Federal jury rules in favor of Crossroads company in beef trial
A federal jury Thursday found a Colorado ranch fraudulently purchased a herd of more than 500 Akaushi cattle from the chairman of HeartBrand Beef in 2011.
The jury decided Gonzales-based HeartBrand Beef should be awarded more than $23 million because Bear Ranch, owned by Bill Koch, had been unjustly enriched, said Jim Reeder, a Houston-based attorney who represented HeartBrand Beef, its chairman, Ronald Beeman, and the American Akaushi Association.
The lawsuit, filed in March 2012, played out for about a week in a case presided over by Judge Gregg Costa.
Bear Ranch claimed it was induced into a contract to buy more than 400 Akaushi cattle from HeartBrand Beef in 2010.
The contract, Bear Ranch said, restricted its ability to market the beef to consumers as healthy and required it to register the cattle with the for-profit breed association.
The ranch also bought 500 more head in 2011.
Bear Ranch said that although HeartBrand Beef marketed itself as the sole owner of Akaushi genetics outside of Japan, it was not.
Bear Ranch said Akaushi cattle were no different than another Japanese breed, Red Wagyu, which is available throughout the world.
The last two witnesses in the trial had expertise in agricultural economics related to the cattle industry. At least one was able to determine the cattle's fair market value, Reeder said.
"I can tell you that HeartBrand was pleased with the verdict," Reeder said.
But Bear Ranch was not.
"Bear Ranch is very disappointed in the jury's verdict, and we disagree with it, but we respect the system. There will be more proceedings before Judge Costa in order to make final decisions about resolving this dispute," said R. Paul Yetter, Bear Ranch's attorney.
Yetter said Costa considered the damage amounts entered by the jury to be "advisory."
Jurors had to answer at least three questions, the attorneys said.
Did HeartBrand fraudulently induce Bear Ranch into entering the 2010 contract?
Did Bear Ranch fraudulently induce HeartBrand into entering the 2010 contract?
Did Bear Ranch commit fraud against HeartBrand for the 2011 purchase of cattle from Beeman?
They answered no to the first two questions and yes to the third question, Yetter said.
Because they answered no to the first question, Beeman was released from any liability.
Costa also decided before the jury began deliberating that the American Akaushi Association had not knowingly participated in any fraud against Bear Ranch, Reeder said.
Jurors also decided that $1.825 million in punitive damages should go to HeartBrand.
They also wrote that HeartBrand should pay for the cattle to get them back from Bear Ranch. HeartBrand should pay Bear Ranch $6.03 million for the cattle purchased in 2010 and $6.83 million for the cattle purchased in 2011, Reeder said.
Bear Ranch owns other livestock, including longhorns and Akaushi cattle, that were not purchased from HeartBrand.