Complaint Alleges that Powerful Family Controlling U.S. Sugar and Others Committed Fraud and Breached Fiduciary Duties by Depriving Employee Shareholders of the Company of Right to Sell Shares for $293 Per Share
CORAL GABLES, Fla.– LAWFUEL – Legal & Litigation Announcements –A class action lawsuit was filed in Federal Court in West Palm Beach, Florida today by Colson Hicks Eidson on behalf of the employee shareholders and other shareholders of the U.S. Sugar Corporation. U.S. Sugar, headquartered in Clewiston, Florida, a major producer of sugar and orange juice, has always been associated with the powerful Mott family, the heirs of the Company’s founder, industrialist C.S. Mott. A large percentage of U.S. Sugar is owned by its own employees, farm field workers, union mill workers, administrative staff and others, who own their shares through an Employee Stock Ownership Plan (ESOP).
The lawsuit alleges that U.S. Sugar’s Chairman William S. White, along with his wife Claire Mott White, their son Ridgway White, CEO Robert Buker and the Board of Directors of U.S. Sugar, took steps wrongfully to deprive the many shareholders of U.S. Sugar of the chance to sell their shares when the Company received a very valuable outside offer to purchase the Company for $575 million or $293 per share. This offer was 51% higher than the price per share the Company was paying its own employees for shares. Specifically, the lawsuit alleges that the prior CEO of U.S. Sugar struck a deal to sell the Company at this price back in August 2005. But, within days after reaching this deal, the CEO was promptly terminated by William White and wired $10 million. This was money, the lawsuit alleges, that was intended to keep the former CEO quiet about the deal. White and Buker then took control of the deal. Accepting the offer, the lawsuit alleges, would have taken U.S. Sugar away from the Mott family and from the control of Claire Mott White and William S. White. Instead of giving the shareholders the chance to sell their shares in response to the valuable offer, the lawsuit claims, the Defendants kept the offer from them. This would have been the only opportunity in decades for the shareholders of U.S. Sugar to sell their shares to a third party. The resulting damages to the employees and other shareholders is alleged to be over $150 million.
Diallo Johnson, one of the lead plaintiffs in the action, stated: “I was never told about the offer. I would have definitely sold my shares in U.S. Sugar. I am now stuck with the shares and they are going down in value. But what really bothers me is that all of the good people that I used to work with at U.S. Sugar were never told about it either and were never given the chance to sell their shares.”
What is worse, the lawsuit alleges, is that not only were the employee shareholders kept in the dark about the outside offer, but the Company continued to tell them that their shares were worth far less than the amount of the offer and continued to buy back and redeem shares from the employees at prices that were almost $100 less per share. Every time the company did this, the lawsuit alleges, William White, Claire Mott White and their family benefited because the size and value of their own stake in U.S. Sugar increased at the expense of the employee shareholders. Meanwhile, the employee shareholders, whose shares in U.S. Sugar are their source of retirement income, were harmed.
One of the shareholders harmed by the Defendants’ conduct, the lawsuit alleges, was the Mott Children’s Health Center, a charitable organization that provides medical services to children living below the poverty level in Flint, Michigan. Flint has more than 27,000 children living below the poverty level. If the Children’s Health Center had sold its shares in response to the offer, it would have received $125,000,000 to be used in carrying out its charitable mission. Instead, it continues to hold almost 40% of its assets in U.S. Sugar shares that cannot be sold on any market.
“This lawsuit alleges an egregious case of abuse of control by the powerful family that controls and dominates U.S. Sugar. The employee shareholders have no representation on the Board of Directors, have no way to sell their shares except back to the Company, and have been paid a price far, far lower than what they would have received in an offer they were never even told about,” says Plaintiffs’ attorney Mike Eidson, a senior partner in the law firm of Colson Hicks Eidson, who filed the case along with his law partners Roberto Martínez and Curtis Miner. Eidson is the immediate past president of the American Association for Justice, the world’s largest trial lawyers’ bar with 60,000 members worldwide.
For current information on the lawsuit, you can go to www.colson.com and press the link for U.S. Sugar Class Lawsuit.
The Law Firm of Colson Hicks Eidson is a trial firm with more than 35 years of experience handling local, national and international litigation. Partners at the firm have had the distinction of holding the following offices: President of the Association of Trial Lawyers of America; President of the International Academy of Trial Lawyers; President of the Academy of Florida Trial Lawyers; President of the Dade County Bar Association; United States Attorney for the Southern District of Florida; and, Chairman of the Florida Federal Judicial Nominating Commission.
Eidson is best known for his work as the lead counsel in some of the largest automobile recalls in U.S. history: the Ford Pinto, the Chrysler Minivan and most recently, the Firestone/Ford tire tread separation. The outcomes of these cases created higher safety standards in the automobile industry safeguarding consumers across the globe. Martínez is a former United States Attorney for the Southern District of Florida known for his work as a former federal prosecutor and as counsel for plaintiffs in major commercial and tort litigation, including the Brothers to the Rescue anti-terrorism litigation, the Eller Media bus shelter electrocution case, and the Rafael Sanchez lawsuit against the Government of Aruba. Miner is best known for his work as a former Assistant United States Attorney for the Southern District of Florida prosecuting major political, police, and public corruption cases and for serving as lead counsel to the Federal Receivership of the Mutual Benefits Corporation.