GE Tree Company ArborGen Found Guilty of Defrauding Workers, Fined $53.5M
By Kip Doyle
Biotech firm ArborGen, a leader in the research and development of genetically engineered trees (GE trees), has been fined $53.5 million in compensation and punitive damages after a court ruled that it acted to use “trickery and deceit” to “defraud” employees.
Just before the holidays a judge issued the 180-page ruling (linked below) on the case in favor of ten ArborGen workers, and against the company, as well as its timber company founders, International Paper, MeadWestvaco (now WestRock) and New Zealand-based Rubicon, plus several of their Board members.
“It is a shame that this story came out on 29 December, in the middle of a holiday week, and has gone almost completely unreported,” said Anne Petermann, Executive Director, Global Justice Ecology Project. “Only two articles have covered this important story in South Carolina papers.
Widget not in any sidebars
“We have always argued that ArborGen is acting recklessly in their pursuit of the commercial development of unproven and potentially dangerous GE eucalyptus, pine and other trees. Now we find out that ArborGen has lied to and defrauded their own employees. How could anyone possibly believe anything they say about the ‘safety’ of these GE trees?” she concluded.
The Charleston, SC Post and Courier reported that the judge in the case ruled the workers had been tricked by ArborGen and their Executive staff into accepting incentive plan changes that depleted most of their wealth.
The Post and Courier quoted Chip Bruorton, a lawyer with Rosen Hagood who represented the workers stating, “The defendants orchestrated a scheme to [give] the employees false information, misrepresentations and concealment as part of a wrongful scheme to defraud them [and which] failed to provide the employees with the value they were entitled to.”
The trial showed the 10 employees should have received a combined $11.3 million of equity but instead were coerced into accepting a new financial plan worth only $414,330 of equity.
From the from Summary of Court’s Findings of Fact, [p. 96]:
This court finds that ArborGen’s legacy employees …were in turn abused by ArborGen, its founders, its board members and its management team. Based on promises made in writing and signed by ArborGen’s CEO Plaintiffs entered into contracts, which the Defendants did not honor. The Defendants orchestrated a cover-up scheme created and executed to switch the Plaintiffs out of the [Dot 3 financial plan] that the Defendants had determined to be “too rich”…
In the Summary [pp 156-157], the judge found that ArborGen Executive staff and Board members resorted to “trickery and deceit” with an “intent to defraud.”
The judge further stated,
The crowning wrongful act tied to Defendants Dot3 Plan contract breach was Defendants’ insistence in the summer of 2010 that Plaintiffs sign up for the Appreciation Rights Plan and receive far less consideration than was warranted in light of their unit values under the Dot 3 Plan.
Missing from Plaintiffs’ dealings with ArborGen and the various Defendants is any attempt by Defendants to act in an honest, fair way concerning the Dot 3 Plan starting in 2004 and extending to the present.
A review [of the facts] leads inexorably to the conclusion that Defendants used deception, misplaced trust, and pressure tactics to convince Plaintiffs to sign up for the [less valuable] Rollout Plan.
In doing so, they also convinced Plaintiffs that they had no pecuniary rights in the Dot3 Plan. Rather than be honest and candid, Defendants relied on trickery and deceit.
The aim was to help ArborGen and its founders by getting rid of a plan that was viewed as too good for the employees.
Plaintiffs have proven by clear and convincing evidence that Defendants’ attempted termination of Plaintiffs’ contract rights under the Dot3 Plan, and the denial of their ‘equitable award’ under the Appreciation Rights Plan amounted to breach of contract accompanied by fraudulent act, and that the fraudulent acts element, perpetrated according to a plan by authorized agents, was committed with an intent to defraud.”