Taking on the Resnicks

By Joe Traynor

An Introduction to the owners of Paramount Citrus 12/12/06

(this article appeared in a slightly different form in the October BEE CULTURE)

A Brief History
In late April, this year, just after most beekeepers had placed bees on long-held citrus locations in the San Joaquin Valley, a number of beekeepers received a startling letter from Paramount Citrus’ in-house attorney stating that “Paramount hereby demands that you immediately remove your bee hives a minimum of two (2) miles away from Paramount’s Property” and threatening legal action if this demand was not met.  Honey bees can contribute to seediness in certain varieties of mandarins by transferring pollen from certain other varieties; seeds greatly reduce the market value of these mandarin varieties.

If  beekeepers are held liable for their bees trespassing on another person’s property, no bee operation in the U.S. is secure.  As one beekeeper put it “we’re going to war”.  Past cases of trespassing bees have been decided in favor of beekeepers but never have beekeepers been pitted against as formidable an opponent as Paramount Citrus and its billionaire owner, Stewart Resnick.

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Paramount Citrus is a subsidiary of the giant, Los Angeles based Roll International Corporation, privately owned by Stewart and Lynda Resnick.  Knowledge of one’s opponent helps in preparing for war; it also helps if one can demonize the enemy.  Although the Resnicks are publicity shy (unless they are promoting their own products) ample information on them is available on the internet.  Unlike recent disgraced heads of empires, one searches in vain for any sign of malfeasance or impropriety on the part of the Resnicks.  In fact, the more one learns about the Resnicks, the more one comes away with a grudging respect for what they have accomplished – they are the quintessential American success story.  Mr. and Mrs. Resnick have earned the sobriquet “Power Couple” and are probably the most powerful couple in California.

Stewart Resnick, 67, put his way through UCLA law school by operating a janitor service.  Lynda Resnick, 61, possesses striking good looks but dubbing her a trophy wife would be demeaning to both her and her husband.  Mrs. Resnick is a highly intelligent and energetic woman and a co-equal partner with her husband.  She started her own ad agency at 19 and has been listed as one of Working Woman’s top 50 business owners for six consecutive years and, in 2003, was named California’s Person of the Year.  Together, the Resnicks make a formidable team.

The Resnicks live in a $17 million Beverly Hills mansion decorated with fine art work.  They serve on the boards of 3 major museums: LA County Museum of Art (LACMA), New York Metropolitan Museum of Art and the National Gallery of Art.  As philanthropists, the Resnicks have been more than generous, donating $25 million to LACMA and $15 million to UCLA’s Medical Hospital.  They have made numerous other donations, including many political candidates, almost exclusively Democrats.  As members of Hollywood’s A-list, the Resnicks have the requisite second home in Aspen, Colorado and are well connected in Hollywood.  Lynda Resnick’s father produced horror films, including the cult classic The Blob (co-starring screen neophyte Steve McQueen).  Their pomegranate juice, POM Wonderful, is a staple at the major annual Oscar parties and is consumed by a number of Hollywood notables.

Following are the seven major companies of the Resnick Empire:

Teleflora
In 1980, the Resnicks purchased Teleflora and by pairing flowers with gifts, turned the company into the world’s largest flower seller.

Franklin Mint
In 1984, the Resnicks purchased the Franklin Mint for $187 million and, as with Teleflora, infused the company with new energy, introducing 1500 new items including $100 Rolls Royce replicas and $4800 Faberge-type eggs.  An annual advertising budget of $100 million was the engine that drove the Franklin Mint to record sales.  You may remember the full-page ads in your newspaper’s Sunday supplement magazine that week after week offered objects of art suitable for collectors or for family heirlooms.  These Franklin Mint ads are textbook examples of the power of advertising to create a burning desire in people to purchase something they really don’t need and weren’t even aware they wanted.  Paying $50 to $100 for athletic shoes is another example of the susceptibility of many Americans to advertising.  Same for designer jeans, off-road vehicles that never go off road and bottled water.  The pharmaceutical industry has gotten into the game, spending billions on advertising and causing millions of Americans to consume billions of high-priced pills that are of dubious value in many cases and that can be harmful in some cases.

When one read the Franklin Mint ads (the past tense is used here because the Franklin Mint currently has a very low profile in the collectibles market) one couldn’t help but admire the prose and the passion that infused them.  For many, it would require considerable self-control to refrain from picking up the phone and ordering a $139 must-have, limited edition collectible.  For others, the question arises “who buys this stuff?”  The answer: enough people to justify spending $100 million a year on advertising.

One senses advertising genius Lynda Resnick as the creative force behind the extremely effective Franklin Mint ads.  Note to honey producers: hire Mrs. Resnick to put together an advertising blitz for honey.  Cautionary note: Don’t ever refer to Franklin Mint collectibles as “kitsch”.

In two separate Franklin Mint cases, with two different outcomes, the Resnicks showed that they are not averse to litigation.  In 2002, the Franklin Mint won approximately $25 million in punitive damages from the Princess Diana fund.  The Fund had sued the Franklin Mint for using Diana’s image on a collectible.  The Resnicks counter sued and won, then magnanimously donated their winnings to charities, including Princess Diana’s favorite charities.  The legal fees for each side in this dispute totaled in the millions of dollars.  In a rare legal defeat for the Resnicks, Tiger Woods won a substantial sum from the Franklin Mint who had issued, without Mr. Woods’ permission, a medallion commerating Woods’ 1996 Master’s championship.  Woods’ papers referred to Franklin Mint goods as “low level merchandise of the type which Tiger Woods does not wish to associate himself.”

The Resnicks recently entered into an agreement to sell the Franklin Mint.  Perhaps the collectibles market became saturated, or perhaps the Resnicks tired of fielding questions from guests at their Beverly Hills mansion as to what the porcelain replica of the Star Trek crew was doing next to the Matisse original.

Paramount Farming Co.
The Resnicks started Paramount Farming in the 1980s, leveraging $ from cash cows Franklin Mint and Teleflora to purchase thousands of acres of almond and pistachio orchards.  Their timing was impeccable.  Oil and insurance companies with large agricultural holdings wanted to get out of ag since commodity prices were depressed and the future was cloudy.  These cash-rich companies didn’t haggle about price and the Resnicks were able to buy quality orchards at bargain basement prices.  Paramount now farms about 30,000 acres of almonds, 25,000 acres of pistachios and 6,000 acres of pomegranates in the southern San Joaquin Valley (mainly Kern County).

Nut prices rebounded in the 1990s and both prices and nut yields have been excellent in recent years.  Almonds and pistachios are both bright spots in an ailing agriculture economy that suffers from global competition.  Almonds require a “Mediterranean Climate” found in few places in the world.  The six to eight years it takes for pistachios to bear a crop has discouraged many from planting them; also, pistachios from major producer, Iran, are prohibited from being sold in the U.S.  Getting into almonds and pistachios was a gutsy move for the Resnicks but one that has paid off big time.  Paramount Farming recently purchased 15,000 acres of row-crop land in Madera county from Newhall Land Co., land that will undoubtedly be planted to almonds, pistachios and pomegranates.  Paramount Farming has replaced the Franklin Mint as the jewel of the Roll Corporation’s holdings.

Paramount Citrus
The Resnicks purchased Paramount Citrus in the 1980s.  They own 20,000 acres of their own citrus and farm another 10,000 acres through their subsidiary S&J Farm Management.  Paramount Citrus is the largest citrus grower in California and supplies 20% of Sunkist’s citrus.  Citrus has not been nearly as profitable as almonds or pistachios and to improve Paramount Citrus’ bottom line, the Resnicks decided to plant the popular new seedless varieties that command a premium price in the market.  It was this decision that led to the current standoff with beekeepers.

Suterra
Paramount Farming cooperated with UC researchers in testing pheromones that disrupted the mating of navel orange worms, a major pest of almonds.  To continually dispense a fixed amount of pheromone to the orchard, puffer dispensers were used.  Paramount Farming purchased the technology and formed an ancillary company, Suterra, to sell this technology to others.  Suterra products could be useful to beekeepers in wax moth control and possibly in the control of other honey bee pests.  CheckMate is the brand name of one of Suttera’s products.

POM Wonderful
As with Suterra, pomegranates found the Resnicks rather than vice versa.  One of the large almond-pistachio holdings they purchased also had 100 acres of pomegranates.  Paramount planned to replant the pomegranates with almonds but the pomegranates made money the first year, then the next and Paramount Farming now has 6,000 acres of a crop that was heretofore considered a very minor crop.  Lynda Resnick researched the health benefits of pomegranates, was intrigued by what she found and hired Nobel Laureate Dr. Louis Ignarro to conduct further studies.  The Resnicks have spent $10 million on scientific studies on the health benefits of pomegranates (and pomegranate juice) with another $8 million earmarked for future research.Paramount’s choicest pomegranates go to the fresh market, the remainder for juice – and extracting juice from pomegranates is a formidable undertaking.  Lynda Resnick has created, from scratch, a solid market for a brand new product, one that will improve the health of those that consume it.  This is a considerable achievement and on that the Resnicks are justifiably proud of.  The surprising success of POM Wonderful has spawned numerous copy-cat producers of pomegranate juice, riding on the coat tails of the Resnicks’ pioneering efforts.  Note to Honey Board: Hire Mrs. Resnick to map out a marketing plan for honey.

Fiji Water
In December of 2004, the Resnicks entered the bottled water business by purchasing Fiji Water (for either $50 million or $150 million depending on the source).  The purchase was probably a sound business investment since the original owners spent $48 million to build an on-site bottling plant (in Fiji) in 1995 and annual sales were about $25 million (since increased by 67% over the past year with the application of the Resnicks’ marketing savvy).  With this purchase, however, the Resnicks have regressed to their Franklin Mint days, selling people something they don’t need (the test: would citizens of a third-world country buy your product?).  Shipping water from Fiji to the U.S. in disposable plastic bottles makes no sense to confirmed environmentalists.  Here’s a conundrum: why are so many Prius-driving Hollywood Democrats also enthusiastic consumers of Fiji Water?

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Owning any one of the many companies under the Roll Corporation banner would justify a cover story in a national magazine.  For one couple to own all of them is truly mind-boggling.  When people rise as high as the Resnicks, they become tempting targets for those that would denigrate their achievements, including those that have not accomplished in their lives a tiny fraction of what the Resnicks have accomplished.  The Resnicks could answer their critics by quoting Theodore Roosevelt: “The man that really counts in the world is the doer, not the mere critic.”  The Resnicks saga is a remarkable and uniquely American success story.

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As with the Franklin Mint, both Paramount Farming and Paramount Citrus have gotten involved in legal disputes.  Paramount Farming is currently attempting to extract itself from the Pistachio Commission, an organization of growers that is assessed according to acreage with a portion of the assessments going to generic advertising.  The Resnicks feel their assessment dollars can be better spent advertising their own pistachios (currently sold under the Sunkist label) and are using free speech statutes to back their case.  Paramount Citrus is trying to back out of Sunkist on related grounds.  In both cases, it would be easy, but unfair, to slap the “does not play well with others” label on the Resnicks but who can blame them for their actions?  With their track record of marketing successes one can only imagine the frustration endured by the Resnicks at having little or no control over the marketing of their health-giving oranges and pistachios.

Some beekeepers have called for a boycott of Paramount almond orchards and at least two beekeepers involved in the current dispute have told Paramount that they won’t deliver almond bees in 2007; both likely have alternative almond locations.  Unfortunately, an effective boycott of Paramount’s almond orchards is dead in the water because there are plenty of beekeepers out there who would be happy to service Paramount’s almond acreage and who have no suitable almond alternatives.  Beekeepers who have come to depend on an annual almond pollination check won’t jeopardize that check in service of a higher principle; who can blame them?

And where does Paramount Farming, sister company of Paramount Citrus stand in this matter?  On the sidelines.  Paramount Farming is sympathetic to the beekeeper position and has even apologized for the confrontational tone of Paramount Citrus, however the final say in this matter belongs to Stewart Resnick and Mr. Resnick has apparently made up his mind that the bees must go.  Just as no one was able to explain to President Bush the ramifications of invading Iraq, no one can explain the ramifications of his bee policy to Stewart Resnick.  At this time, it appears that negotiations will be unsuccessful and that litigation is inevitable.  If such be the case, beekeepers are united in their stand – “Bring it on!”

The New King (and Queen) of California
Jim Boswell, the largest cotton grower in California (and the world) was labeled The King of California in an excellent 2003 book of the same name by Mark Arax and Rick Wartzman.  With California’s cotton acreage half of what it was ten years ago (much of it converted to almonds) Stewart Resnick can justifiably lay claim to the title King of California or, more accurately, Resnick, with his wife Lynda, have earned the title The King and Queen of California.

There are some striking parallels between Jim Boswell and Stewart Resnick: both live in palatial homes in the Los Angeles area.  At one time Boswell was the largest single renter of bees in California (and the world) using 2+ colonies per acre on thousands of acres of alfalfa seed (an excellent rotation crop with cotton).  The Resnicks are now the largest renter of bees in the world on their vast almond holdings.  Both Boswell and Resnick have come under fire for using state and federal water on their holdings – water that would command a much higher price on the open market.  Both have in-house attorneys and neither is averse to litigation.  Both have succumbed to the temptation common to many who have built empires: to re-write the Golden Rule as The Man with the Gold Makes the Rules.  Both are stubborn, which can be either a fault or a virtue depending on the circumstances.

In the 1980s, Boswell, convinced his rules applied, was on the losing end of a lawsuit that could serve as a cautionary tale for Resnick on the perils of hubris.  Boswell sued a group of farmers claiming their anti-Boswell ads on a contentious water issue were libelous.  The farmers counter-sued on free-speech grounds and eventually won $3 million in compensatory damages and an additional $8 million in punitive damages.  Punitive damages – that the defendant knowingly and maliciously caused harm – are difficult to prove, but some beekeepers feel a case can be made against Paramount Citrus.  The dollar amount of punitive damages is based on the financial status of the payer; they are assessed high enough so that they inflict enough financial pain on the defendant to discourage future similar action by either the defendant or anyone else.  Winning punitive damages against Paramount Citrus is a distinct long shot, but would represent a windfall for beekeepers if it did happen.

In what could serve as an example of unchecked hubris, Paramount Citrus’ attorney is threatening beekeepers with punitive damages if their bees are not removed.  When one owns a legal pit bull, it must be tempting to unchain it from time to time to keep it in fighting trim.

Unsolicited Advice for the Resnicks

Conclusion
If the current dispute goes to litigation, the only sure winners will be the attorneys.  The best thing that beekeepers have going for them is that the Resnicks are good people.  When good people are well informed, they usually make good decisions.