Suit goes sour for renowned hot sauce maker

A lawsuit against Sriracha went sour for the hot sauce maker when it lost its legal battle with its former jalapeno supplier, with a California jury awarding the pepper grower $23.3 million, CNBC.com reported on Friday.

For 28 years, Underwood Ranches provided Sriracha manufacturer Huy Fong Foods with the ripe red jalapeno peppers it needed for its famous sauce, according to the report chronicling how in 2017 that relationship ended bitterly when the two companies could not reach an agreement for the harvest that year.

Irwindale, California-based Huy Fong initially filed a lawsuit against the supplier in August 2017, accusing it of failing to return an overpayment of $1.4 million from the previous season. Underwood responded with a countersuit claiming breach of contract, according to the network news site.

The outcome? Not so sweet for Huy Fong after the jury on Wednesday awarded Underwood $10 million in punitive damages and $14.8 million to compensate for the two years of financial losses related to the abrupt dissolution of their working relationship. About $1.5 million was deducted for Huy Fong’s 2016 overpayment, according to CNBC.

“Those losses were real, so we’ve got a lot of ground to make up, but it was so emotionally rewarding to hear all of the jury members support us unanimously,” Craig Underwood, owner of Underwood Ranches, said in an interview with CNBC, adding that about half of the company’s employees were laid off as a result of the heated legal war between supplier and manufacturer.

Officials with Huy Fong have not commented.