Companies' long-standing beef comes to light in court
May 19, 2014 at 12:19 a.m.
Ranchers are fighting in federal court this week over the exclusivity of expensive Japanese beef.
Bear Ranch sued HeartBrand Beef, a Gonzales company that has marketed itself for years as the "sole source for 100 percent pure Japanese Akaushi beef."
Bear Ranch, spread out on 4,200 acres in Colorado, claims it bought 400 Akaushi cows and 24 Akaushi bulls from HeartBrand Beef for $2.3 million in 2010 because it did not know Akaushi was available worldwide under a different name - Red Wagyu.
Because HeartBrand misled Bear Ranch, owner Bill Koch signed a contract that prohibited him from selling the Akaushi cattle or its genetic material, said R. Paul Yetter, Bear Ranch's Houston-based attorney.
If Bear Ranch sold beef, it also could not market it as Akaushi beef or promote its health benefits, he said.
Within days of signing the contract, Bear Ranch began looking for loopholes to what was supposed to be a mutually beneficial partnership, said HeartBrand Beef's attorney Jason Powers, also of Houston.
HeartBrand was to provide breeding and birthing tips while Bear Ranch was to register its animals with the American Akaushi Association and sell back a portion of its calves. Bear Ranch never submitted data, he said.
Powers spent much of Monday questioning the integrity of the American Wagyu Association's registries. He pointed out how in 2011, Bear Ranch bought more than 500 Akaushi cattle from HeartBrand, again.
"This cattle met their requirements," Powers said. "They knew that the only place to get Akaushi was to go back to HeartBrand."
He said Bear Ranch filed the lawsuit to get out of the contract, which stipulates it must return the cattle to HeartBrand.
Dustin Dean, the director of beef programs at Sexing Technologies, testified Akaushi and Red Wagyu are two names that describe the same animal.
Dean created a model that showed Bear Ranch could have spent $1.31 million if it had originally bought from other ranchers 16 Red Wagyus or Akaushis in 2010.
It could grow the herd in three years to close to 400 head, partly by using a process in which fertilized Red Wagyu or Akaushi embryos were implanted into cows of another breed.
The cow of another breed would then birth a full-blooded Red Wagyu or Akaushi calf, Dean said.
Jurors also watched the deposition of James L. Scott, a retired Idaho rancher who provided one of several explanations of how the cattle came from Japan to the U.S.
In 1994, Scott, as a member of the Japanese Venture Partners, imported Wagyu cattle. Among them were two Red Wagyu cows. He sold about 100 embryos per cow within three years to ranchers as far away as Australia. Unlike HeartBrand, whoever bought the embryo from him could do with it what they wished, he said.
The trial will resume Tuesday morning.
Ronald Beeman, who bought HeartBrand Cattle and renamed it HeartBrand Beef in 2006, is expected to testify later in the week.
It was after Beeman, a former owner and now board member of Eddy Packing Company, of Yoakum, bought HeartBrand that it begun using the Akaushi name, Yetter said.
The federal government has denied a request to trademark HeartBrand Akaushi Beef.
"They said, 'That'd be like trying to get a trademark on Angus, that'd be like trying to get a trademark on chicken,'" Yetter said.
Beeman is also named as a defendant in the lawsuit filed in March 2012.
"Their ambition blinded them to say and do things that they knew were wrong," Yetter said.
HeartBrand, meanwhile, thinks Bear Ranch approached it under false pretenses.
"We thought it was a promise; they thought it was a problem," Powers said of the contract.
"We're here to get back what was taken from us," another HeartBrand attorney Jim Reeder said. "If we can't get the cattle back, we want to be compensated."