v3.26.1
Commitments and Contingencies
9 Months Ended
Jul. 31, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Litigation
We are from time to time involved in legal proceedings and investigations arising in the ordinary course of business.
On October 21, 2024, a former temporary worker placed at the Company’s California packinghouse by a labor contractor utilized by the Company, filed a class action lawsuit in the Superior Court of the State of California for the County of Ventura, against us, alleging violations of certain wage and hour laws. Plaintiff sought class certification, payment of wages earned and owed, liquidated damages, penalties and fees, other damages as set forth in plaintiff’s lawsuit, and injunctive relief. A related lawsuit under the Private Attorneys General Act (“PAGA”) was also filed on December 16, 2024. On July 30, 2025, the Court granted the parties’ stipulation to dismiss the class action lawsuit and to submit the PAGA matter to mediation. The parties attended mediation on February 25, 2026. No resolution was reached at mediation. On July 17, 2026, the Company filed a motion to compel arbitration of plaintiff’s individual claims, including the individual PAGA claim, which the Court granted. The representative PAGA claim has been stayed pending resolution of the individual claims in arbitration. At this time, it is too soon to determine the outcome of the litigation. As a result, the Company has not accrued for any loss contingencies related to these claims because the amount and range of loss, if any, cannot currently be reasonably estimated.
On November 6, 2024, the Organic Consumers Association filed a lawsuit in the Superior Court of the District of Columbia alleging the Company engaged in false and deceptive advertising in violation of the D.C. Consumer Protection Procedures Act by making representations about sustainable sourcing practices in connection with its sale of avocados (the “OCA matter”). Plaintiff sought declaratory and injunctive relief. The Court initially denied the Company’s motion to dismiss and permitted limited discovery regarding personal jurisdiction. Following the completion of that discovery, the Company renewed its motion to dismiss. On July 24, 2026, the Court granted the Company’s renewed motion to dismiss. On August 21, 2026, OCA filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit. The Company intends to vigorously defend against the claims asserted in this matter. The Company has not accrued for any loss contingency related to this matter because the amount and range of loss, if any, cannot be reasonably estimated.
On February 21, 2025, Kachuck Enterprises, Bantle Avocado Farm, Maskell Family Trust, and Northern Capital, Inc., owners and operators of avocado orchards located in California, filed a putative class action lawsuit in the United States District Court for the Central District of California against the Company and certain other avocado distributors, including Calavo, which became a wholly owned subsidiary of the Company on May 28, 2026 (the “Kachuck matter”). Plaintiffs alleged violations of California’s False Advertising Law, California’s Unfair Competition Law, and unjust enrichment related to defendants’ alleged representations that their avocados are sustainably and responsibly sourced. Plaintiffs sought injunctive relief, monetary and statutory damages, disgorgement of profits, and restitution. On February 25, 2026, Defendants filed a renewed motion to dismiss Plaintiffs’ second amended complaint, which the Court granted without leave to amend on June 3, 2026. On July 2, 2026, plaintiffs filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit. The Company intends to vigorously defend against the claims asserted in this matter. The Company has not accrued for any loss contingency related to this matter because the amount and range of loss, if any, cannot be reasonably estimated.
On January 29, 2026, a former temporary worker placed at the Company’s California packinghouse by a labor contractor utilized by the Company, filed a class action lawsuit in the Superior Court of California for the County of Ventura, against the Company, alleging violations of certain wage and hour laws. Plaintiff seeks class certification, payment of wages earned and owed, liquidated damages, penalties and fees, other damages as set forth in plaintiff’s lawsuit, and injunctive relief. On July 22, 2026, plaintiff submitted a first amended complaint seeking to add a claim under PAGA, which the Court rejected. The Company filed a motion to compel arbitration, and a hearing on the motion is scheduled for October 1, 2026. The Company is vigorously defending
against the claims asserted. At this time, it is too soon to determine the outcome of this lawsuit. As a result, the Company has not accrued for any loss contingency related to this matter because the amount and range of loss, if any, cannot be reasonably estimated.
Calavo Litigation
In connection with the Company’s acquisition of Calavo, which closed on May 28, 2026, the Company is reporting the following legal proceedings involving Calavo and certain of its subsidiaries and affiliates arising from events occurring prior to the acquisition. These proceedings include employment-related claims involving Calavo, Renaissance Food Group, LLC (“RFG”), GH Foods CA, LLC (“GH Foods”), Calavo de Mexico S.A. de C.V. (“CDM”) and other named defendants, as described below.
On August 9, 2022, a former employee filed a putative class action in the Superior Court of California, County of Sacramento, against RFG and GH Foods, alleging violations of California wage-and-hour laws, including claims relating to minimum and overtime wages, meal and rest periods, payment of wages during and upon termination of employment, wage statements and unfair competition. On November 29, 2022, the plaintiff filed a related action in the Superior Court of California, County of Los Angeles, against RFG, seeking civil penalties under PAGA based on similar alleged Labor Code violations. The defendants prevailed on motions to compel arbitration in both actions. As a result, the plaintiff’s putative class claims were dismissed, and the representative PAGA claims were stayed pending arbitration of the plaintiff’s individual claims. The plaintiff subsequently filed separate arbitration demands corresponding to each action. On February 12, 2026, the parties reached an agreement in principle to settle these matters, together with the related matter described below, for an aggregate amount of $610,000, which has been fully accrued. The parties are finalizing the settlement documentation, and the settlement remains subject to court approval.
On November 4, 2022, a former employee filed a representative action in the Superior Court of California, County of Ventura, against Calavo, alleging violations of California wage-and-hour and employment laws, including claims relating to minimum and overtime wages, wage statements, payment of wages during and upon termination of employment, meal and rest periods, reimbursement of business expenses, sexual harassment, retaliation, unfair competition and civil penalties under PAGA. The plaintiff dismissed with prejudice his individual claims pursuant to a release agreement but did not dismiss the representative PAGA claim. This matter is included in the February 12, 2026 settlement described above.
On March 1, 2023, a former temporary worker filed a putative class action in the Superior Court of California, County of Riverside, against Calavo, Golden State Staffing Services, Inc., Richard A. Mendoza and Crystal Mendoza, alleging violations of California wage-and-hour laws, including claims relating to minimum and overtime wages, paid sick leave, meal and rest periods, payment of wages upon termination of employment, wage statements and unfair competition, and seeking civil penalties under PAGA. On March 12, 2024, Defendants filed a motion to compel arbitration of the plaintiff’s individual claims, including the individual PAGA claim. The Court granted defendants’ motion to compel on July 23, 2024, and stayed the representative PAGA claims pending resolution of the arbitration. The parties are pursuing mediation, which is currently scheduled for March 12, 2027. The Company is vigorously defending against the claims asserted. At this time, it is too soon to determine the outcome of this lawsuit. As a result, the Company has not accrued for any loss contingency related to this matter because the amount or range of loss, if any, cannot be reasonably estimated.
On October 4, 2024, the Organic Consumers Association filed a lawsuit in the Superior Court of the District of Columbia against Calavo alleging false and deceptive advertising in connection with the sale of Mexican avocados in violation of the District of Columbia Consumer Protection Procedures Act. The allegations are similar to those asserted by the same plaintiff against the Company in the OCA matter described above. The plaintiff seeks declaratory and injunctive relief and attorneys’ fees but does not seek monetary damages. Calavo filed a motion to dismiss for lack of personal jurisdiction, lack of standing and choice of law. The Court denied the motion without prejudice. After completing jurisdictional discovery, on June 25, 2026, Calavo filed a supplemental motion regarding its renewed motion to dismiss plaintiff’s complaint, which was fully briefed as of July 16, 2026. The Company is vigorously defending against the claims asserted. At this time, it is too soon to determine the outcome of this lawsuit. As a result, the Company has not accrued for any loss contingency related to this matter because the amount or range of loss, if any, cannot be reasonably estimated.
CDM is involved in ongoing proceedings with Mexico's Servicio de Administración Tributaria (“SAT”) relating to a fiscal 2013 tax audit. In July 2018, the SAT issued a final tax assessment against CDM, including accrued interest, penalties and inflation adjustments, totaling approximately 3.6 billion Mexican pesos (approximately $207.4 million) as of July 31, 2026. In general terms, the SAT concluded that CDM does not perform maquila operations and that Calavo Growers has a permanent establishment in Mexico. According to the SAT, a maquila operation exists when merchandise provided by a foreign resident is temporarily imported into Mexico for processing or transformation and is subsequently returned abroad. In CDM’s case, however, the SAT determined that the company receives funds from Calavo Growers to purchase fruit in Mexico, which is then exported. In addition, Mexican tax authorities have asserted employee profit-sharing liabilities of approximately 118 million Mexican pesos (approximately $6.8 million) as of July 31, 2026. Against the tax assessment, an administrative appeal was filed with the SAT on September 6, 2018. The appeal was resolved unfavorably against CDM. Consequently, on August 20, 2021, CDM filed a nullity claim before the Federal Administrative Justice Court (Tribunal Federal de Justicia Administrativa), where the matter is currently pending resolution. The matter remains unresolved, and the ultimate outcome cannot be determined at this time. The SAT has also initiated income tax audits of CDM for fiscal years 2019 and 2020. As of July 31, 2026, no formal assessments have been issued in connection with
these audits. As of July 31, 2026, CDM had a provision for these uncertain tax positions of approximately $27.1 million as determined based on our cumulative probability analysis.
In addition, since fiscal 2014, Mexican tax authorities have challenged certain refund claims and related supporting documentation relating to VAT paid to suppliers that tax authorities allege failed to satisfy their own tax obligations. As of July 31, 2026, CDM had VAT receivables of approximately $25.7 million. CDM continues to pursue recovery of these amounts through administrative procedures and, when necessary, legal remedies. Although we believe the SAT will ultimately authorize the refund of the VAT receivables, the ultimate amount and timing of recovery of these VAT receivables remain uncertain.
The outcomes of our legal proceedings and other contingencies, including those involving Calavo, are inherently unpredictable, subject to significant uncertainties, and if one or more legal matters were resolved against the Company or Calavo in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that period could be materially adversely affected.
Lease contingency
In conjunction with the sale of a former subsidiary of Calavo in 2024, Calavo assigned leases resulting in them being relieved of their primary obligation under these leases. As a result of these lease assignments, the buyer is the primary obligor under the leases, with Calavo secondarily liable as a guarantor. If the buyer fails to perform under a lease, we could be liable to fulfill any remaining lease obligation. The leases have a remaining term of approximately 7.6 years as of July 31, 2026. The resulting maximum exposure includes $17.8 million of undiscounted future minimum base rent payments under these leases, and we may be obligated for variable lease payments, including common area maintenance, taxes, insurance and other charges, for the remainder of the lease terms. This amount represents the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties. We do not believe it is probable that we will be required to satisfy these obligations. As of July 31, 2026, we have not experienced any changes related to this contingency, and there were no new developments affecting its likelihood or potential financial impact. We continue to assess this obligation, but do not believe it is probable that we will be required to fulfill any obligations under these leases.
Tariffs
On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA), and remanded related matters to the Court of International Trade. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.
Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. The system was released in phases corresponding to different classes of claims. During the third fiscal quarter of 2026, we submitted or have developed a plan to submit approximately $12.5 million in claims. As a portion of these refunds have been received during the third quarter, we believe the remainder of the claims are realizable. Refunds and receivables for refund claims have been recognized as allowances against revenue and cost of sales based on the nature of the settlements. We are monitoring the situation closely for any changes to the ability to recover refunds.