LIVINGSTON -- Foster Farms' long dispute with a bank over the illicit use of private financial information ended well for the giant poultry producer Monday after a San Francisco appeals court issued a $10 million ruling in its favor.
Foster Farms, which also operates hatcheries, ranches, feed mills, processing plants and delivery systems, is one of the county's largest employers.
The case began in 2001 when Foster Farms bought out competitor Zacky Farms' chicken operation, using SunTrust Bank to provide acquisition financing, said attorney Carmine Zarlenga, partner of Howrey LLP, who represented Foster Farms.
"This case has been going on for six years," he said. "It's been a long battle."
Foster Farms, a private company that isn't required to disclose revenues and profits to the public, learned that SunTrust was also doing business with Zacky Farms. Foster Farms also learned that bank officials used financial information -- including earnings, creditworthiness, credit revenues and financial projections -- to benefit the bank, Zarlenga said.
In essence, Atlanta-based SunTrust Bank gave Zacky Farms a loan because of Foster Farms' good credit rating.
"You can't stop people from stealing stuff and using it, but when they do, you can put some consequences on them -- and here are the consequences," Zarlenga said.
The first ruling on the case came in 2008 when a federal judge awarded Foster Farms $4 million.
SunTrust decided to appeal the decision, and the result couldn't have made Foster Farms happier after the appeals court decided to increase the damages, Zarlenga said.
"In hindsight, it was foolish," he said. "It was a very bad decision for them to appeal it. If they would have written us a check for $4 million in 2008, this would be over."
The district court found that Foster Farms' confidential information was included in a credit package, but the information wasn't disclosed to anyone outside of SunTrust, according to the most recent decision from the Ninth Circuit Court of Appeals.
"Second, and perhaps more important, not only did Foster not get the benefit of the bargain of the confidentiality agreement, but SunTrust misused Foster's information for its own profit," the decision declared.
Officials from Foster Farms think the ruling will sufficiently offset any losses stemming from misuse of the confidential information, Zarlenga added. "We think it was compensated for, and then some," he said.
When Foster Farms shares confidential information with its bank, it's expected to be kept confidential, said Randy Boyce, senior vice president and general counsel for Foster Farms. SunTrust misused that information, he said.
"They're no longer our bank, and they'll never be our bank," he said. "They were caught with their hand in the cookie jar, and they paid for it."
SunTrust Bank couldn't be reached for comment on the decision. A person answering the phone at the bank's Atlanta office said officials weren't available.
Reporter Mike North can be reached at (209) 385-2453 or mnorth@mercedsun-star.com.
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