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Jury delivers $44.4 million verdict against Jacksonville-based Swisher

Roger Bull
Will.Dickey@Jacksonville.com--09/20/13--Swisher International, Inc., Friday, September 20, 2013 in Jacksonville, Florida. (The Florida Times-Union, Will Dickey)

A California jury ordered Jacksonville's Swisher International to pay $44.4 million to a company it was making cigars for.

Trendsettah USA had filed suit against Swisher, the world's largest cigar maker, accusing the company of unfair business practices.

According to the lawsuit, the two companies entered a contract in 2011 under which Swisher would make cigarillos, a small cigar, which Trendsettah would sell under the name Splitarillos.

Swisher's 16th Street factory in Jacksonville is the world's largest cigar maker, producing 1.6 billion a year, said Mark Poe, who represented Trendsettah for San Francisco-based law firm Gaw|Poe.

Splitarillos are identical to Swisher's own Swisher Sweets, Poe said.

"They were produced on the same machines, but with different packaging," he said. "The catch was that we sold them three for 99 cents while Swisher typically sold them two for 99."

Trendsettah claimed that sales increased rapidly, taking market share from Swisher Sweets. There was no maximum amount of cigars on the contract for the first two years, he said.

"It's called a 'requirement contract,'" he said. "The supplier has to provide as much as the buyer orders."

After two years, in February 2013, Swisher put a cap of 12 million Splitarillos a month, he said, which was a fraction of the demand.

"And they didn't even supply that," he said. "They're strangling us out of the marketplace. If you can't fulfill your orders for three months, wholesalers write you off."

He said Swisher supplied Trendsettah with about 283 million cigars during those three years, but that was 200 million fewer than it needed.

After two weeks of trial that ended Friday in Orange County, where Trendsettah is headquartered, the jury found Swisher liable for breach of contract and violating federal anti-trust laws. The jury awarded Trendsettah $14.8 million, which is tripled under federal anti-trust law.

Joe Augustus, Swisher spokesman, said Monday that the company disagrees with the verdict. The company is considering its options, including a possible appeal, he said.

But Poe said it was a textbook case. "It was pretty much the exact thing the statute prohibits," he said.

Swisher was founded in 1861 and moved to Jacksonville in 1924. In 2013, it announced that 250 people would be laid off from its plant as the company moved more production to the Dominican Republican.

Swisher had as many as 1,100 employees at the plant within the previous 10 years, Augustus said, but has a little more than 500 now.

As for Trendsettah, Poe said it is again having Splitarillos produced, but by another factory in the Dominican Republic.

Roger Bull: (904) 359-4296