Maine lobster union reaches $5M settlement with former CEO
File photo / Laurie Schreiber
Maine Lobstering Union Local 207 won a $5 million settlement against its former CEO.
Lobster 207, a co-op formed by the Maine Lobstering Union, emerged with a settlement of more than a $5 million in its favor after five years of litigation against a former CEO, Warren Pettegrow, his parents, their companies and another alleged co-conspirator.
The union got its start in 2013 when lobstermen, concerned about falling catch prices and fair pricing, approached the International Association of Machinists and Aerospace Workers District 4. With District 4’s help, hundreds of lobstermen along the coast formed the Maine Lobstering Union Local 207.
In 2017, the union purchased the wholesale division of the Trenton Bridge Lobster Pound from Anthony and Josette Pettegrow. As part of the transaction, Warren Pettegrow was named as CEO of Lobster 207 and the Pettegrows agreed they would withdraw from the wholesale business and not compete with Lobster 207’s operations.
Concerns over financial misconduct surfaced in 2019, prompting an independent forensic audit.
In 2019, Lobster 207 filed suit against the defendants in the U.S. District Court for the District of Maine. In the original complain and subsequent pleadings, the alleged that by means of a procession of schemes, rackets, and misrepresentations, the defendants had engaged in a course of misconduct that resulted in serious economic injuries to Lobster 207.
The allegations included fraudulent invoices, up-charges for lobster products and competition with the wholesale lobster business that they had sold to Lobster 207, during a period from 2017 to 2019.
In 2020, the union fired Pettegrow, a decision upheld by an independent arbitrator appointed by the federal court.
In 2021, an arbitrator ordered the defendants to pay $1.021 million in damages to the union. In a case document from that action, Pettegrow alleged “that at all times he faithfully and diligently discharged his duties as L207’s CEO and that in violation of the 10-year employment agreement, he was terminated without warning or just cause.”
The case was headed for a jury trial in federal court, with jury selection set to start on Jan. 6 and the trial scheduled for Jan. 21.
Instead, on Jan. 3, the parties agreed to a settlement, concluding the case in its entirety.
The $5 million represents a “global settlement,” David Sullivan, eastern territory general vice president for the International Association of Machinists, said in a press conference held Tuesday.
“Now that this chapter has closed, we remain focused on dealing with current issues related to federal regulations, rising industry costs, climate change and threats from overseas fisheries,” said Joel Strout, Local 207’s president.
Lobster 207’s goal is to bring fairness and transparency to the marketplace, said Mike Yohe, Local 207’s CEO.
“ I believe that, though it’s over, it’s a new start for us,” said Yohe. “We have to rebuild, regroup…We’re very happy that we can move forward at this point.”
Sullivan said it’s unclear when the union will collect the money and how it will be spent.
“We have a lot of bills and outstanding expenses from the five-year lawsuit,” he said. “We have to come up with plan. This came very fast. We haven’t laid out a complete plan on how we’ll go from here.”
He added, “We’ll continue to rebuild now and move on to the next chapter.”
Local 207, an affiliate of the 600,000-member International Association of Machinists and Aerospace Workers, is the only union-based cooperative in the lobster industry.
The lobster industry in Maine generates approximately $1.4 billion annually and supports the livelihoods of 4,500 lobstermen and thousands of Mainers employed through lobster dealers and seafood processors, vessel and trap manufacturers, restaurants and other coastal businesses.
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