S.A. produce biz bankrupt, blames H-E-B

Delta Produce LP, a San Antonio institution that filed for bankruptcy Tuesday and closed its doors after more than 30 years in business, is blaming H-E-B for its demise.

In a lawsuit also filed Tuesday in U.S. Bankruptcy Court in San Antonio, Delta claims it was prevented for decades by H-E-B from selling tomatoes — and later other produce — to the grocer's competitors. Delta alleges the restrictions created financial problems when H-E-B increased its purchases of tomatoes from other sellers and reduced its orders from Delta.

The restrictions ultimately were lifted, but Delta says it came too late for it to establish business ties with other retailers, including Walmart, which expanded its grocery operations in San Antonio starting in the 2000s.

Delta is seeking more than $100 million in damages from H-E-B, according to Randall Pulman of Pulman, Cappuccio, Pullen & Benson LLP, the law firm representing the produce company in the lawsuit.

H-E-B spokeswoman Dya Campos said the company had no comment on the suit.

Delta and a sister company, Superior Tomato-Avocado Ltd., employed about 225 people between them, Pulman said. Superior also filed for bankruptcy protection Tuesday.

Delta operated from an 118,000-square-foot refrigerated facility at 2001 S. Laredo St. Pulman called Delta a “repacker.” It would buy tomatoes from producers and then sell them to H-E-B. The volume of tomatoes purchased by H-E-B gave Delta “buying power” with the producers, he said. Delta could have increased its buying power, and thus bought tomatoes at even lower prices, had H-E-B allowed it to sell to other retailers, he said.

“What's interesting about this is (that) H-E-B would have told one of its primary vendors, ‘Don't sell to our competitors,'” Pulman said. “H-E-B didn't want that competitive advantage used for the benefit of anybody else.”

That placed H-E-B's competitors at a disadvantage because it raised their costs, the suit alleges. As a result, “consumers were denied meaningful choices regarding from whom to purchase their groceries,” it adds.

By 1994, H-E-B was buying 95 percent of its green, Roma and cherry tomatoes from Delta, the suit says. Based on the business, Delta spent $750,000 to buy and install a tomato sizer and color sorter. But before it received the machine, Delta says in the suit, H-E-B started buying tomatoes from a shipper in Mexico. Purchases from Delta were “drastically” reduced as a result, the suit alleges.

The suit accuses H-E-B of “unlawful monopolization” and restraint of trade.

Delta has assets of about $8 million and liabilities of about $8 million, Pulman said.

While the produce business has been shuttered, Pulman said Delta hopes to reorganize its trucking business and sell its assets so employees and creditors can get paid. It operates a fleet of more than 30 long-haul tractors, according to its website.

Last week, companies filed three federal lawsuits seeking to collect from Delta more than $575,000 in claims under the Perishable Agriculture Commodity Act. The law provides farmers and agricultural purveyors a preferred status to get paid, Pulman said.

Express-News Business Writer Vicki Vaughan contributed to this report.