Oregon fishermen sue to break up seafood company

EUGENE — Two Oregon fishermen from Brookings and an antitrust lawyer from Portland have filed a class-action lawsuit in federal court in Medford in an effort to break up a giant seafood company.

Lloyd Whaley and his son Todd, along with attorney Michael Haglund, seek up to $520 million in damages and a slew of injunctions that would effectively end Pacific Seafood Group's dominant role in the West Coast fish business, The Register-Guard newspaper in Eugene reported.

Economists, seafood industry experts and individual skippers claim that Pacific Seafood has built up a monopoly in the West Coast's four most lucrative fisheries: dungeness crab, shrimp, groundfish and whiting.

Pacific Seafood attorney Craig Urness called the lawsuit "completely without merit" and said the company will "aggressively" defend itself.

Frank Dulcich, president and CEO of Pacific Seafood, runs a billion-dollar company that has become the nation's No. 1 fish buyer, according to Seafood Business Magazine.

The lawsuit offers a description of various tactics Dulcich allegedly has employed to drive competitors out of business and keep the fishermen who sell their catch to him from finding other buyers and markets. Many of the charges mirror those reported by the The Register-Guard in 2007.

The Whaleys say Dulcich now controls 50 percent to 70 percent of the market in the four fisheries described in their lawsuit, which alleges he uses that clout to drive down prices, force out other seafood buyers, and purchase plants only to idle them and keep fishermen from selling their catch at higher prices elsewhere.

Haglund, who won an $82 million judgment against Weyerhaeuser in 2007 after a seven-year legal battle that went to the U.S. Supreme Court, said antitrust cases can be difficult to prove.

But Haglund said his case against Weyerhaeuser was weaker at the outset than the case he is building against Pacific Seafood.

"The evidence we have in this case dwarfs what we had with Weyerhaeuser," Haglund said.

The lawsuit filed by the Whaleys says there were about 50 seafood processors along the West Coast in 1980. Now there are only a handful. Dulcich's company owns and operates 18 of the processing plants or landing stations, including the only plants in seven coastal cities.

Pacific Seafood picked up many of its plants and landing stations at prices far below market value, according to the lawsuit.

The complaint alleges that in some cases, the company did so by making a loan to a processor, which included an illegal requirement that its entire product be delivered to Pacific for resale.

"Then, at a point where Pacific Seafood Group owes the processor a substantial sum (for the seafood), defendants trump up a quality claim, impose severe financial hardship on the processor and then negotiate to acquire it at a discounted price," according to the complaint.

The lawsuit says Pacific Seafood also has been the single largest buyer of boats on the West Coast in the past decade, alleging they are used to keep fish coming into the processing plants if fishermen decide they're unhappy with Pacific's price and decide to go on strike.

In an interview with The Register-Guard in 2007, Pacific Seafood's chief operating officer, Tim Horgan, acknowledged that Pacific determines how much fishermen earn for their catch. But, he said, it's because competitors wait to see what Pacific is offering before they set their own price. "They're hiding behind us," Horgan said. "They're hiding in our shadow, because they know they can't compete. We have the best position in the market. We have the best plants, the best technology, the best people and therefore we have the best boats. We drive the price."

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