Lobster 207 and the Maine Lobstering Union have reached a settlement worth more than USD 5 million (EUR 4.8 million) after five years of litigation against the latter firm's former CEO Warren Pettegrow.
The Maine Lobstering Union owns Lobster 207, a Trenton, Maine, U.S.A.-based lobster wholesaler and co-op. The union sued husband and wife Anthony and Josette Pettegrow, along with their son Warren, in 2019 alleging they defrauded the union of nearly USD 2 million (EUR 1.9 million).
“The Maine Lobstering Union Local 207 welcomes this settlement and will stand strong against any threats to our lobster industry,” Maine Lobstering Union Local 207 President Joel Strout said.
The union – which is part of the International Association of Machinists union – claimed the Pettegrows breached an agreement made with Lobster 207 which would see the union receive the family’s wholesale business, Trenton Bridge Lobster Pound. The agreement stipulated the Pettegrows were to leave the wholesale business, but the union said that, instead of doing so, they engaged in a scheme that defrauded Lobster 207.
“Former lobster 207 CEO Warren Pettegrow, his parents, their companies, and another alleged co-conspirator had engaged in the course of misconduct that resulted in serious economic injuries for Lobster 207,” IAM Union Eastern Territory General Vice President David Sullivan said during a press conference announcing the settlement. “The amount of the settlement today is public, and it speaks volumes of where we settle up today after five years.”
Sullivan said that the settlement comes after a federal court dictated Pettegrow’s firing from Lobster 207 was justified after Pettegrow filed for arbitration in 2020 claiming he was terminated without warning or just cause. Arbitration ruled in favor of Lobster 207 in 2021, finding Pettegrow competed against his own company and engaged in acts of dishonesty and gross misconduct.
The original lawsuit claimed Pettegrow engaged in a number of different behaviors that justified his firing, including directing Lobster 207 trucks to unload lobster to then be sold back to Lobster 207 at a higher price, selling “phantom” lobsters that didn’t exist, and pocketing a USD 0.10 (EUR 0.09) per-pound premium that Lobster 207 decided to pay its members.
“The arbitrator found that Warren Pettegrow had breached his employment agreement and fiduciary duties to Lobster 207 by committing acts of ‘gross misconduct’ and that, ‘from day one,’ Pettegrow had intended to assist his parents and their company, Trenton Bridge Lobster Pound, Inc., in making money in the wholesale lobster business at Lobster 207’s expense,” Lobster 207 said in a press release soon after winning its lawsuit in 2021.
The arbitrator also said that the evidence in the trials showed Pettegrow intended to continue to make money in the wholesale lobster business and assist his parents in doing so and was in breach of his offtake agreement from the beginning of his employment with Lobster 207 and continuously up-charged the union for lobster.
“Although his employment agreement prohibited Warren Pettegrow from being connected to Trenton Bridge, Warren Pettegrow received daily Trenton Bridge financial reports and continued to sign Trenton Bridge checks, authorized Trenton Bridge’s wires and managed Trenton Bridge’s employees,” Arbitrator Frederick E. Connelly wrote in his decision. “There was considerable evidence that Warren Pettegrow arranged for the lobsters Trenton Bridge used, as well as other product, such as scallops, to be trucked at Lobster 207’s expense without proper reimbursement to Lobster 207. In all important respects, he continued to run a wholesale lobster business for Trenton Bridge.”
While it won the arbitration, Sullivan said there were still loose ends to tie up after the 2021 decision.
“The case was returned to federal court for a jury trial to resolve the remaining allegations against all defendants,” Sullivan said.
He added that the settlement came on the eve of jury selection for the case, which was set for 6 January, and concludes the case in its entirety.
“This settlement underscores the importance of holding individuals accountable and protecting the Maine lobstering communities,” Sullivan said. “The Maine Lobsterman’s Union and Lobster 207 Co-op reaffirm our commitment to safeguarding members interest in ensuring transparency and integrity in the lobstering industry.”
Current Lobster 207 CEO Michael Yohe said the settlement comes as a relief after five years of litigation.
“We can put this behind us to move forward,” Yohe said during a press conference. “We’ve spent five years working very hard, diligently, with lawyers to get this to its final status.”
Yohe said the union was prepared to go to trial over the issue – but the settlement will avoid dragging the issue out for even longer and help the union move on.
“I believe that though it’s over, it’s just a new start for us,” Yohe said. “We have to rebuild, to regroup. We’ve got to remain focused on growing and rebuilding what we started and the trust and transparency with our fishermen and all fishermen in the state, and we’re very happy that we can move forward at this point.”
Yohe said one of the goals that led to the union’s creation in the first place was to increase the fairness and transparency in the Maine lobster industry and that the union will continue focusing on that goal now that the lawsuit has been resolved.
“That’s what we look forward to continuing to do from this point on,” Yohe said. “That’s where we’re at; we’re pretty relieved.”
