pineapple Photo: Shutterstock

What is a pineapple seed? Which one is most popular? How do they grow? And why are they worth hundreds of millions of dollars?

Senior Judge Susan Black of the U.S. Court of Appeals for the Eleventh Circuit answers those questions and more in an opinion released Tuesday. Spoiler alert: Del Monte International gets a juicy $26 million.

The decision resolves a lingering dispute between Del Monte and Inversiones y Procesadora Tropical Inprotsa of Costa Rica, which Black judiciously called simply Inprotsa in the opinion.

Del Monte entered into a 13-year contract in 2001 with Inprotsa to grow pineapples. Not just any pineapples, but the MD-2 variety, according to Black.

The deal was that Del Monte would send its MD-2 seeds to Inprotsa for free. Inprotsa would grow the pineapples and sell them back to Del Monte. During the 13 years of the contract, Del Monte sent Inprotsa tens of millions of dollars’ worth of seeds. Inprotsa sold Del Monte more than $200 million worth of pineapples. The agreement provided that when the contract ended, Inprotsa would destroy or return any remaining MD-2 seeds, Black said.

When it comes to pineapples, by the way, seeds are not really seeds.

“Commercial pineapples are not grown from ‘seeds’ in the ordinary sense of the word,” Black explained in a footnote. “They are grown by planting the leaves from the crown of the pineapple fruit or by planting seedlings that grow out of the pineapple plant’s stem. The term ‘pineapple seeds’ thus refers collectively to crowns or seedlings that can be planted in the soil to produce new plants. It is in this sense we use the term ‘seeds’ in this opinion.”

Del Monte developed MD-2 with the help of the Pineapple Research Institute of Hawaii.

“According to Del Monte, through its efforts, the MD-2 became the most popular pineapple variety in the world,” Black said. “Del Monte did not, however, hold a patent on the MD-2. And given the MD-2’s commercial success, Del Monte was not the only pineapple producer interested in selling the variety.”

That competition became a major player in the story. Del Monte had to fight Dole over the rights to MD-2 during the course of its contract with Inprotsa. When the deal expired, Inprotsa kept growing MD-2 pineapples and selling them to other companies, according to the court.

“Del Monte initiated an arbitration against Inprotsa in the International Court of Arbitration of the International Chamber of Commerce (ICC) in Miami,” Black said. “Del Monte alleged that Inprotsa breached the agreement and converted its plant stock, for which Del Monte sought specific performance, injunctive relief, and damages. Inprotsa responded by arguing—among other things—that because Del Monte did not exclusively own the MD-2 variety … Inprotsa was not obligated to sell exclusively to Del Monte or return its MD-2 plant stock.”

Ultimately, the tribunal concluded that ownership of MD-2 wasn’t the point. Inprotsa had agreed to grow the pineapples exclusively for Del Monte and then destroy the seeds. “Thus, Inprotsa breached the agreement by selling, rather than returning or destroying, the pineapples it derived from Del Monte’s seeds,” Black said.

The tribunal awarded Del Monte $26 million for the profits Inprotsa made off the MD-2 seeds. Inprotsa challenged that award in Florida state court. Del Monte removed the case to federal court. U.S. District Judge Federico Moreno of the Southern District of Florida previously upheld the tribunal’s award.

Black affirmed Moreno’s decision, joined by Eleventh Circuit Judge Stanley Marcus and Judge John M. Walker Jr. of the Second Circuit, sitting by designation.

Quoting the district court, Black said Inprotsa could not avoid the award “simply because it disagreed with the arbitrator’s conclusion.”

“Otherwise,” Black quoted, “any losing party raising a fraud defense in an international arbitration[] could relitigate the issue in federal court.”

Black added, “Such a result itself would violate this country’s public policy favoring arbitration as an efficient means for resolving disputes.”

Brian Stack of Stack Fernandez & Harris in Miami represented Del Monte. Stack in an email declined to comment, citing Del Monte policy.

Alvin Lindsay III of Hogan Lovells in Miami represented Inprotsa at oral arguments before the Eleventh Circuit in January. He could not be reached for comment by deadline.

The case is Inversiones y Procesadora Tropical Inprotsa v. Del Monte International.