Opinion ID: 1970127
Heading Depth: 1
Heading Rank: 2

Heading: Initial Dealings Sea Labor, Inc. and Sea Work, Inc.

Text: Borden owned Snow Food Products Division, a leading producer of clam products, namely Snow's Clam Chowder. Borden obtained shell stock of ocean quahog clams (clams) from its own four-vessel fleet and from independent boats. Borden's policy was to attempt to fill its need for clams from its own boats first and then to obtain clams from independent boats to fill any additional need. The boats delivered the clams to Borden's Cape May Plant, where the shell stock was processed into clam meat. The meat was then shipped to Pine Point, Maine, where the final product was made and canned. In 1978, Borden hired Donald DeMusz to be the captain of the Arlene Snow, which was one of the four boats that Borden used to harvest clams. In 1983, Wayne Booker, Group Operations Manager in charge of Snow Food Products, Kava Instant Coffee, and `Bama Food Products, negotiated with and later entered into a charter agreement with DeMusz whereby DeMusz would manage Borden's four boats. DeMusz formed Sea Labor, Inc. to manage Borden's boats. The agreement provided that Sea Labor would receive five cents per bushel of clams harvested by the fleet. DeMusz would still receive captain's compensation for his work on the Arlene Snow. Around the same time, Borden began to implement a long-considered project called Shuck-at-Sea, which would enable the fishermen to shuck the clams on the boat and thereby provide a bigger haul of clams per boat trip. Borden developed the project because it would increase the return on its investment through reducing costs, would eliminate disposing of shells and visceral materials on land by returning them directly to sea, and would eliminate the need to drill a new freshwater well at the Cape May Plant. DeMusz was involved in developing the Shuck-at-Sea project. Borden initially planned to place its shucking equipment on the Arlene Snow, but it was too small. Booker and DeMusz discussed the problem. DeMusz offered to buy a large boat, to rig it to Borden's specifications, and to use it in conjunction with Borden for the Shuck-at-Sea project. Booker determined that an agreement with DeMusz would save Borden money. Moreover, he did not think Borden would generate a high enough return on its investment if it bought the boat itself. Following a meeting where Booker and other executives approved DeMusz's proposal, DeMusz formed Sea Work, Inc. with two partners. Sea Work purchased and operated a clam-fishing boat named Jessica Lori. Purchasing and rigging the Jessica Lori cost Sea Work $750,000, which it financed through a bank loan. Although DeMusz did not want to double-rig the boat, he acquiesced to Borden's demands to do so. During the negotiations, Booker wrote Herbert A. Southwell, Group General Manager, an inter-company memorandum, describing how a contract with DeMusz would save time and money: [W]e still have a significant mutual interest with DeMuse [sic]. His principal business will still be in chartering the Snow fleet and in captaining Arlene. He needs a dependable customer for the clams that he catches, either shell stock or meat. If we terminate our agreement with him, he would have a hard time making the payments on his boat. On July 11, 1984, Sea Work and Borden signed the Equipment Lease, an eleven-page contract, which provided that Borden would place its shucking equipment on the Jessica Lori in exchange for Sea Work offering to Borden all the clam meat shucked by the Jessica Lori at fifty cents per pound. The lease required the Jessica Lori to offer Borden a minimum of 15,000 pounds of clams each week. Initially, the equipment was to be installed by the end of 1984. Problems with the equipment developed on several occasions, however, and the Jessica Lori was not functioning as a Shuck-at-Sea vessel until late 1986.