Special Litigation Committee Seeks Dismissal of Shareholder Lawsuits Against Chiquita
An independent special litigation committee (SLC) recently filed a comprehensive report detailing the actions of Chiquita Brands International executives, directors and counsel that led to the $25 million settlement of a Justice Department investigation into the company’s illegal payments to Colombian terrorist groups.
The SLC recommends that shareholder litigation stemming from the payments, settlement and purported “fire sale” of the company’s Colombian banana business be dismissed because the SLC found no evidence that any defendant acted in bad faith. The SLC also found that the litigation will inflict “substantial further damage on the Company,” the costs outweigh any potential recovery, “an event of this nature is unlikely to recur,” and the shareholder litigation “would serve to further divert management from its core mission.”
The report explains that payments were made to both right-wing and left-wing groups in Colombia to protect the company’s workers and property. Until the recipients were declared terrorist organizations in 2003, however, none of the payments was apparently illegal. While the SLC found some mistakes in the company’s oversight and decision-making process, it concluded that any shortcomings did not breach the defendants’ fiduciary duties. According to a news source, the plaintiffs’lawyers do not plan to voluntarily dismiss their claims. An attorney representing five American missionaries kidnapped and murdered by Colombian guerrillas in the early 1990s was quoted as saying, “I’m not aware of a case where an American company has laid out in such detail [these] kinds of things. It’s a remarkable listing of . . . the conduct that went on for years and years that nobody knew about.” See Law.com: International News, April 28, 2009.