Huy Fong Foods Inc., the makers of uber-popular hot sauce Sriracha, is suing the company that provides their chile peppers for alleged breach of production agreement, breach of contract, and civil theft, NBC reports. According to Huy Fong, Underwood Ranches is refusing to return $1.4 million in pre-payments and is holding hostage $7 million worth of Huy Fong’s equipment.
Underwood has supplied the chile peppers used by Huy Fong for the past 30 years, according to the lawsuit. During that time, Huy Fong has paid Underwood a guaranteed fee in addition to the costs associated with harvesting chile peppers for millions of bottles of Sriracha each year. Beginning in 2008, Huy Fong paid Underwood in yearly pre-payments and would make up the difference after the actual cost had been determined. But in 2016, the suit alleges, Huy Fong overpaid Underwood by $1.4 million, and Underwood has not agreed to return that money.
Complicating matters, the complaint states that the terms of the payment agreements changed each year. Parts of the agreements were recorded in writing, but other aspects of the arrangement were agreed upon verbally, or were simply based on past practice.
“Huy Fong has demanded that Underwood allow it to take possession of the equipment, but Underwood has refused to do so,” the suit says. “Instead, Underwood is holding Huy Fong’s equipment hostage, severely impacting Huy Fong’s ability to complete the 2017 harvest and greatly increasing the expense associated with the harvest.”
This isn’t the first time California-based Huy Fong Foods has run into legal trouble. In 2014, it was on the opposite end of a lawsuit after residents of the city of Irwindale, where the Sriracha factory is located, complained of burning eyes, irritated throats, and headaches caused by hot sauce production. But, fears that this would lead to a Sriracha shortage were overblown, and the suit was dropped.
Huy Fong processes all of the chile required for the year during a three-month period beginning as soon as September and ending by December, according to the LA Times. There’s no word yet on how the suit could affect the number of green-capped bottles that end up on store shelves this time around.
• Heating Up: Sriracha Sues Chili Pepper Provider [NBC]
• Sriracha Battle Over: City Council Drops Lawsuit and Public Nuisance Declaration [E]
• Sriracha sauce factory odor causing headaches, burning eyes, city says [LA Times]