After co-founder of Pacific Foods dies, fight erupts over $250 million

A legal fight has broken out over whether the organic food company Pacific Foods has shorted its late co-founder’s estate by $250 million.

Most of that money was supposed to go to charitable causes, but instead has enriched the Tualatin-based company, a lawsuit alleges.

The suit was filed this week by the estate of Ed Lynch, who died in May 2015 at age 94. Lynch designated that "substantially all of" his fortune go to philanthropic causes, the suit states.

One of Lynch’s four children -- Michael Lynch -- is listed as the plaintiff in the lawsuit, acting behalf of his late father’s estate.

The lawsuit claims that surviving co-founder Chuck Eggert and Pacific Foods “vastly” undervalued Ed Lynch’s 43 percent share of the company after he died. The suit doesn’t say how much the company agreed to pay the estate for the shares, but the suit says the estate is now due more than $250 million.

The lawsuit bases that figure off news last month that Campbell Soup Co. has agreed to pay $700 million to acquire the company. The company makes a variety of foods, including soup, hummus and almond drinks.

Eggert is Ed Lynch’s son-in-law, and the two founded the company in 1987, according to the suit. Pacific Foods describes Lynch as an "original co-investor."

After the redemption of Lynch’s shares, Eggert’s stake in the company significantly increased: Instead of owning just a 29 percent interest, he became a majority owner with a 50.4 percent share, the suit says. And after Lynch’s death, the suit states, Eggert also came to own 100 percent of the voting shares.

In a statement released Friday to The Oregonian/Oregonlive, the company said it had acted properly and that Ed Lynch wouldn’t have wanted this dispute to erupt.

“We were fortunate to have financial investment from family to support the launch of Pacific 30 years ago," the  statement says. "As any business would do, we long ago established a buy/sell agreement, which was triggered in 2015 at the death of Ed Lynch, the father-in-law of our co-founder Chuck Eggert.

"We followed a valuation process that was agreed to by Ed, and we followed that process to the letter. It required an appraisal by an independent, outside firm which Ed initially retained years ago and which performed an annual appraisal of Pacific Foods for the 17 years preceding his death.

"We don’t believe Ed would have wanted this conflict and are disheartened by this turn of events."

Ed Lynch lived in the Vancouver area for more that 50 years, according to stories in The Columbian newspaper. The newspaper stated that he made a substantial amount of his fortune after rising through the ranks of Kiewit Pacific, a construction company, to become its president. He was known as a generous philanthropist to community organizations, including PeaceHealth Southwest Medical Center and the Fort Vancouver National Trust.

When Ed Lynch traveled, he was known to fly coach rather than first class to save the money so it could be donated to charity, according to a friend quoted in The Columbian.

This week’s lawsuit lists as defendants Pacific Foods, Eggert and directors or shareholders Johnathan Gehrs and Kaye Barnes. The suit also lists Moss Adams, a Portland accounting and consulting company, as a defendant for its work in determining the value of the company after Ed Lynch’s death.

Portland attorneys Gary Berne, Timothy DeJong and Jennifer Wagner are representing Lynch’s estate. The suit was filed in Multnomah County Circuit Court.

Popular

More Articles

Popular