Sriracha Maker Must Pay $23 Million to Pepper Farm in Fraud Suit

Huy Fong Foods, Inc., the company that makes Sriracha hot sauce, must pay more than $23 million in damages awarded to a jalapeno pepper farm by a California jury, after it failed to convince a state appellate court to dismiss the fraud claims.

The company contracted with Underwood Ranches LP in 1988 to purchase peppers for its jalapeno-based hot sauce, and the parties were partners for nearly 30 years. For the first ten years of their partnership, they executed written agreements, but they later turned to informal oral agreements.

By 2006, Underwood was growing 90% of Huy Fong’s peppers. To ...