Monday 23 September 2019

Aryzta countersues former US customer in court battle

Embattled: Aryzta CEO Kevin Toland has been attempting to revitalise the company’s fortunes
Embattled: Aryzta CEO Kevin Toland has been attempting to revitalise the company’s fortunes
John Mulligan

John Mulligan

Swiss-Irish baked goods firm Aryzta, that owns the Cuisine de France brand, has launched a counterclaim against former US customer McKee Foods in a bruising legal fight that is likely to end up in front of a Tennessee jury.

The bust-up between the pair has its roots in a labour crackdown undertaken by the US immigration authorities that last year saw almost 800 workers at two manufacturing facilities - collectively known as Cloverhill - then owned by Aryzta, being forced out the door because they did not have proper worker authorisations.

The staff, most of whom had worked at the facilities for years, had been supplied by a third-party employment agency and Aryzta had been unaware of their deficient employment credentials.

The loss of the workers created a major challenge for the Aryzta facilities.

Family-owned McKee, based in Tennessee, is one of biggest cake snack makers in the United States, with annual sales of about $1.5bn.

Cloverhill had been manufacturing McKee products since 2010. The plants were acquired by Aryzta in 2014 and the company was engaged to continue making McKee products at the sites.

But McKee claimed that soon after Aryzta warned it of its own labour problems, the Swiss-Irish firm began having difficulties filling McKee's orders. It alleged that the problem later intensified.

McKee terminated its agreement with Aryzta in August last year.

It then sued Aryzta, claiming that it will lose millions of dollars in profits because the firm couldn't fill orders. But Aryzta, whose CEO is Kevin Toland, has denied it breached the agreement between the two firms.

Aryzta has also denied that McKee will lose profits and customer goodwill due to the alleged breaches.

In court documents, Aryzta has said that none of the alleged breaches committed by it "qualify as a breach that was immediately terminable" and that McKee should have given 90 days' notice.

Aryzta's insists that the alleged breach of the manufacturing agreement by McKee has resulted in Aryzta suffering "substantial damages", which continue today and which would be proven at trial.

Irish Independent

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