French cheese giant Savencia has won its protracted dispute with two US companies who accused the company and its subsidiary of fraud and a conspiracy to harm.
One of the world’s biggest cheese makers Savencia and its US subsidiary Zausner Foods (now AFP) have secured a trial victory in the US District Court for the District of Delaware after the jury dismissed allegations that the companies had conspired to commit fraud regarding the sale of Savencia’s cheese distribution arm.
The jury verdict, handed down on Friday (21 February), comes nearly seven years after the dispute first kicked off between Savencia and Florida-based corporations ECB USA and Atlantic Ventures.
Over 20 years ago, France-headquartered Savencia acquired Schratter Foods to serve as its distribution arm in the US. Alain Voss, the president and CEO of Schratter, owned 25% of Schratter’s shares, with the other 75% held by Savencia’s Dutch affiliate Eurexpan, until 2014 when ECB and Atlantic Ventures (the claimants) entered the fray and purchased Schratter in December of that year for USD 27 million, with the terms of the purchase set out in a stock purchase agreement (SPA).
The acquisition turned fraught when the claimants alleged that, as part of the Schratter sale process and thereafter, Zausner, Savencia and its agents all engaged in the “Savencia conspiracy” in order to cause harm and damage to the claimants.
The claimants contended that Voss, who stayed on at Schratter until his termination in 2017, served as an “inside man” – a key factor which allegedly enabled the defendants to perpetrate this scheme. In order to incentivise Voss, Zausner and Savencia are said to have offered him several perks, including a bonus of up to several million dollars.
In addition, the claimants asserted that several representatives and warranties in the SPA were false and that Voss and Bertrand Proust, Schratter’s chief financial officer, had “cooked the books” to make it appear that Schratter was doing better than it was. The claimants said they began uncovering “significant financial discrepancies and other fraudulent activities” within Schratter in 2017, resulting in Schratter’s eventual insolvency.
At the time of trial, the claimants were seeking USD 27.9 million in compensatory damages plus punitive damages. Meanwhile, Zausner asserted counterclaims for breach of contract and breach of the covenant of good faith and fair dealing for the unpaid remaining purchase price of USD 6.1 million.
The jury found that the claimants had failed to prove that Savencia and Zausner had committed fraud by misrepresentation or concealment, or that they had entered into a conspiracy to commit fraud and an overt act in furtherance of that conspiracy. They also failed to prove that Voss owed or breached a fiduciary duty to the claimants or that the other defendants aided and abetted this alleged breach.
No damages were awarded to the claimants, while the defendants were awarded the USD 6.1 million sought.
In ECB and Atlantic Ventures v Savencia and Zausner, the claimants were represented by Marko & Magolnick, while the defendants were represented by a Morgan, Lewis & Bockius team led by Troy Brown along with Su Jin Kim, Michael Ableson, Brian Morris, Ashley Gindle and Jody Barillare.
The parties’ legal counsels did not immediately respond to a request for comment.
Earlier this month, the US District Court for the District of Delaware handed down one of the first legal decisions addressing whether training an AI model using copyrighted content can be defended as fair use – concluding that it cannot.
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