Judge slices up SweeTango tort, orders sides into mediation

A judge on Friday dismissed most claims apple growers and others made in a lawsuit against the University of Minnesota and an orchard that got an exclusive licensing deal to sell the popular SweeTango apple.

In a 35-page ruling issued Friday, Hennepin County Judge Lloyd Zimmerman barely kept alive the lawsuit filed last summer by 24 plaintiffs, including orchards, individual growers and a production facility, over the apple variety the university developed by crossing a Honeycrisp and a Zestar.

The suit claimed that the exclusive agreement between the university and Pepin Heights Orchard hurt other orchards by limiting the number of trees they could grow and restricting them to selling the SweeTango only to consumers or individual stores, rather than through the wholesalers, a key source of revenue for many orchards.

The plaintiffs say the only way they can stay competitive is by selling SweeTango apples to large wholesalers and retailers. The growers alleged antitrust violations, unfair monopoly, price fixing and denial of due process.

But Zimmerman rejected most of their arguments. He dismissed the plaintiffs' monopoly claim against the university, saying its "apple breeder," David Bedford, had an exclusive lawful patent on the SweeTango. The judge said a lawful patent cannot simultaneously be an unlawful monopoly.

Zimmerman agreed with the university that it is immune from antitrust laws. He also dismissed the growers' price-fixing and conspiracy claims against the university and Bedford, but allowed them to go forward against Pepin while conceding the allegations appear "thin."

Zimmerman left in place only one claim against the university: the plaintiffs' allegation that they were denied procedural due process. The growers claim the university violated their rights by entering the exclusive agreement without giving them a right to be heard. Zimmerman, however, said "the life expectancy of this claim is guarded at best."

Tim Byrne, vice president of sales at Pepin Heights, noted that the meat of the case -- the antitrust claims -- are gone, as well as most other claims. "Plaintiffs have the burden to prove their case. We're confident discovery will reveal their remaining claims to be meritless as well," he said.

Lisa Lamm Bachman, the lawyer for the growers, said, "We're happy with the results. We're looking forward to trying to resolve this. ... We remain optimistic."

University officials say the more restrictive limits on the SweeTango are meant to maintain high quality standards that will better protect the product's long-term value. The Honeycrisp debuted in 1991 and ultimately earned a reported $8 million in royalties. The problem was that anyone could grow the wildly popular apple. Sometimes it was planted in areas that caused quality to suffer and the apple's reputation to decline, the university argued.

Byrne said new delicious apples generate buzz -- and profits. "That excitement creates more demand for other quality apples, pulling consumers away from our real competitors, which are unhealthy snacks," Byrne said.

He said the plaintiffs threaten the university's "ability to create strong, steady streams of new revenue in the face of declining public financial support.