Major US tuna canner StarKist & Co. has tentatively agreed to pay at least $50 million to the US government as a penalty for its participation in the conspiracy to fix canned tuna prices. But paying the maximum $100m fine could "bankrupt" the company, its general counsel Scott Meece told San Francisco, California-based federal judge Edward Chen.

Meece was speaking at a Nov. 14 hearing during which StarKist, which is owned by South Korea's Dongwon Enterprise, pleaded guilty to the price-fixing charge and said that the company's ability to pay should be factored in when determining the amount of the fine to be paid. The $100m maximum was determined using federal sentencing guidelines and an estimated sales volume of $600m of canned tuna during the 2011 to 2013 period.

"And really, this is a $50m hearing. The low end is 50m, the high is 100m. This is really about the life or death of our company, and its ability to continue as an ongoing concern," Meece said.

Meece's statements, revealed in recently released court transcripts, have not been previously reported.

The size of the fine has become an issue in the criminal case because, according to Reece, restitution to victims of StarKist's price-fixing -- the individuals and companies that bought tuna at inflated prices -- has "primacy" when the judge determines the amount of the fine.

"Now, we're not walking away from our responsibility here, Your Honor. We're agreeing to pay, at a minimum, $50m. It's just simply $100, will either bankrupt the company, or absolutely impair its ability to pay restitution to victims. And so that will be central," Meece said.

Bumble Bee Foods also pleaded guilty to criminal price-fixing charges last year and agreed to pay a $25m fine to the Department of Justice (DOJ). Bumble Bee could have faced a $136m penalty if its ability to pay wasn't taken into account, DOJ officials wrote in a sentencing memorandum. Bumble Bee's fine could rise to a maximum of $81m in the event of a sale of the company.

The other big US tuna canner alleged to have fixed prices, Thai Union Group's Tri-Union Seafoods, which trades as Chicken of the Sea International, has avoided a criminal conviction and fine because the company acted as a whistleblower to the DOJ, informing on its rivals in exchange for leniency.

Evidentiary hearing

Chen was originally slated to determine Bumble Bee's sentence on May 15 but that has been pushed to June 12, court records indicate, due to complications related to the determination of the fine.

Specifically, StarKist has said it plans to ask the court for permission to conduct an evidentiary hearing during which it will present evidence of the company's ability to pay. That hearing, Meece said in November, will include "expert witnesses describing the financial situation -- state of the company, what money it has available to pay in terms of a criminal fine, as well as payment of anticipated civil-damage claims which have already been filed".

The company hasn't yet formally requested for an evidentiary hearing to be scheduled. However, lawyers representing plaintiffs in the class-action civil suits against the canners have sought judge Chen's permission to be heard as part of sentencing, pursuant to their rights under the Crime Victim's Rights Act.

"We’ve done a lot of work on the financial state of the company. We have a perspective we'd like the court to consider," Christopher Lebsock, an attorney representing a group of large wholesalers and distributors who dealt directly with the canners known as "direct purchasers", told Undercurrent News.

Lawyers representing "indirect purchasers" of canned tuna have also asked to be heard as part of sentencing.

Court records indicate that StarKist won't oppose the plaintiffs request to be heard but is objecting to the plaintiffs' request to view a government presentencing report in order to weigh in regarding the size of the fine.

"[The direct purchasers] offer no compelling need for the disclosure of the presentence report and unredacted sentencing memoranda and therefore cannot overcome the strong presumption in favor of confidentiality," StarKist said.

The DOJ, in a separate reply to the direct purchasers' request, spoke similarly arguing that the presentence report should be kept confidential.

All three canners have recently been active in reaching settlements with large customers such as Walmart, Sysco Corp., US Foods and others, hoping to put an end to the nearly four-year-old matter.

However, Lebsock said that the class action lawsuits, which are being heard in a San Diego court, are still moving ahead. The next hurdle that plaintiffs need to be certified as a class, a process to ensure that that the facts of the individual cases are common enough to be treated as a group.

This would allow the groups to have common legal counsel and pool many plaintiffs' resources together to pay the costly bills for expert witnesses, lawyers fees and other expenses that come in class-action litigation.

However, in responding to the certification motions, Thai Union and Bumble Bee have argued that there are too many differences between within some of the groups of plaintiffs to be treated as a class.

Lebsock, however, said that he believes plaintiffs will prevail on the motion.

“We feel optimistic and good on our chances on certification,” he said.