Can The People save Claravale Dairy as it teeters on the edge of insolvency?


After weeks of silence, Claravale Dairy, one of two substantial producers of raw milk for retail sale in California (Organic Pastures is the other), is reaching out to its large community of supporters by launching a crowd-funding campaign that it says is its only hope to avoid bankruptcy. Here is how Collette Cassidy describes the raw dairy’s precarious situation on the crowdfunding site


“We are at the nexus of two bad things: a recall, which is a part of doing business in the food industry and which we could handle in the course of things, and an unrelated and predatory legal action consisting of a $500,000 law suit which, in conjunction with the recall, we cannot handle. While we are about to come back on line and start selling again, we have been down for 7 weeks with a near total loss of income during that time.”


There’s good news and bad news on the campaign. Initial signs are positive: in three days, it’s raised more than $5,5000 from more than 30 donors. The bad news is that Claravale has more than $594,000 to go as it seeks to raise the huge sum of $600,000.


While Claravale’s problems with campylobacter, which led to the dairy’s shutdown for the last seven weeks, have been widely publicized, Cassidy says that is a manageable problem compared with a legal challenge it faces from lawyers representing two former employees who were managers. Cassidy says the dairy is about ready to resume production, but even at full production from its 60 cows and 150 goats, it can’t afford to settle long-standing legal actions by two former employees. It actually credits the California Department of Food and Agriculture with being supportive. In a statement on the dairy’s web site, Claravale says, “The CDFA has been very helpful during this process and will do what they can to get us up and running as soon as possible.” 


The labor legal challenges are considerable, Cassidy states, based on complex state regulations around how employees are classified, as employees or managers. Here is how Cassidy describes it: “Our problem is that predatory lawyers have succeeded in turning our thriving, vibrant business into a pile of garbage. Predatory lawyers, using the pretense of the California labor laws, have filed fraudulent and baseless claims against us in the amount of $500,000, an amount we cannot come anywhere near paying. Not even close, never. We are faced with a number of bad choices. We can try to settle for some lesser amount, we can go into bankruptcy and hope to survive it, or we can liquidate the business. We are trying to settle for some lesser amount but any course of action will generate, from our perspective, large and entirely unmanageable legal fees. None of these options are good, and all of them cost more money than we have, particularly in light of not having any income for the past 7 weeks. The recall we can survive, the lawyers we can’t.” 


The labor legal problems must be pretty serious, because Cassidy doesn’t even mention an additional legal problem that has cropped up in recent weeks: a lawsuit filed by product liability lawyer Bill Marler on behalf of an individual allegedly sickened by campylobacter in Claravale milk. Marler indicates he is seeking medical expenses for the individual, who was hospitalized for three days. 


Inexplicably, Claravale waited practically until the vultures were circling before seeking public backing from its longstanding community of supporters—supporters served by the dairy since 1927. Claravale has been silent about this campylobacter outbreak practically since it was shut down by the California Department of Food and Agriculture two months ago. It remained silent when the media said, without official confirmation, that six people were made seriously ill by its milk. It was similarly silent when it was shut down three years ago, also in connection with campylobacter illnesses. It was only ten days ago that Claravale finally issued a public statement on its web site, saying “we have been reluctant to say anything until we had it all figured out and resolved so as not to give out misinformation.”


I’m sorry, that’s not the way to handle a food safety (and financial-legal crisis). Their bland explanation aside, it’s not clear why owners Collette Cassidy and Ron Garthwaite refused to communicate with their customers and supporters. The two were actively involved in trying to roll back the CDFA’s 2008 effort to enforce a 10-coliform minimum on raw milk producers (which was implemented). But they dropped out of a joint suit with Organic Pastures against the state, and after that, the two seemed to pull back from public engagement of any sort. Years ago, Garthwaite had feuded with Mark McAfee of Organic Pastures Dairy Co. over OPDC’s marketing tactics when it entered the raw milk marketplace in 2001 (detailed in my book, The Raw Milk Revolution).


The refusal of the Claravale owners to reach out has certainly not helped their efforts to stay afloat. Lots of people have wanted to provide support, but the two refused to return calls or otherwise share information. My guess is that lots of people will support the crowd-funding effort in spite of the dairy’s go-it-alone persona. It’s just a strange way to do business in this day and age, when farmers of all sorts are interacting ever more with their customers.