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CFO Says Tomato Giant Fired Him for|Objecting to Illegal Use of Pesticides

SALINAS, Calif. (CN) - The former CFO of Eurofresh, a leading producer of greenhouse tomatoes, claims the company fired him because he refused to allow the company's illegal use of at least 15 pesticides. Brian McLaughlin claims that when he objected to the illegal practices, the executive vice president of operations told him: "'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 sued the company in Monterey County Court, alleging wrongful firing and Labor Code violations. He says he was fired because "he refused to participate and openly opposed the company's unlawful use of chemicals and pesticides."

Eurofresh's pretext for his "abrupt" firing was "that the company's senior leadership had purportedly lost 'trust and confidence' in his abilities," McLaughlin says.

McLaughlin was CFO from April 2, 2008 until Nov. 18, 2009, "when the company abruptly terminated his employment."

The complaint describes Eurofresh as "the leading year-round producer and seller of greenhouse tomatoes in the United States." It continues: "From its founding in 1992 and prior to September 2009, Eurofresh achieved its competitive advantage, in part, through the deliberate and willful use of at least fifteen unregistered and, therefore, unlawful chemicals and pesticides to enhance the company's tomato crops grown for human consumption."

In May 2008, the month after he became CFO, McLaughlin says, he learned that Eurofresh had "for years knowingly used chemicals, pesticides, and growth regulators that were not approved by either the United States Environmental Protection Agency or the Arizona Department of Agriculture for use on greenhouse tomatoes."

He says the pesticides - including Asepta Carex, Calypso, and Ethrel - were imported from The Netherlands and helped Eurofresh achieve its "competitive advantage."

McLaughlin says he refused to sign or approve payment of invoices for the illegal chemicals because he had concerns about the "health and safety risks to both Eurofresh employees and the consuming public caused by the company's unlawful use of chemicals ... [and] also about the company's potential criminal liability for knowingly engaging in such illegal activity."

McLaughlin says he "discovered these unlawful practices" when the company's controller, Steve Lunt, asked him to sign the invoices for purchase of the chemicals, because "Lunt stated that although [Frank] Van Straalen directed the purchase and use of the chemicals, he did not want his initials to appear on the invoice."

Van Straalen, now executive vice president of operations, was formerly the CFO, McLaughlin says. He adds: "Plaintiff refused to sign or approve the invoices."

He claims that he learned later that Van Straalen and CEO Johan van den Berg "had collectively ordered the use of unregistered chemicals and growth regulators for several years."

McLaughlin says he "voiced his resistance to the company's practices with Van Straalen, who refused to discontinue the practice." Because of the "ongoing complicity in the unlawful application of chemicals between Van Straalen and van den Berg," McLaughlin says, he "directly advised Eurofresh's Board of Directors of the company's unlawful practices."

He says the board "immediately convened a meeting to discuss the issue, during which van den berg admitted his knowledge of the company's unlawful practices." The board formed an investigatory committee and hired a law firm to assist it, which in turn hired an environmental consulting firm. He says the investigation "revealed an extensive history of unlawful procurement and use of unregistered chemicals."

Around that time, he says, the company changed its marketing slogan from "grown without pesticides" to "pesticide free product."

He adds: "Van Straalen verbally threatened Plaintiff that he needed '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.'"

Eurofresh eventually registered Ethrel with the EPA and with Arizona, but the EPA refused to approve of the use of the pesticide, according to the complaint. McLaughlin claims that Van Straalen did not notify Eurofresh's executive team of the EPA decision, but told Karin Tifft, the company's biocontrol manager, "to continue the use of Ethrel pending an appeal of the EPA's declination."

McLaughlin says that van den Berg "expressed great frustration" when company president and then-CEO Dwight Ferguson ordered the company "to cease using Ethrel," after seeking legal advice on the issue.

Van den Berg "estimated that cessation [of Ethrel] would lower monthly production volumes by 1 million pounds or more," and he "continued to apply pressure on Ferguson to continue the use of Ethrel notwithstanding the EPA's prohibition," according to the complaint.

The EPA granted approval to use Ethrel in September 2009. McLaughlin was fired on Nov. 18 that year.

McLaughlin's complaint begins by stating that his "relationship with the company's senior leadership got off to a rocky start" when within weeks of his arrival, he and auditors found that Eurofresh had overstated its earnings by $10.3 million, and that it may have been overstating its earnings since 2005. The company had to restate its earnings.

"Former CFO Van Straalen and Johan van den Berg were extremely upset and embarrassed when the company's accounting irregularities came to light and strongly resisted plaintiff's efforts to reform the company's accounting practices," McLaughlin says. Then came the pesticide problems.

McLaughlin seeks punitive damages for wrongful firing, retaliation, Labor Code violations, and emotional distress. He is represented by David Burtt and Andrew Mailhot with Ongaro, Burtt and Louderback of San Francisco.

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