There won't be any interruption in supplies, though, despite the fact that Paramount Citrus Association and Sun Pacific Marketing are in arbitration regarding the packing, marketing and selling of the fruit, Paramount’s president said.
“Paramount Citrus will continue to deliver the Cuties brand to our customers and consumers,” said David Krause, president of Delano, Calif.-based Paramount. “Our ongoing plans for the fall remain unchanged.”
Berne Evans, owner of Pasadena, Calif.-based Sun Pacific, said he could not comment on the pending arbitration, which also involves a dispute about use of the Cuties logos. Evans did say he anticipates the relationship between his company and Paramount will continue, even after their current contract expires in 2014.
Cuties coined in 2001
Evans and Paramount owner Stewart Resnick began collaborating in the late 1990s. They agreed in April 1999 to grow, pack, market and sell clementines and afourers. They coined the Cuties name in 2001, according to court documents.
In 2004 the companies harvested the first major crop under the Cuties brand. Evans and Resnick formed Maricopa Packing LP, Exeter, Calif., in October 2005 to pack the brand.
In September 2007 Resnick and Evans formed the Cuties Clementine Cooperative, according to records from the California secretary of state. Paramount and Sun Pacific are the only voting members of the cooperative. The cooperative’s website does not include corporate officers or names of participating companies.
Nonvoting members can sell clementines to the cooperative. Fowler Packing Co. Inc., Fresno, Calif., which grows and packs Cuties, is described by Evans in court documents as a “business associate” of Paramount and Sun Pacific.
By the 2011-12 season, Cuties volumes had grown to 75 million boxes. In June 2011 Evans and Resnick were finalizing plans for a juice operation that would provide a profitable option for culls. Development of the juice operation is part of their 2008 master agreement.
The juice operation, Califia Farms, is a wholly owned subsidiary of Sun Pacific, in Pasadena. Resnick and his company are not involved. He pulled out of the deal in late 2011.
Califia began making and marketing Cuties-branded juice. In March, Resnick filed a trademark infringement case in federal court, even though court documents show Paramount and Sun Pacific jointly own the trademarks and intellectual property related to Cuties.
A month later Resnick withdrew the federal complaint after Evans asked the judge to enforce an arbitration clause included in the 2008 master agreement. The trademark dispute is pending before the American Arbitration Association.
More than just juice
Resnick’s apparent displeasure concerning the master agreement with Evans dates back to at least October 2011. Court documents state Resnick wanted to take over the packing of Paramount’s clementines and afourers for 2012-14.
Resnick also told Evans he wants to market and sell all of Sun Pacific’s clementines and afourers for the 2012-14 seasons, according to court documents.
The disputes came to light July 14 when The Wall Street Journal published a story outlining the companies and their leaders. The Journal reported Evans was unhappy with expensive advertising campaigns that saw the companies spend $20 million during the latest season.
“That story was really old news,” Evans said. “The reporter first called me last summer, and then I didn’t hear from her for months. Then she called back after the first of this year.”
Paramount and Sun Pacific also claim each owes the other millions. Court documents show that Paramount wants $60 million from Sun Pacific and Sun Pacific wants $18 million from Paramount.
Resnick declined to be interviewed.
When asked about the situation, Krause said “commercial advertising has helped grow the brand, increasing loyalty among current customers and building national awareness.”