Aug. 28 – A federal arbitrator awarded a fishing cooperative more than $ 1 million in the cooperative’s lawsuit against its former CEO, whom the cooperative accused of defrauding and stealing the group.
The arbitrator’s award allows the cooperative’s federal lawsuit to continue against the former CEO and his parents, who own a Hancock County lobster pound.
Lobster 207 LLC sued Warren Pettegrow and his parents, who own and operate Trenton Bridge Lobster Pound, in Bangor U.S. District Court in December 2019. The lawsuit alleged that the family members defrauded and stolen the group after they sold their wholesale lobster business to them in 2017.
Pettegrow’s lawyers did not immediately respond to a request for comment on Friday.
Pettegrow ran his parents’ wholesale business prior to its sale to the Maine Lobstering Union in March 2017. At the time, the union hired Pettegrow to manage the newly acquired Lobster 207 wholesale business.
Last summer, U.S. District Judge Lance Walker ordered the Pettegrow family to set aside more than $ 1.4 million, the amount Lobster 207 should be awarded in the case. That figure was presented by Portland chartered accountants who were hired by the Lobster Cooperative to estimate their losses from the business deal, according to court documents.
Pettegrow demanded that the employment allegations contained in the lawsuit be resolved through binding arbitration, not legal proceedings. Earlier this week, the arbitrator found that Pettegrow had violated his employment contract and fiduciary duty to Lobster 207 by committing “gross misconduct,” the arbitrator concluded in a 22-page ruling filed in federal court in Bangor on Tuesday.
The arbitrator stated that “Warren Pettegrow, as CEO of Lobster 207, should be aware of this”. [the cooperative’s] Mission to save lobster men money by avoiding the middleman as much as possible and making the prices received transparent, “Lobster 207 said in a statement Thursday.
Pettegrow violated his agreement with Lobster 207 “right from the start,” said the referee.
Pettegrow did not buy lobsters from fishermen he had contracted. In addition, according to Schlichter, he did not sell all of the lobsters on his boat to Lobster 207. Instead, he sold it to his parents’ lobster pound, which it then resold to Lobster 207 for a profit.
The arbitrator’s decision has yet to be approved by U.S. Judge John Nivison, but it would be highly unusual for a federal judge to dismiss it before the remaining allegations can be settled through either a settlement or trial.
The Maine Lobstering Union was formed as a cooperative in 2013 after fishermen’s prices fell sharply to give their members greater financial stake in the wholesale distribution of lobster.
Although the cooperative is technically not a union as its members are all independent, it is affiliated with the International Association of Machinists and Aerospace Workers. The wholesale store was added in 2017 when it was bought by the Pettegrows.