The clean hands maxim—“he who comes into equity must come with clean hands”—bars relief for anyone guilty of improper conduct in the matter at hand.  The papers submitted to Judge Zagel during the 22 months leading up to the Contempt Order included overwhelming evidence that the defendants had unclean hands that  disqualified them from receiving any equitable relief:

4. The particulars of the prior restraint.

Despite the defendants’ disqualifying history of criminal and deceptive conduct, Judge Zagel, through the Contempt Order, granted them unprecedented equitable relief in the form of a five-year prior restraint on my speech, as follows:  

5. The presentation of the Contempt Order as an Aristotelian tragedy—but with key events omitted from the narrative.

Judge Zagel justified the citations, the prior restraint, and the financial penalties with an ad hominem critique of my character and fitness to practice law. He called me a “great tragic figure” because the misfortunes I suffered (i.e., the punishments he was imposing via the Contempt Order) were brought on by a flaw in my personality—I cannot not keep a confidence, he said. He dramatized this critique by adding my name and alleged flaw to a litany of Shakespearean figures with tragic flaws:

Othello’s downfall was the result of his own jealousy, MacBeth fell victim to his blinding ambition, Lear’s insecurity prompted his misfortunes, and Hamlet’s tragedy was that of a man who could not make up his mind. John Messina fits the mold of the great tragic figure. His is the tragedy of an attorney who could not keep a confidence.

Citing Aristotle’s precept that the “first essential, the life and soul, so to speak, of Tragedy, is the plot,” Zagel then presented “some history” of the Grove Fresh litigation (888 F. Supp. at 1431). “Some” is the operative term, for the history he presented omitted any reference to the bad acts that disqualified the defendants from receiving equitable relief. (History §§XXVIII-B-1-7.) It also failed to disclose the key role he had played in securing the unethical restriction on my right to practice law as a condition of settlement—a role that disqualified him from presiding over the post-settlement proceedings. See Motion for Recusal.

These omissions belied Zagel’s claim that the Plot he constructed for the Contempt Order met Aristotle’s rubric for a tragedy. (History §XXVIII-B-8). The Contempt Order is, instead, a textbook example of a result-oriented ruling. (History §XXVIII-C).[6]

In the years following the Contempt Order, Judge Zagel administered the prior restraint in a way that revealed its true purpose and intent—it was nothing more than a stealth mechanism for enforcing the unethical restriction on my right to practice law that was a condition of settlement. (History §XXVIII-D.)

6. The suppression of records that would expose the deceptions in the Contempt Order’s narrative.

For 57 months there was no official record of the 90c5009 case, as Judge Zagel barred the clerk from creating a docket for 90c5009, in derogation of the clerk of court’s duties under FRCP 79(a). During that time approximately 380 pleadings, motions, briefs, orders, and other judicial records accumulated in the 90c5009 case file. Judge Zagel kept these records in his chambers, out of the custody of the clerk of court. See History §§XXII-G; XXIII-H, Q; XXVII-R, T; see also Respondent's Second Motion to Dismiss  All Charges, ¶¶5(a)-(h).

A few weeks before he issued the Contempt Order, Judge Zagel finally permitted the clerk to create a docket for 90c5009, but he only released 248 of the 380 extant records for docketing. He kept the other 132 records in his chambers. See History §XXVII-T.

The 132 records that were omitted from the docket included all of the motions, briefs, and exhibits relating to the defendants’ unclean hands.

[1] For a profile of Mr. Troy prepared a year before he died, see Adrienne Press, Putting the Squeeze on the Little Guy, The Chicago Reporter (April 1993).

[2] For an account of Holiday Juice’s secrecy procedures, see Curt Guyette, “Pulp Friction: The story of a father, his son and the doctored orange juice Detroiters were drinking 20 years ago,” Metro Times (8/2/06).

[3] Before Labatt acquired Everfresh, it received notice of a pending lawsuit alleging that Everfresh made and sold adulterated orange juice. Labatt approved a $70,000 cash settlement of that lawsuit eight months after it acquired the firm. Uncontested Facts ¶¶49, 60-68, 90, 111. 

[4] “EF___” refers to documents produced by Everfresh during the Grove Fresh litigation.

[5] For a more detailed discussion of the events leading to the Contempt Order, see History §§XXV-XXVII.

Other problems with the Contempt Order are discussed at pp. 26-27 and 47-49 of the Opening Brief in the 2009 appeal; and at pp. 8-13, 14-18 of the Reply Brief in that appeal.