Ex-CFO says he refused to condone illegal use of chemicals; grower says allegations are false



Fired executive sues Eurofresh


David Wichner Arizona Daily Star Arizona Daily Star
Posted: Friday, December 3, 2010 12:00 am

Did you know


Founded in 1992 by Dutch investors, Eurofresh Inc. ranked 43rd this year in the Star 200 survey of the major employers of Southern Arizona, reporting 1,009 full-time-equivalent employees at the start of 2010.


The company filed for Chapter 11 bankruptcy reorganization in April 2009 and emerged from bankruptcy in November 2009.


A former executive of Willcox-based Eurofresh Inc. has sued the greenhouse-tomato grower in a California court, alleging he was wrongfully fired for refusing to go along with illegal use of pesticides and other chemicals.


Eurofresh said there is no truth to the allegations and that the company will fight the suit.


In the state lawsuit filed in Monterey County, Calif., former Eurofresh Chief Financial Officer Brian McLaughlin said he was fired after objecting to what he called the company's longtime practice of using unregistered pesticides and chemical growth regulators on its hydroponically grown crops.


Eurofresh, which markets its products as Eurofresh Farms, is a leading U.S. grower of fresh greenhouse tomatoes. It operates one of the largest greenhouse complexes in the world, growing tomatoes and cucumbers in more than 300 acres under glass near Willcox and at a smaller Arizona operation in Snowflake.


The company has in the past called its produce "certified pesticide-free" and has won marketing and workplace awards in part based on such claims.


But McLaughlin - CFO of Eurofresh from April 2008 to November 2009 - alleges that from the start of operations in 1992 until September 2009, Eurofresh achieved its competitive advantage in part by deliberately using "at least 15 unregistered, and therefore unlawful, chemicals and pesticides to enhance the company's tomato crops grown for human consumption."


Eurofresh founder and CEO Johan van den Berg said in a prepared statement that McLaughlin's allegations are false.


"To ensure its produce is safe for consumers and employees, Eurofresh Farms has not and will not improperly use any products to grow its tomatoes and cucumbers," van den Berg said Thursday.


Eurofresh constantly monitors its compliance with federal and state regulations, he said.


"Who signs your paycheck"


McLaughlin said he was threatened with termination after refusing to sign invoices for "unregistered" chemicals. He said he was later fired after disclosing the illegal-pesticide practices to the company's board of directors, which he said led to an investigation that confirmed his allegations.


The lawsuit alleges that Frank van Straalen, currently chief operating officer and chief financial officer for Eurofresh, warned McLaughlin after he reported his findings to the company's board to "think about who signs your paycheck. The last operations guy who was here raised this issue and he's gone. That's what is going to happen to you."


McLaughlin alleges that Eurofresh imported and used chemicals, including the growth regulator Ethrel and pesticides Asepta Carex and Calypso, and used them though they were not approved by the U.S. Environmental Protection Agency or the Arizona Agriculture Department.


The former Eurofresh executive said he learned that van Straalen and CEO van den Berg had ordered the use of the chemicals. When van Straalen refused to halt the use, McLaughlin said, he told the company's board about the practices.


As a result, the suit alleges, the board formed a special committee to investigate the matter. The committee hired a local law firm that engaged an environmental-consulting firm to investigate. The lawsuit alleges that the firm confirmed the company's wrongdoing, and that van den Berg admitted during a board meeting that he had made the decision to use the unregistered chemicals.

Eurofresh eventually tried to register Ethrel with the EPA and the state, but the EPA refused to approve its use, according to the suit.


Around the same time, the suit says, the company changed its marketing materials to drop the phrase "grown without pesticides" and instead state the tomatoes were a "pesticide-free product."


But van den Berg disputed that account.

"The matters Mr. McLaughlin alludes to in his complaint were independently, objectively and thoroughly addressed in 2008 and 2009 by an independent consulting firm retained by Eurofresh to ensure practices surrounding pesticide usage were and are in compliance with all regulatory requirements," he said.

No Documentation yet

The suit does not include documentation of the allegations, but an attorney representing McLaughlin said that will be forthcoming.


"We wouldn't have brought the case if we didn't have the documents to support it," said Chuck Campbell, an attorney based in Larkspur, Calif.


Campbell noted that McLaughlin spent years in corporate banking and was chief financial officer for Fresh Express - a leading marketer of bagged greens acquired by Chi-quita Brands International in 2005 - from 1996 to 2006.


An EPA official said the agency will look into McLaughlin's allegations. "We take these types of complaints seriously and will certainly look into this one. However, we cannot comment on our investigation activities," Pam Cooper, manager of the EPA's pesticides office for the Pacific Southwest, said in a prepared statement.


Ethrel brand ethephon plant regulator is labeled for use on tomatoes, another EPA official said.


Laura Oxley, a spokeswoman for the Arizona Agriculture Department, said Ethrel initially was turned down by the EPA but was registered after additional data was provided.

McLaughlin is seeking unspecified damages for lost wages and benefits and emotional distress, as well as punitive damages. The suit was filed in Monterey because that's where McLaughlin lived and worked much of the time while he was with the company, Campbell said.

The lawsuit alleges violations of pesticide laws and laws designed to protect employees from retaliatory actions by employers, including California labor law and parts of the U.S. Clean Air Act, Clean Water Act and Safe Drinking Water Act.


Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.
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