Alpenrose Dairy family feud continues in court

Multnomah County

Fate of Portland landmark at stake as court hearing enters day 3

PORTLAND, Ore. (KOIN) — A dispute over the sale of a dairy among family owners has become a public spat, even as community members decry the possibility of losing the many iconic landmarks it hosts. A show-cause hearing of the disagreement is entering its third day in a Multnomah County Courtroom and will resume next week.

On one side of the dispute are the great-great-grandchildren of the founder of Alpenrose Dairy — three Cadonau siblings — who seek to block it’s sale to Seattle-based Smith Brothers. The siblings, who are part family owners, offered their own deal to buy the company.

Alpenrose-dairy-aerial-view-cropped_1551832063258.jpg

Other family members — two aunts of said siblings, current Alpenrose President Rod Birkland and others — wish to sell the dairy. They said that won’t include the shared community spaces the dairy hosts on its land.

The opposing group said the sale is a ploy to eventually abdicate the land to the highest bidder, too.

Lawyers on both sides of the legal battle alleged the other of conflict of interest issues. The younger Cadonau siblings were questioned as to their ability to do their official duties of their respective jobs at the dairy due to having financial stake in a deal the company’s board of directors ultimately voted down.

Carl Cadonau III, the son of former Alpenrose Co-president Carl Cadonau Jr., took the stand Friday. He is the Vice President of Operations, working on the supply side of the company.

In his testimony, Carl Cadonau III stated the Cadonau siblings’ proposed deal was all but assured to go through, so long as it beat out the Smith Brothers’ proposition, according to a meeting he had with Alpenrose President Birkland on May 31.

Though Carl Cadonau III testified that his relatives’ intent with the Smith Brothers deal was to eventually “liquidate the land,” counsel representing the opposing side accused Cadonau of backing a deal that would do the same, based on documents from December 2018–a claim Cadonau denied.

The board of directors have come under scrutiny by the Cadonau siblings’ counsel due to some of the board members being overlapping shareholders in both the Alpenrose company itself and the company which owns the land the dairy sits on, called Alpha LLC.

Certified Public Accountant William Holmes, an outside financial expert, said the board members failed fiduciary duties of company shareholders in his testimony.

“I believe they were representing the interests of Alpha members,” he said.

Holmes was the witness for the Cadonau side and he analyzed both rival deals, as well as the company’s financials stretching back to 2014 and the board member meeting minutes from when the deal decision was reached in June.

Holmes said the board members did not do the same quantitative, analytical comparison of the two deals–like he had–and hence failed in their duties.

In his comparison, Holmes testified the Cadonau proposed deal was worth $2.2 million more than the Smith Brothers deal in terms of net proceeds to company shareholders. He also alleged board members made “false assumptions” and showed “a general failure to follow a process,” according to his analysis.

Holmes testifed that Alpenrose “has no debt” and that it “is a strong company.”

William Holmes, C.P.A., testifies at Alpenrose Dairy hearing that his analysis is the board of directors acted against the interest of company shareholders by taking a dealing to sell to out of state farm on Friday, Sept. 20, 2019. (Danny Peterson/KOIN 6 News)

Though he acknowledged Alpenrose experienced net losses from 2015-2018, he said it made a comeback in 2019 with a net cash-flow of about $1 million in the first half of the year. That’s a figure the company board members “should have known” about at the time the deal was finalized, Holmes said.

In the second day of proceedings, opposing counsel questioned the character among those within the Cadonau family who don’t want to sell the dairy. At the same time, workers’ solidarity with the Cadonaus became more pronounced.

Alpenrose is not just a locally known brand and business, it’s a huge part of the community, hosting Christmas and Easter events, the Softball World Series, go-cart and bicycle racing events.

Gary Rowell, an administrator for Oregon Little League, hopes the legal battle will result in the preservation of the dairy’s three baseball parks. He showed out in support for Friday’s hearing.

“I pray for this family,” Rowell said. “My relationship with the Cadonaus has been a long time. I can’t imagine what it would be without Alpenrose and I’d like to see grandchildren and future generations be able to accommodate what I’ve been able to do to provide those fields to those kids.”

A community fundraiser has already brought in nearly $25,000 to help in the legal fight.

Remember to follow KOIN 6 News on Facebook, Twitter and Instagram. Download our free news and weather apps for the latest headlines and forecast information.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Top Headlines

More News

Trending Stories

Don't Miss

More Don't Miss

Twitter News Widget