'The pepper makes the product': inside Sriracha's spicy lawsuit
For 28 years, the chili peppers that made Huy Fong Foods’ world-famous Sriracha hot sauce came from one southern California
grower.
One year after that partnership ended, in the midst of a spicy legal battle, that grower, Underwood Ranches, came out with its own line of sriracha sauce.
As they hurtle toward trial, a once multimillion-dollar alliance between an immigrant success story and a homegrown California farm owner has devolved in a fashion as fiery as the sauce in question.
Huy Fong Foods’ Sriracha sauce has a worldwide following, with many devoted hot sauce lovers swearing by the green-tipped bottle with the rooster logo for all their flavor needs. Founded by David Tran, an officer in South Vietnam’s army who fled with his family to California after communist North Vietnam reunited the country, he named the company after the freighter he sailed in from Vietnam.
In 1988, he found the perfect counterpart in Craig Underwood and his peppers at Underwood Ranches. The first year, Underwood grew only about 50 acres of peppers. By 2016, the last year the two worked together, he was planting on about 1,700 acres for Huy Fong.
According to court documents, the two parties operated under an agreement that was “partly oral, partly written and partly established by the parties’ practice”.
Under this agreement, Underwood would estimate the cost of equipment and chili production ahead of each harvest season and Huy Fong would pay in installments. After each season, Underwood would tally the actual cost,
and Huy Fong would pay in full.
Attorneys for both parties either did not return requests for comment or declined to comment, but Tran and Underwood were unable to negotiate a new agreement in 2017, according to court documents. In an online post Huy Fong Foods claims that Underwood Ranches ended its partnership “without any warning”. In a cross-complaint, Underwood Ranches accused Huy Fong of trying to cut costs by establishing a new legal entity to procure peppers called Chilico, and attempting to convince Underwood’s chief operating officer to work for Chilico instead.
After their partnership ended, Huy Fong alleged that it overpaid Underwood by $1.46m Huy Fong Foods filed a breach of contract lawsuit for its money and $7m in equipment back.
Underwood Ranches then countersued for $20m, claiming that because of the loss of business, it had to lay off 44 employees.
In the midst of the legal proceedings, Underwood began producing its own sriracha sauce during the 2018 harvest season, selling and marketing the bottles locally.
Huy Fong did not respond to the grower’s new business venture until March, when the company posted the same message to its Instagram and Twitter feed.
“Underwood Ranches came out with their own Sriracha Sauce but is suing Hf for damages in excess of $20m,” Huy Fong Foods wrote. “Underwood expects HF to pay back the ‘golden goose’ that they themselves killed.”
In January, Underwood Ranches tweeted its own dig at Huy Fong Foods, implying that the sauce wasn’t anything without Underwood’s peppers.
“The Pepper Makes the Product,” Underwood Ranches tweeted in January, under the hashtag “sriracha”. “Without Underwood’s pepper, it’s just another condiment.”
The case is expected to head to trial within the next few weeks.
In 2014, Huy Fong Foods came up against similar legal issues when it butted heads with the city of Irwindale, where its factory is headquartered, after some residents complained that the spicy smell was causing sickness. The city eventually dropped its public nuisance lawsuit, allowing production to continue.
During that time, fans of the hot sauce rallied around the company, terrified that any sort of closure would result in a sauce shortage.