Three stockholders of Chiquita Brands International Inc. have filed separate lawsuits against the company and its board of directors, saying they violated their duties by engaging in illegal acts, gross mismanagement and abuse of corporate control.
Shareholder Helen Bondy filed her lawsuit Thursday, while Hal Bloomberg and Anne Shapiro filed theirs Friday. No addresses were provided in the court papers for the three stockholders. Ms. Shapiro's lawyer said she lived in Putnam County, N.Y. None could be reached for comment.
Wording of the lawsuits, filed in Hamilton County Court of Common Pleas, was virtually identical. Named as defendants were Chiquita and all seven members of the board: Carl H. Lindner Jr., chairman and chief executive officer; Keith E. Lindner, vice chairman; Fred J. Runk, director; Jean Head Sisco, director; William W. Verity, director; Oliver W. Waddell, director, and Steven G. Warshaw, director, president and chief operating officer.
The three lawsuits recount questionable business practices revealed in an 18-page section in Sunday's Cincinnati Enquirer.
They allege that the board of directors violated its "fiduciary responsibilities" to protect the company, its assets, reputation, and its shareholders' investments. They claim that Chiquita and its directors were involved in, permitted, or should have been aware that company employees engaged in activities such as:
The bribing of Colombian government officials to obtain access to a state-owned warehouse facility in violation of the U.S. Foreign Corrupt Practices Act.
Routinely conducting aerial spraying of hazardous and toxic pesticides on its banana crops while unprotected workers were in the fields.
Endangering the lives and health of employees by the misuse of pesticides and the emission of toxic fumes from a Costa Rican factory run by a Chiquita subsidiary.
Maintaining a system to routinely rotate workers from one subsidiary to another to deprive them of benefits and prevent them from organizing in unions.
Circumventing existing labor agreements by closing farms and employing foreign military forces to raze long-standing villages over the protest of local residents and international human rights organizations.
Assisting companies with which it does business to avoid tax obligations.
Creating an international trust structure to circumvent foreign nations' land-ownership and national security laws.
"No reasonable individual could have believed that the company was justified in failing to monitor and impose adequate mechanisms and safeguards and to investigate and correct the misleading, deceptive and illegal practices," Ms. Bondy's lawsuit stated.
The lawsuits, called derivative complaints, state that Chiquita directors, by failing to halt illegal and improper actions by company employees, left shareholders vulnerable to extensive financial losses through potential lawsuits and state and federal investigations.
The lawsuits also cite the possibility that an ongoing U.S. Securities and Exchange Commission investigation into Chiquita's business practices could lead to substantial fines, court-ordered sanctions and criminal prosecution. Any or all of those things would harm and diminish the shareholders' investments, the suits state.
"The company has engaged in illegal activities, its corporate assets have been wasted, the value of its common stock has been adversely affected, the company has been and will continue to be subjected to litigation as a result of the wrongful conduct alleged, and the company has lost credibility, its reputation has been damaged, and its ability to be competitive has been seriously undermined," Ms. Shapiro's lawsuit alleges.
Chiquita officials did not respond Friday to Enquirer questions about the lawsuits.
The lawsuits were filed on behalf of the shareholders by Richard S. Wayne and William K. Flynn of the Cincinnati law firm Strauss & Troy. Each shareholder also has retained New York lawyers.
Efforts to reach Mr. Wayne and Mr. Flynn were unsuccessful.
Stanley M. Grossman, the New York lawyer representing Ms. Shapiro, told the Enquirer Friday that the "extensive and well-documented" newspaper articles, along with additional information obtained by the attorneys, prompted the quick legal action.
"It sounds like a very serious situation at Chiquita and there is just no reason to wait when this information is currently available," Mr. Grossman said. "Hopefully, these lawsuits will prompt some corrective action by the (Chiquita) board."
Mr. Grossman said "it is still being decided" whether Ms. Shapiro will attend Chiquita's annual stockholders' meeting in Cincinnati on Wednesday.
Arthur N. Abbey, the New York attorney representing Ms. Bondy, and Marian P. Rosner, the New York attorney for Mr. Bloomberg, could not be reached for comment.
(Copyright 1998)
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