Huy Fong, Maker of Sriracha, Faces Yet Another Legal Entanglement
Huy Fong Foods, the L.A. County–based maker of the most popular and recognizable sriracha on the planet, has been battling the city of Irwindale over nuisance complaints and business fees since 2013. The company has recently entered into another lawsuit: this time, against its red jalapeño supplier, Underwood Ranches.
The vegetable farmer has been Huy Fong's sole pepper provider since around 1990, according to Underwood's website. To keep costs competitive with jalapeño growers in Asia and Central America, Huy Fong founder David Tran helped Underwood develop machinery that cut down the time needed for harvesting the peppers.
Underwood and Huy Fong had an unusual financial arrangement: The sauce manufacturer would pay a fee at the beginning of the year, with the expectation that the balance would be corrected later. This deal has been in place since 2008, but it fell apart this year. Huy Fong is suing Underwood for repayment of $1.4 million, as well as the return of $7 million worth of harvesting equipment.
Underwood Ranches, which farms on about 1,800 acres in Ventura and Kern counties and is affiliated with, but is not the same company as, the Underwood Family Farms u-pick locations, has not yet responded to the suit.
In 2012 Huy Fong moved its production facilities from Rosemead to Irwindale; the next year its new city called the scents emanating from the plant a "public nuisance" and asked for the pepper processing to stop until Huy Fong could guarantee no more smells. (Whether said smells ever actually existed is still up for debate.) That suit was dropped, but in 2016 the city sued the company again, this time for failure to pay fees — here, too, Huy Fong entered into an unorthodox arrangement, paying Irwindale $250,000 per year in lieu of taxes. Huy Fong countersued for $750,000.
Maybe going forward Huy Fong will enter into entirely conventional contracts.
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