Farmers file class-action suit against tobacco company

Several Kentucky farmers have filed a class-action lawsuit against a leading tobacco merchant they say failed to honor contracts to purchase burley tobacco from them at the end of the 2010 crop year.

Now some of the farmers say they would rather leave the business than gamble on tobacco.

The lawsuit, which was filed against Universal Leaf North America last week in Harrison Circuit Court, says hundreds of farmers have lost what amounts to millions.

Among the plaintiffs are Jerry Feagan of Berry, Steve Lang of Cynthiana and Thomas Leach and Larry O'Neill, both of Dry Ridge, who say agents of Universal Leaf North America refused to accept tobacco, the lawsuit says. They are seeking monetary damages to be determined at trial.

Universal Corporation, which is based in Richmond, Va., is the world's leading tobacco merchant and processor, the lawsuit said. Universal Corporation is the parent company of ULNA, which is based in Nashville, N.C., and registered to do business in Kentucky.

A clerk who answered the phone for Universal Corporation said the company's attorney does not answer questions about litigation.

According to the lawsuit filed Tuesday, ULNA "unilaterally decided to forgo the inspection process and almost universally rejected the tobacco that it had contracted tobacco producers to deliver to the Cynthiana, Kentucky receiving station."

Attorney Jack S. Gatlin said there was nothing in the farmers' contracts that said the company could simply decide not to purchase tobacco. Gatlin discovered the situation when a farmer approached him, worried about losing his farm and his house because he had not received payments from the tobacco company.

He said tobacco farmers did not deserve to be treated the way Universal Leaf treated them. "A lot of people are financially crippled by this," Gatlin said.

He said most of the farmers were told there was no longer a market for the tobacco. But "there's nowhere in that contract that says they can just decide not to buy it," Gatlin said.

The law firm handling the case, Strauss & Troy in Cincinnati, continues to search for others who were "betrayed by tobacco companies."

Steve Lang signed a contract on April 8, 2010 that said ULNA agreed to purchase 28,500 pounds of tobacco from him for a price dependent on the grade the crop received at inspection, the lawsuit says. On Dec. 10, Lang delivered his crop to the receiving station in Cynthiana but it was rejected by an ULNA agent without "reasonable inspection."

Lang was able to sell his crop at open auction but lost more than $15,000.

Reached by phone, Lang said he did not want to comment on the case. O'Neill, who could not be reached for comment, lost more than $17,000, according to the lawsuit.

Feagan, Leach and O'Neill signed similar contracts on April 8 and faced similar roadblocks when they delivered crops to the receiving station in Cynthiana.

Feagan produced high-quality burley tobacco, the lawsuit says, but at the end of November 2010 a representative from ULNA visited Feagan's farm and told him the company did not intend to purchase the tobacco according to the price agreed upon in the contract. Instead, the company offered Feagan 30 cents a pound.

Feagan decided to sell his tobacco in an open auction at Clay Tobacco Warehouse in Mt. Sterling. A portion of Feagan's crop sold in auction for 88 cents a pound.

Feagan returned to ULNA on Dec. 14 and asked them to purchase the rest of his crop, the lawsuit said. They purchased a portion of the remaining crop. He returned to ULNA again in February and his tobacco was refused without inspection.

He sold the rest of the crop at open auction. But Feagan suffered a loss of more than $10,000, according to the lawsuit. In a telephone interview, Feagan said he lost $21,000.

"It was a very stressful winter, knowing we couldn't get our money back," Feagan said.

Feagan, who also does construction work, said he no longer plans to grow tobacco. Leach also said he planned to leave the business.

"That's always got me through six months of winter," Feagan said. "So I don't know what I'm going to do this fall."

Thomas Leach, who is not the University of Kentucky sports announcer, lost more than $14,000 because of ULNA breach of contract, the lawsuit said.

"I worked all year and lost money," Leach said. "Now you step back and you have farm payments and other commitments. What do you do?"

Leach said it will be difficult to replace the money he's lost and won't return to the tobacco industry.

It's an industry that has already suffered. Tobacco production has significantly declined over the years.

There were 8,112 tobacco farms in Kentucky in 2007, according to the latest numbers available from the Kentucky Department of Agriculture. And 887 of those farms accounted for 75 percent of the sales.

Kentucky produced 203 million pounds of tobacco in 2010 compared to the 432 million pounds of burley tobacco alone that was produced in 1975.

"It's a way of life coming to an end," Leach said.

source: www.kentucky.com