A revised statement of claim Sweda Farms and Best Choice Eggs has filed includes many allegations of conspiracy among Harry Pelissero, general manager of the Egg Farmers of Ontario marketing board, L.H. Gray and Son Ltd. and Burnbrae Farms Ltd.
Some of the allegations are that they:
- - Misled the federal government about the lack of certain types of eggs so they could thwart Sweda Farms’ applications for supplementary import permits.
- - Falsified the grades, sizes and quality specifications for eggs they supplied to Sweda Farms.
- - Spread false rumours among Sweda’s farmers, trying to get them to switch their business to Gray and Burnbrae and to leave Sweda short of eggs to supply its clients.
- - Pretended to bid to buy Sweda Farms’ egg-grading and retail businesses, but really were only interested in learning about the company’s finances, suppliers and customers.
- - Bribed the late Johannes Klei, a Sweda Farms employee, to have him spread information among farmers and customers that would drive Sweda Farms out of business.
- - Burnbrae Farms , when it was negotiating to buy Sweda, broke a confidentiality agreement by providing information to L.H. Gray and Son Ltd. For another example, Pelissero of Egg Farmers of Ontario shared lawsuit information that the board was threatening to cancel Sweda Farms’ quota.
- - Burnbrae and Gray shared information about pricing and clients.
- - Conspired to reduce the premiums offered to farmers for Grade A Extra Large eggs.
- - Tried to besmirch Sweda’s reputation with Eggland’s Best, a potential supplier of specialty eggs, and with Hartmans Canada Inc., supplier of egg cartons.
Gray and the egg board deny any wrongdoing. Sweda’s allegations have yet to be tested in court.
Many of the new allegations arise from information provided by Norman Bourdeau, fired by Gray from his position as manager of Information Technology.
The lawsuit alleges that Gray made more than $150 million profits from illegally selling undergrades as Grade A eggs and used some of those profits to pay millions to the big chain stores to gain exclusive supplier status and also to pay farmers to switch to Gray. It names Loblaws, Sobeys, Metro, Wal-Mart, Costco and Longo’s as examples.
For example, the electronic files Bourdeau took from Gray and provided Sweda Farms indicate that:
- - Gray paid Klei $118,842.24 on Dec. 18, 2008 and ordered another cheque for $5,000 dated Dec. 24. The lawsuit alleges that Klei promised to spread information that would wreck Sweda Farms so Burnbrae and Gray would gain a monopoly.
- - Bill Gray, owner of L.H. Gray and Son Ltd., and his employees exchanged e-mails about how they were adjusting an automatic egg-grading machine and failing to report accurate grade information to farmers, the egg board and customers.
- - Pelissero and Gray conspired to put the wrong size eggs into shipments to Sweda Farms.
- - A Nov. 9, 2009, grading report, provided as an example of cheating on grades, shows Gray’s automatic grading machine registering 1.91 per cent cracks, but the cartons marked Grade A contained 7.58 per cent cracks. The total for utility grade was 3.28 per cent according to the automatic grading machine, but in reality was 9.77 per cent.
- - Bill Gray e-mailed an employee, asking why the CIP (cracks-in-pack, i.e. in retail-ready cartons marked Grade A) percentage was so low.
The allegations also say when the egg board accused Sweda and its farmers of the egg board on the percentage of Grade A eggs, and therefore levies, it sent letters and made visits, but two weeks later, when it made similar allegations about others, it neither visited them nor named a grading station and then cancelled those charges.
When the letters went out to Sweda’s suppliers, and the egg board officials were visiting them, staff from Burnbrae Farms and L.H. Gray and Son Ltd. began soliciting 14 of those producers for their business, Burnbrae east of Toronto, Gray west of Toronto.
The lawsuit also alleges Pelissero acted on his own, without authorization from the board of directors, to accuse Sweda and the farmers shorting the egg board on levies.
The lawsuit says Pelissero and the egg board have no jurisdiction over egg grading – that’s policed by the Canadian Food Inspection Agency – so Pelissero was acting beyond his authority and on his own. That’s one of the reasons why the lawsuit names Pelissero personally as well as the egg board.
Previous statements of claim named Mark Beaven of the egg board; this new statement has dropped him.
There is an allegation that on Jan. 8, 2009, Bill Gray ordered Bourdeau “to destroy all electronic data and information from the business records of L.H. Gray which were relevant to the litigation involving the plaintiff (Sweda Farms)”.
