Massive Fine Isn’t the End of Miracle Gro’s Disaster
Class-Action Lawsuit Alleges Mafia-Like Activity
Miracle Gro Boss Says One Employee Acted Alone in Misleading Government
Yesterday the Justice Department handed down $12.5 million worth of fines and penalties, but that only lengthened the long line of trouble likely awaiting the world’s largest lawn and garden chemical company.
At least a dozen, perhaps more civil lawsuits are in the works against Scotts Miracle Gro as a result of its February 2012 admission that it knowingly tainted bird seed with pesticides that are toxic to birds and otherwise mis-led pesticide regulators in the sales and labeling of more than 100 products. A class-action lawsuit is being readied and lawyers are aggressively seeking consumers who purchased an estimated 73 million tainted bags of Scotts birdseed between November of 2005 and March of 2008. Even though Scotts was warned by members of its own staff that the seed was tainted with pesticides, the company knowingly sold the products under several brand names, including “Morning Song,” “Country Pride,” “Scotts Songbird Selections” and “Scotts Wild Bird Food.”
“Scotts failed to disclose that its bird seed contained pesticides that were known to be highly toxic to birds,” states the class-action lawsuit. “Instead, defendant knowingly sold millions of units of its defective and toxic bird feed products, knowing the products would be widely used to feed birds at purchasers’ homes, in back yards and in wild and natural environments across the United States. Due to defendant’s concealment of material information regarding its use of toxic chemicals in its products, defendant’s products were not appropriate for their intended and marketed use as bird feed, and were not worth the purchase price paid by plaintiffs and the class. As a result of defendant’s criminal enterprise, thousands of American consumers and other purchasers across the country did not receive the benefit of their bargain and were damaged.”
The class-action suit, according to reports, seeks more than $5 million in compensatory and treble damages for claims that fall under the law that covers mafia-like activity and other ongoing criminal organizations (RICO) and alleges violations of consumer fraud and unfair trade practices laws in several states. The case was brought forward by Douglas Dowd and Alex Lumaghi of Dowd & Dowd and John Driscoll in St. Louis, Missouri.
The story of the $12.5 million fine, carried on several major news outlets, lit the blogosphere afire Friday night and into this morning.
“Scumbags!” stated one observer. “No fine is big enough,” said another. “For 70 million units sold? Fair fine? How much do their top dogs make?” asked yet another.
STILL IN DENIAL
Only time will tell if the latest news will truly hit Miracle Gro’s bottom line at the peak of the fall lawn care season. When the stock market closed Friday, just as the news of the fine began to spread, Miracle Gro was up to 43.21 per share — a significant increase over recent negative fluctuations — although financial forecasters do predict the stock will dip Monday.
In posting its acknowledgement of the largest pesticide-related fines in American history on its web site, Scotts Miracle Gro’s release said the company “neither admits nor denies the allegations” related to the mislabeling of products. The CEO Jim Hagedorn continues to insist that one long-time employee — Sheila Kendrick — bore all the responsibility for the five-year ruse.
“No one else in the company knew about the illegal activities of one of our associates,” said Hagedorn, who has not offered an explanation as to a possible motive of a woman who was, by many accounts, much beloved by her co-workers.
In an open letter posted on the company’s web site late yesterday, Hagedorn also stated that coating the bird seed with pesticides to avoid infestation from insects “is a standard practice in the wild bird food industry” and Scotts issued reports that the tainted seed came as the result of “three rogue employees.”
Hagedorn went on to assure readers that the company had taken steps to assure nothing like that would ever happen again — and ultimately hopes that consumers believe the $12.5 million fines and penalties were the result of the actions of four misguided employees rather than a corrupt company culture.