Hazelnut facility ready for upcoming harvest

The Wilco-Hazelnut Growers of Oregon cooperative’s new processing facility in Donald, Ore. A lawsuit filed by another processor alleges the cooperative breached contracts and misappropriated trade secrets.

A lawsuit seeks $2.4 million from the Hazelnut Growers of Oregon cooperative for allegedly breaching contracts with a smaller processor and misappropriating its trade secrets.

The complaint claims that HGO has refused to honor several provisions of packaging, license and supply agreements with Pacific Hazelnut Farms of Aurora, Ore.

Andrew Halls, the owner of Pacific Hazelnut Farms, said that filing the lawsuit was a matter of saying “enough is enough” to the larger processor.

“I believe this is a big guy, a big company, who thinks they can do whatever they want to a smaller company,” he said. “Eventually, you need to fight for yourself, stand up for yourself.”

Capital Press was unable to reach Greg Thorsgard, HGO’s chief operating officer, for comment. The cooperative merged with the Wilco cooperative in 2017.

The complaint seeks more than $1 million in damages for “willful or malicious” trade secret misappropriation by the cooperative, whose representatives allegedly filmed Pacific Hazelnut’s proprietary seasoning process while ostensibly testing a new recipe at the facility.

The cooperative also sought to obtain Pacific Hazelnut’s “spec sheets” for ingredients, tried to learn about its “proprietary recipes and processes” from suppliers, and is now marketing and selling “identical” products that “could not have been duplicated” without that information, the complaint said.

Pacific Hazelnut was also guaranteed a certain sales volume under a 2019 contract to process and package hazelnuts under HGO’s “Oregon Orchard” retail brand, starting at about $285,000 in 2019 and increasing by at least 10% in 2020 and 2021, the complaint said.

However, the sales volume of Oregon Orchard products fell short of the agreement by $118,000 last year, which entitled Pacific Hazelnut to a payment of $44,000 under a provision in which the company is compensated for 37.3% of unmet revenues, the complaint said.

The cooperative hasn’t made that payment while also failing to comply with other provisions, under which Pacific Hazelnut was given the opportunity to pitch product development proposals to HGO and fulfill orders for HGO hazelnut products under 2,000 pounds, the complaint said. The lawsuit seeks more than $650,000 for alleged violations of the 2019 contract.

The complaint also seeks $690,000 for the alleged breach of an earlier 2015 contract in which HGO allegedly disregarded an exclusive license granted to Pacific Hazelnut to use the Oregon Orchard trademark.

I've been working at Capital Press since 2006 and I primarily cover legislative, regulatory and legal issues.

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