VICTORIA, Texas (CN) - Bear Ranch cannot "have its steak and eat it too," a federal judge ruled, paring down the beef producer's fraudulent inducement claims against an American supplier of Akaushi cattle.
HeartBrand Beef's herd of Akaushi cattle began with a small group imported to the United States under a loophole in a 1992 trade act between the U.S. and Japan, according to HeartBrand's website.
Bear Ranch says it bought from HeartBrand, among other sources, as it assembled a herd of the specialty breed.
But that purchase came at too high a price, Bear Ranch complained when it sued HeartBrand, its chairman Ronald Beeman and the American Akaushi Association in March 2012.
The beef producer accused HeartBrand of maintaining a monopoly on Akaushi beef in the U.S. by illegally applying anticompetitive restrictions to the cattle it sells, their offspring, and those cattle exchanged between other parties.
HeartBrand requires purchasers to register offspring with the American Akaushi Association and restricts sales of the cattle to members of the association, according to Bear Ranch's complaint.
The beef producer eliminated its antitrust claims in an amended complaint last August, and expanded the relief it sought for fraudulent inducement.
U.S. District Judge Gregg Costa decided last week that Bear Ranch could proceed with the claim that it was led to overpay by HeartBrand touting itself as the only supplier of the cattle outside Japan.
"It may turn out to be the case, as defendants contend, that Bear Ranch actually got a good deal and underpaid for the cattle," Costa wrote. "But that is an evidentiary determination that the court cannot consider at this stage. The allegation that Bear Ranch suffered 'overpayment' damages as a result of defendants' misrepresentations is sufficient for it to move on to the more challenging phase at which it will have to offer proof to support that claim."
Bear Ranch may not, however, hold onto the cattle and petition the court to invalidate the restrictions in its contract with HeartBrand, according to the ruling
"Bear Ranch essentially wants to 'have its steak and eat it too' by seeking to keep the cattle it purchased under the contract yet undo part of that deal - the contract restrictions to which it agreed," Costa wrote. "The law does not allow such partial rescission."
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