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.
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.
Foster Farms, a private company that isn't required to disclose revenues and profits to the public, learned a few months later that SunTrust also was doing business with Zacky Farms' turkey business.
It discovered that SunTrust officials in essence used Foster Farms' financial information -- including earnings, creditworthiness, credit revenues and financial projections -- to give Zacky Farms' turkey business a loan.
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"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 appealed the decision, and 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."
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.
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 federal 9th 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."