Judge Richard Seeborg in the US District Court for the Northern District of California ruled at the end of May that some elements of an ongoing case regarding allegedly deceptive business practices should be dismissed.
However, he did not agree with a request to strike other elements of the case.
Bunnett & Company and Energy Feeds International brought the lawsuit originally against JD Heiskell Holdings, LLC (JDH) and Todd Gearheart, a vice president with that feed company, and several others alleging, in part, that Gearheart and others violated the Racketeer Influenced and Corrupt Organizations Act (RICO).
The lawsuit was first filed in March 2017.
An earlier complaint against JDH was dismissed by the US District Court for the Northern District of California on the grounds that the plaintiffs did not reveal facts showing that Gearheart's alleged "conduct was of a kind he was hired to perform."
While the court did not explicitly state the plaintiffs could file an amended complaint, they did so, and included new charges against JDH and its alleged awareness of the scheme.
JDH requested that court to strike the amended complaint on the grounds the plaintiffs were given no permission to file, and to dismiss the core allegations. The court refused to strike the complaint against the company in its entirety, but did dismiss two counts under the civil RICO laws.
"Plaintiffs’ amended claims for relief will be considered on the merits and JDH’s motion to strike is denied," the judge ruled.
Case history and overview
The lawsuit states that Bunnett and Energy Feeds International, which supply nutritional supplements for dairy cows in the US, have previously done business using exclusive distribution agreements. However, they allege that the defendants “engaged in a conspiracy” that included “perjury, money laundering, mail and wire fraud and bankruptcy fraud,” according to court documents.
The goal of this “scheme” was to establish a new distribution channel for dairy cow nutritional supplements, which would drive them out of business, according to court documents.
JDH, an animal feed distributor, had been a customer of both supplement companies, according to court documents. Several employees of the supplement companies allegedly worked to break distribution contracts for Bunnett and Energy Feed International and instead establish those supply lines with JDH.
Later iterations of the lawsuit also named JDH as being involved in the RICO violations alleged in the case and alleged that JDH was part of a distribution channel where members operated in concert, “directly affected foreign and interstate commerce,” and “engaged in a pattern of racketeering activity,” according to court documents.
The company also was alleged to have been a “key participant” in a series of “under the table payments” as part of an effort to “disguise and conceal” the creation of a new feed ingredient distribution system involving distributors previously working with the plaintiffs, according to court documents.
The plaintiffs also allege that Gearheart’s actions were done “for the benefit of and with the knowledge, encouragement and support” of JDH, according to court documents.
A spokesperson with Bunnett & Co and Feed Energy International said that they were unable to comment on the case, as it was a matter of pending litigation.
JDH did not respond to requests for comment by press time.