Sunkist Inc. has been ordered to pay back more than $1.6 million to its employee retirement plans by a U.S. District Court judge in Los Angeles.
Judge Percy Anderson issued the order after finding that the Sherman Oaks citrus farmers’ cooperative was using employee retirement benefits to pay for operating expenses.
The decision comes after a lawsuit and investigation by the Labor Department’s Employee Benefits Security Administration, which found that Sunkist used retirement funds to pay salaries and benefits for employees and managers between January 2006 and April 2011.
“Retirement plan assets represent workers’ hard-earned savings, not a source of operating funds that companies can choose to use as they see fit,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security, in a statement issued after the ruling.
“This is a case of plan fiduciaries failing in their legal and ethical duties to act solely in the interest of plan participants,” she said.
Joan Wickham, a Sunkist spokeswoman, called the violation a “basic misunderstanding” on the cooperative’s part.
“This court order was part of a voluntary settlement agreement with the Department of Labor (DOL) that resulted from a DOL audit with which Sunkist cooperated completely,” she said in an email. “Sunkist never made any attempt to conceal its expense practices.”
The order follows a period of change for the cooperative.
In February, it sold its longtime Sherman Oaks headquarters to IMT Capital Inc. for an undisclosed price. And in August, it bought a new office building in Valencia to become its future offices.
Sunkist was founded in 1893 and is the oldest continually operating citrus cooperative in the country. The not-for-profit marketing entity is owned and operated by thousands of citrus farmers in California and Arizona.