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Investors Continue to Challenge Dean Food
Business Law Info | 2007/03/26 17:18

Socially concerned investors for the second year in a row have filed a shareholder proposal asking Dean Foods Co. (NYSE: DF) to report to shareholders how it is responding to widespread concern that industrial-scale organic dairies, supplying milk for its Horizon Organic brand, violate consumer trust, seriously jeopardizing share value.

The shareholder proposal is a by-product of a seven-year debate in the organic industry over the introduction of large-scale factory-farms, milking as many as 2,000-10,000 cows each. It is the contention of a growing number of public interest, environmental, and farming groups that some of these farms are violating current USDA regulations by labeling their products as organic.

In 2005 and 2006, The Cornucopia Institute, a Wisconsin-based farm policy group, filed formal complaints with the USDA against a number of industrial dairies, including allegations that these mega-farms, mostly in the arid West, were violating the law by confining their cattle to feedlots and sheds rather than grazing as the federal organic regulations require. The dairy farms in question include two owned by Dean Foods in Idaho and Maryland and another California farm shipping milk for distribution under Dean’s Horizon Organic label. Because of inaction by the USDA the Institute is now preparing to seek court intervention in order to compel the agency to investigate the alleged improprieties.

“When consumers pay a premium for organic milk, they generally have the expectation that cows have access to pasture and gain a sizable percentage of their nutrients from grass,” said Steven Heim, director of social research with Boston Common Asset Management, lead investor-sponsor of the resolution representing institutional shareholders in the resolution process. “Besides complying with the law itself, we question whether Dean’s procurement of milk from factory-farms violates consumer trust and jeopardizes the value of its organic brands,” Heim added. Dean Foods, the nation’s largest milk processor, also became the largest U.S. marketer of organic dairy products when it acquired the Horizon Organic, Alta Dena, and Organic Cow of Vermont brands.

In June 2006 Heim and Mark Kastel, The Cornucopia Institute’s senior farm policy analyst, toured Dean’s Idaho farm at Dean’s invitation. “Although the company is making a $10 million investment in additional facilities in the desert-like conditions, and is attempting to paint their facility ‘green’, serious questions remain as to the legitimacy of milking thousands of cows in these conditions,” Kastel said.

The shareholder proposal asks an independent committee of Dean’s board to review Dean’s policies and procedures for its organic dairy products, and report to shareholders on their adequacy to protect Dean’s organic dairy brands and its reputation with organic food consumers. The investor groups also want to know how the company intends to respond to increasing consumer and media criticism.

“Even though the proposal is only asking the company, currently engaged in a nationwide advertising campaign touting the greenness of their organic milk business, to report to shareholders concerning this controversy, Dean has opted to ‘lawyer-up’ and aggressively fight the proposal at the U.S. Securities and Exchange Commission” (SEC), added Sister Linda Hayes of the Springfield Dominicans, an investor-sponsor of the resolution. “This is not the kind of transparency that consumers have expected in the organic food industry.”

Unfortunately, it appears that their PR campaign has so far backfired. An active boycott by the 700,000-member Organic Consumers Association has resulted in scores of natural foods retailers around the country dropping all or part of the Horizon Organic product line.

The negative press has already led to a growing legion of loyal organic consumers looking for alternative brands. “It is very unfortunate that instead of addressing the central concerns articulated in this shareholder proposal, that the company has instead decided to invest its resources in legal maneuvers to prevent its investors from voting on this resolution,” said Daniel Stranahan of the Needmor Fund, another investor-sponsor of the proposal.

Stranahan likewise mentioned the issue of transparency. “We are concerned that Dean Foods’ lack of transparency to its shareholders betrays a similar attitude toward its core consumers.” He added, “Factory farms are antithetical to the concept of organic farming, which supports family-scale production with sound environmental policies.”

Dean Foods appeal to the SEC for the authority to prevent its shareholders from voting on the proposal may prove successful. It appears that government regulators are likely to side with the $10 billion corporation.

Dean Foods’ primary business has been somewhat stagnant in recent years, so it has been touting its investments in the organic milk labels and the country’s leading soy milk brand, Silk, as vehicles to make its stock more attractive on Wall Street.



Recall of pet food hits close to home
Business Law Info | 2007/03/19 09:10

More than 60 million cans of dog and cat food sold under dozens of brand names were recalled on Saturday after being linked to the deaths of 10 animals.

The food was manufactured by Menu Foods, of Streetsville, Ontario, which makes wet food sold as store brands for companies like Wal-Mart, Kroger and Safeway.

The company also makes food on behalf of many brand-name pet food makers. Menu Foods said it had recalled some food made for the Iams unit of Procter & Gamble. Two other pet food companies — Nestle Purina PetCare and Hills Pet Nutrition, the unit of Colgate-Palmolive that makes the Science Diet brand — recalled some of their products that were made by Menu Foods.

Menu Foods is recalling only certain gravy-style pet food in cans and pouches it made from Dec. 3 to March 6.

The company said in a statement that tests of its food had “failed to identify any issues with the products in question.” But it did associate the timing of the reported deaths with its use of a new supplier for wheat gluten, a source of protein. Sarah Tuite, a spokeswoman for Menu Foods, declined to name the supplier.



Downtown Los Angeles Revival Going Strong
Business Law Info | 2007/02/15 00:32

Downtown Los Angeles is undergoing a real estate revival of epic proportions. And the Los Angeles Urban Redevelopment Group and its people are in the thick of it.



In just the last few years, the number of downtown residents has increased by over 30%, from 18,000 to 24,000. Early next year, the Ralph's supermarket chain will be opening the first new supermarket in the downtown area in decades. And bistros, bookstores and coffeehouses are sprouting on the ground floors of numerous historical buildings that have been redeveloped over the last few years into loft-type residences.

Although business has long been L.A.'s heart, its arts and cultural institutions have given life to its soul in recent years. Each year, thousands come to watch Esa -Pekka Salonen conduct the Los Angeles Philharmonic at the Frank Gehry-designed Walt Disney Concert Hall; view avant-garde works at the Museum of Contemporary Art; or tour the magnificent Cathedral of Our Lady of the Angels.

Free outdoor concerts by Grand Performances at California Plaza during the summer months offer an eclectic mix of music, dance and spoken word programs. The Museum of Neon Art houses a unique collection of neon signs from many Los Angeles landmark buildings.

Nearby Exposition Park draws hundreds of thousands of people annually to the California Science Center and IMAX, Natural History Museum and California African-American Museum. The City's ethnic diversity is also reflected by the Japanese American National Museum located in Little Tokyo.

World-class athletic teams and venues offer sports fans a wealth of choices: the Dodgers at their longtime home in Chavez Ravine just north of the Downtown Center District; plus the Kings, Lakers, Avengers, Sparks and Clippers playing at the Staples Center.

The Los Angeles Urban Redevelopment Group's unmatched track record in Downtown spans from the pioneering sale of the first major loft conversion at the Historic Bank District, the 1½ city block Gas Company land assemblage, and the placement of the first major supermarket in Downtown in over 45 years – a 50,000 square foot Ralphs grocery store.  Each of the aforementioned transactions have one common thread: the Los Angeles Urban Redevelopment Group defied what current market conditions were dictating and uncovered value for both sides of the transaction based upon our insight into the upside of Downtown Los Angeles.

Downtown Los Angeles is finally becoming the world-class live/work/play location that it's always been destined to be. And the Los Angeles Urban Redevelopment Group is very much a part of it.


BP Settles Suit Over 2 Refinery Deaths
Business Law Info | 2006/11/09 17:56

The world's third largest publicly traded oil company BP Plc, agreed to settle a lawsuit brought by a woman whose parents died in a Texas refinery explosion, woman's lawyer said.

Though the terms of the agreement were confidential, BP set aside $1.6 billion to resolve the claims.

The London based BP, has acknowledged safety shortcomings at the plant, and settled about 1,000 suits, including all death claims except the two filed by Eva Rowe, 22. She lost both her parents in the explosion and has refused to settle unless BP agrees to change safety procedures and equipment.

Roddy Kennedy, who heads BP's press office in London, said he couldn't comment on the reported settlement. BP will pay money to community groups as part of the settlement, attorney Brent Coon said.

If if the trial had gone forward, BP faced unlimited damages and harm to its reputation. The March 23, 2005, explosion killed 15 and injured hundreds at its Texas City, Texas, refinery led to more than 1,300 suits against BP, a record fine from the U.S. Occupational Safety and Health Administration and a finding by another safety agency that the company endangered workers by cutting costs.

The evidence to be introduced, including an internal study showing the company ignored safety problems at the Texas City refinery, could have produced sizable punitive damages. The trial was set to begin with jury selection today.

Breaking Legal News.com
Sheryl Jones
Staff Writer



Employee of U.S. Military Contractor Pleads Guilty
Business Law Info | 2006/11/06 17:41

WASHINGTON - (USDOJ) A former employee of a construction company that has contracts with the U.S. Air Force in Iraq, pleaded guilty in U.S. District Court in the Eastern District of Michigan to a one-count criminal information, the Department of Justice announced today.

Samir F. Mahmoud, 56, of Bloomfield, Mich., pleaded guilty to charges of making a false statement stemming from an investigation into possible violations of the Anti-Kickback Act. U.S. District Judge Gerald E. Rosen set a sentencing date for February 2, 2007.

According to the information filed in September 2006, on July 17, 2006, Mahmoud was interviewed by special agents from the Defense Criminal Investigative Service and U.S. Immigration and Customs Enforcement (ICE) regarding allegations of illegal payments and gifts offered to company employees in exchange for promised assistance in obtaining, retaining or altering the Air Force contracts and subcontracts associated with the reconstruction of Iraq. During the interview Mahmoud willfully made materially false statements in that he denied providing gifts to other company employees when he had offered and provided things of value to at least one company employee.

The maximum sentence for a charge of making a false statement is up to five years in prison and a $250,000 fine.

In October 2006, Deputy Attorney General Paul J. McNulty announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other governmental programs. The Procurement Fraud Task Force chaired by Assistant Attorney General Alice S. Fisher of the Criminal Division includes the FBI, the U.S. Inspectors General Community, the Executive Office of the United States Attorneys and others.

The case was prosecuted by Trial Attorneys Nathaniel Edmonds and Stacey Luck of the Criminal Division's Fraud Section.



Record Companies Sues Parent and Her Kids
Business Law Info | 2006/11/02 18:30

Five record companies, represented by the Recording Industry Association of America, filed a lawsuit in federal court in White Plains on Wednesday against Patricia Santangelo's son and daughter, accusing them of pirating songs over the Internet.

The lawsuit accuses Michelle Santangelo, 20, and brother Robert, 16 of downloading and distributing over 1,000 songs, including "Pretty Fly (for a White Guy)" by the Offspring, "MMMBop" by Hanson and "Beat It" by Michael Jackson, and that Michelle acknowledged downloading songs on the family computer.

The complaint read, "In short, each of the defendants participated in the substantial violations of plaintiffs' copyrights at issue and then concealed their involvement, standing idly by as Patricia Santangelo repeatedly protested their innocence and chastised plaintiffs for filing allegedly frivolous litigation."

Jordan Glass, attorney for the Santangelos, disputed the recording industry's allegations and said he was at Michelle Santangelo's deposition and does not recall her "admitting or acknowledging downloading."

Called "an Internet illiterate parent," by a federal judge last year, Paricia Santangelo came to the forefront of attention by her denial of downloading songs and her adamant refusal to settle with the recording industry, for $7,500 to keep her name out of the lawsuit.

Defenders of Internet freedom helped pay for Santangelo's attorney. Patricia Santangelo stated her personal innocence but of her children she said she had no knowledge of them downloading and, if they did, to blame the computer programs.

The industry is requesting unspecified damages for each download, an injunction, and court costs.

The record companies have forced most file-sharing computer networks , and has sued thousands of individuals, including minors, for allegedly music pirating.



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