Texas judge says Bill Koch must pay damages, sell back Akaushi cattle

Texas judge says Bill Koch must pay damages, sell back Akaushi cattle

Case dating to 2012 settles fight over genetics of U.S. cattle herds used to produce pricey Kobe beef

By The Denver Post

Posted: 09/09/2015 12:59:27 PM MDT2 Comments | Updated: 3 days ago

Bill Koch (Denver Post file)

A south Texas ranch family was awarded $1.825 million in punitive damages in a dispute over full-bred Japanese Akaushi cattle they sold to billionaire Bill Koch’s Bear Ranch in Paonia.

U.S. District Court Judge Gregg Costa also ruled that Bear Ranch must sell back those cattle to Flatonia, Texas-based HeartBrand Beef, the ranch said in a news release.

Costa’s decision affirms a May 2014 award by a federal jury.

The case dates to a 2012 dispute between the two ranches. Bear Ranch purchased Akaushi — one of four Wagyu cattle breeds indigenous to Japan — from HeartBrand in 2010 and from HeartBrand chairman Ronald Beeman in 2011, growing its herd to about 4,000 head.

According to HeartBrand, Bear Ranch agreed to meet certain genetic standards, however Bear Ranch sued the the Texas company in 2012, claiming the agreement was anti-competitive and illegal.

HeartBrand countersued, claiming Bear Ranch breached the 2010 contract that required the ranch to register the cattle with the American Akaushi Association and then misled HeartBrand into approving the 2011 purchase.

According to HeartBrand, the Akaushi breed is treated as a Japan national treasure and export of the beef is virtually impossible. However, a group of 11 Akaushi was brought to Texas in 1994 using a loophole — now closed — in the U.S.-Japan Trade Act of 1992. HeartBrand is the successor of the family that originally imported the cattle and for the last decade has worked to maintain the genetic purity of its Akaushi herd and build the breed in the U.S. to about 14,000 head.

Akaushi are a source of pricey Kobe beef.

According to HeartBrand, it and the Akaushi trade group require HeartBrand-contracted producers to meet standards similar to their Japanese counterparts in order to ensure equally high quality beef.

In 2011, Koch Agriculture’s Matador Cattle Co. managers told the Wichita Eagle that the Kansas cattle operation intended to breed its 40 full-blood Akaushi bulls with its herd of Angus-Hereford crossbreed cows. The intent was to introduce more Kobe beef into the American diet, but also improve the genetics of Koch’s regular herd to produce higher percentages of top-grade beef.

In that story, Koch was identified as one of HeartBrand Beef’s few producer partners that sold Akaushi calves back to the Texas ranch for $100 a head more than market rates. The calves would then be fed and slaughtered, and their meat marketed to posh restaurants.