This is part of the 2nd one.
Subject: Fwd: Cancellation of PO #50036 and Resolution of Australia defective product issue
Date:
March 9, 2013 at 11:51:05 AM CST
To:
"bjarte.rene@privatelabelnutra.com" <bjarte.rene@privatelabelnutra.com>
Cc:
Mike Malm <Mmalmimage@aol.com>, "eric.skae@scoutbeverage.com Skae" <eric.skae@scoutbeverage.com>, Bob Devers <rjdevers@msn.com>
Bjarte, I am receiving a ton of pressure from our Australian distributor to get resolution of the issues concerning the defective product that Private Label/Metaugus shipped them which I laid out for you in the email dated 3-4-13 below. They would really like to see this resolved in an amicable fashion with Kevin living up to the commitments he made to them to correct this. Their patience is growing very thin and I anticipate they may file suit against Hangover Joe's, Inc. very shortly if this isn't fixed. Obviously, if they sue Hangover Joe's, we will have to file suit against against Private Label and Metaugus. Having not received a response from you to my email, I wanted to reach out to you again to see what position you are going to take. I remain optimistic that we can resolve this amicably with lawsuits having to be filed, but this has to be resolved immediately. I will look forward to hearing back from you and hopefully getting this matter Begin forwarded message:
From:
Michael <mike@hangoverjoes.com>
Subject: Re: Cancellation of PO #50036 and Resolution of Australia defective product issue
PRIVILEGE REDACTION
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 10 of 18
2
Date:
March 4, 2013 11:07:07 AM CST
To:
Bjarte Rene <bjarte.rene@privatelabelnutra.com>
Cc:
Mike Malm <mmalmimage@aol.com>, Bob Devers <rjdevers@msn.com>
Bjarte, I've been swamped the last few days and apologize for just getting this response back to you. You've asked that I email you back and set forth the issues we've had with the product produced by Private Label and shipped to our Australian distributor and also why we cancelled the 3000 gallon bulk order. First, our records indicate an outstanding balance to PL of apx 47K not 100K as you indicated. Below is what has transpired. 1. We ordered 20 pallets of 7200 bottles labeled for Australia (a shipping container) that PL said would be produced and ready for shipment on July 1, 2012. The product was not ready for shipment as promised. On July 25th our AU distributor had us send them 3 pallets of our US product by air freight where they wouldn't be empty handed for a major trade show they had paid to attend. 2. On August 9, 2012 the AU order was still not fully completed and ready to ship to our distributor, so our AU distributor had us air freight them 5 pallets of the 20 pallets they were expecting to already have received and they paid the air freight since they were so desperately behind in supplying their customers. Again, PL was late in shipping, and the 5 pallets didn't ship until Aug 23, 2012. 3. On Sept 4, 2012, given PL having said the remaining pallets due of the 20 pallet order were ready, we shipped the container to the port to be put on a freighter to Australia. 4. On September 5th, our AU customer finally gets their 5 pallets and they notify us that PL had not perforated the bottles and they could not be opened and as such could not be sold to their customers. They documented this with photos and a video that was supplied to Kevin. 5. With it now being apparent that the product inside the container was going to be in the exact same shape as the defective 5 pallets the AU distributor had just received, with Kevin's agreement we (at our expense of apx. 5K) had the container recalled from the port before it was loaded on the freighter and returned to PL where Kevin said they would re-sleeve the bottles with perforations. 6. Again, because of the delays caused by PL and their desperate need for product, our AU distributor has 3 pallets of AU product air freighted to them which Kevin said would be perforated correctly. The order for the 3 pallets was around Sept 17, 2012 and it was not until around Nov 17, 2012 that the AU distributor received them and they also were not perforated and thus were defective and not able to be sold. 7. After waiting apx 2 months for the 3 pallets ordered around Sept 17, 2012, the AU distributor, because they are still running so far behind on receiving the the correctly manufactured product that was supposed to be shipped to them on July 1, 2012, have 5 more pallets of AU product air freighted to them of their original 20 pallet order that Kevin said had been re-sleeved and he had
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 11 of 18
3
personally inspected. When the 5 pallets were finally received by our AU distributor, they had not been re-sleeved and perforated correctly, but rather were cut around the caps of the bottle with some sort of hand tool in a non uniform fashion which Kevin ultimately admitted had occurred. By now, 6 & 1/2 more pallets had been shipped by container to AU that were likewise defective when received around January 2013. 8. At this point our AU distributor demanded a conference call with Kevin. Again, the distributor sent photos and videos of the defective 6 & 1/2 defective pallets which were supplied to Kevin. On this conference call Kevin admits that all the sleeving and perforating were both being done by hand and they had no automation or a perfing tool on the line to do this efficiently. At this point Kevin told us he had reached out to another local co-packer to hand this off to to get this done effectively. He then told our AU distributor that he would immediately air freight them at PL's expense, 5 correctly manufactured pallets and replace the balance of the 20 pallet container with correctly manufactured product ASAP at PL's expense. To this date, this has not happened. It should also be noted, our Australian distributor has advised us that the delay in them receiving their product has cost them at least 100K in out of pocket expenses such as brand promotion, interest expense, 45K in air freight expenses etc and they have lost substantial profits due to lost opportunity cost by being unable to sell in their peak season. They lost the opportunity to sell during Christmas and New Years. With regard to why the order for the bulk liquid order was cancelled, please note that the date we were told by PL that it would be ready for us to have picked and shipped (as is stated on the PO) was 1PM Eastern Standard Time on 1-29-2013. The product was not available at that time as promised, but we remained patient until Feb 8, 2013 when we had no other choice but to move forward with another manufacturer because we had deadlines to meet with our customers and given PL's track record of not delivering on time, we could not wait any longer. In addition to the problem with our AU distributor, please let me call to your attention these other issues that were caused by PL that have been extremely costly and damaging to our company and brand with our US customers. All of these orders were prepaid to Private Label.
1.) Coremark: Coremark ordered 10 pallets (5 to two different DCs) to be shipped in early November for December holiday sales. Both orders were shipped by Private Label without the standard master cases as required by Coremark. (Private Label has the Coremark standards and have been shipping correctly for the previous 6 months.) Private Label also shipped inconsistent qtys not matching the packing slips. The week of Thanksgiving, Coremark informed us of the shipping discrepancies and refused to accept and process the orders. For the west coast shipments, our company had to find a 3rd party fulfillment company to pick up the product, repack and redeliver. Upon delivery, the product was now too late to go our for holiday sales. The Arkansas shipment was not reshipped or redelivered by PL for several weeks. The value of these orders to us was apx $100,000. We lost all of the holiday sales which were approximately this same amount. 2.) Harold Levinson: This distributor order was paid for the first week of Dec. The first order was for 1 pallet to be followed by several others. They were a new customer with 30,000 accounts. The order was not shipped until the 2nd week of Jan and we had to give the customer a special discount to accept the order. It cost us a minimum of 2 pallets in sales for the holiday season. They were going to cancel our agreement because we had done a trade show for them and never shipped the orders because of this delivery issue.
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 12 of 18
4
3) A-1 Discount Distributing: They placed a PO right after the NACs show and Private Label didn't ship for a month. By the time the order got to the distributor, they refused it. This was 2 pallets (over $18,000) 4.) Republic National New Mexico: Ordered a pallet and shipped 6 weeks late. By the time it had already arrived, we had spent several thousand dollars in the sales presentation without product available. This cost us one pallet at $ 9,000 5.) Private Label shipped product in the US this year and used a wrong bottle (Mr Chow from Canada) The product has a different UPC on it and will not ring the register with our accounts. We sent notice to Private Label asking for the list of customers they shipped it to and they have not answered the question. We are in jeopardy of chargebacks when the item won't go through the register. Cost is still to be determined. 6.) In September of 2012 Private Label shipped our US product without perforations. They were shipped to all customers and we found out at a trade show for Mclane and the Rodman conference. 7.) 2 pack program: All 2 packs were not glued and properly assembled by Private Label. The were also packed into oversized boxes causing damage to all pieces shipped. The cost to us was delayed shipments and charges from a third party company to re-pack all of the product.
Please review and let's discuss at your earliest convenience. Michael On Feb 26, 2013, at 6:31 PM, Bjarte Rene < bjarte.rene@privatelabelnutra.com> wrote: Thanks, Michael! Looking forward to hearing from you. Bjarte On Tue, Feb 26, 2013 at 5:18 PM, Michael <mike@hangoverjoes.com> wrote: Hi Bjarte, Thank you for your email. I'm away from my office on business, but should be back tomorrow and can get you a response.
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 13 of 18
5
Regards, Michael Sent using Siri so expect an occasional misspelled or wrong word! On Feb 25, 2013, at 5:59 PM, Bjarte Rene < bjarte.rene@privatelabelnutra.com> wrote: Hi Michael, Thank you for your email. If you don't mind, could you please detail in an email the issues about the shipment to Australia as well as the issues that led HOJ to want to cancel the bulk order you placed a deposit on on 1/29? Looking forward to hearing from you. Thanks, Bjarte On Mon, Feb 11, 2013 at 5:37 PM, Michael <mike@hangoverjoes.com> wrote: Bjarte, This is Michael Jaynes, CEO for Hangover Joe's, Inc. From the email I received from Shawna Brown at Private Label today, I'm getting the feeling neither she or Kevin is keeping you in the loop of how the relationship between of our companies is getting into crisis mode. Perhaps they are, and my forwarding the following emails to you is a waste of your time, but if you haven't seen these emails I thought you should. We would certainly like to resolve the issues before us in an amicable fashion, but I'm getting no cooperation out of Kevin. Please feel free to contact me if you would like to discuss a resolution before this matter escalates further. There will be 2 more emails to follow FYI. Sincerely, Michael Jaynes Begin forwarded message:
From:
Hangover Joe's Get Up & Go <mike@hangoverjoes.com>
Subject: Cancellation of PO #50036 and Resolution of Australia defective product issue
Date:
February 8, 2013 5:53:52 PM CST
To:
Kevin Harden <kevin.harden@privatelabelnutra.com>, Jay Connaughton < jconnau@pstel.net>, Jay Connaughton <metaugus.jay@gmail.com>, Shawna Brown <shawna.brown@privatelabelnutra.com>
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 14 of 18
Subject: Fwd: Cancellation of PO #50036 and Resolution of Australia defective product issue
Date:
March 9, 2013 at 11:51:05 AM CST
To:
"bjarte.rene@privatelabelnutra.com" <bjarte.rene@privatelabelnutra.com>
Cc:
Mike Malm <Mmalmimage@aol.com>, "eric.skae@scoutbeverage.com Skae" <eric.skae@scoutbeverage.com>, Bob Devers <rjdevers@msn.com>
Bjarte, I am receiving a ton of pressure from our Australian distributor to get resolution of the issues concerning the defective product that Private Label/Metaugus shipped them which I laid out for you in the email dated 3-4-13 below. They would really like to see this resolved in an amicable fashion with Kevin living up to the commitments he made to them to correct this. Their patience is growing very thin and I anticipate they may file suit against Hangover Joe's, Inc. very shortly if this isn't fixed. Obviously, if they sue Hangover Joe's, we will have to file suit against against Private Label and Metaugus. Having not received a response from you to my email, I wanted to reach out to you again to see what position you are going to take. I remain optimistic that we can resolve this amicably with lawsuits having to be filed, but this has to be resolved immediately. I will look forward to hearing back from you and hopefully getting this matter Begin forwarded message:
From:
Michael <mike@hangoverjoes.com>
Subject: Re: Cancellation of PO #50036 and Resolution of Australia defective product issue
PRIVILEGE REDACTION
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 10 of 18
2
Date:
March 4, 2013 11:07:07 AM CST
To:
Bjarte Rene <bjarte.rene@privatelabelnutra.com>
Cc:
Mike Malm <mmalmimage@aol.com>, Bob Devers <rjdevers@msn.com>
Bjarte, I've been swamped the last few days and apologize for just getting this response back to you. You've asked that I email you back and set forth the issues we've had with the product produced by Private Label and shipped to our Australian distributor and also why we cancelled the 3000 gallon bulk order. First, our records indicate an outstanding balance to PL of apx 47K not 100K as you indicated. Below is what has transpired. 1. We ordered 20 pallets of 7200 bottles labeled for Australia (a shipping container) that PL said would be produced and ready for shipment on July 1, 2012. The product was not ready for shipment as promised. On July 25th our AU distributor had us send them 3 pallets of our US product by air freight where they wouldn't be empty handed for a major trade show they had paid to attend. 2. On August 9, 2012 the AU order was still not fully completed and ready to ship to our distributor, so our AU distributor had us air freight them 5 pallets of the 20 pallets they were expecting to already have received and they paid the air freight since they were so desperately behind in supplying their customers. Again, PL was late in shipping, and the 5 pallets didn't ship until Aug 23, 2012. 3. On Sept 4, 2012, given PL having said the remaining pallets due of the 20 pallet order were ready, we shipped the container to the port to be put on a freighter to Australia. 4. On September 5th, our AU customer finally gets their 5 pallets and they notify us that PL had not perforated the bottles and they could not be opened and as such could not be sold to their customers. They documented this with photos and a video that was supplied to Kevin. 5. With it now being apparent that the product inside the container was going to be in the exact same shape as the defective 5 pallets the AU distributor had just received, with Kevin's agreement we (at our expense of apx. 5K) had the container recalled from the port before it was loaded on the freighter and returned to PL where Kevin said they would re-sleeve the bottles with perforations. 6. Again, because of the delays caused by PL and their desperate need for product, our AU distributor has 3 pallets of AU product air freighted to them which Kevin said would be perforated correctly. The order for the 3 pallets was around Sept 17, 2012 and it was not until around Nov 17, 2012 that the AU distributor received them and they also were not perforated and thus were defective and not able to be sold. 7. After waiting apx 2 months for the 3 pallets ordered around Sept 17, 2012, the AU distributor, because they are still running so far behind on receiving the the correctly manufactured product that was supposed to be shipped to them on July 1, 2012, have 5 more pallets of AU product air freighted to them of their original 20 pallet order that Kevin said had been re-sleeved and he had
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 11 of 18
3
personally inspected. When the 5 pallets were finally received by our AU distributor, they had not been re-sleeved and perforated correctly, but rather were cut around the caps of the bottle with some sort of hand tool in a non uniform fashion which Kevin ultimately admitted had occurred. By now, 6 & 1/2 more pallets had been shipped by container to AU that were likewise defective when received around January 2013. 8. At this point our AU distributor demanded a conference call with Kevin. Again, the distributor sent photos and videos of the defective 6 & 1/2 defective pallets which were supplied to Kevin. On this conference call Kevin admits that all the sleeving and perforating were both being done by hand and they had no automation or a perfing tool on the line to do this efficiently. At this point Kevin told us he had reached out to another local co-packer to hand this off to to get this done effectively. He then told our AU distributor that he would immediately air freight them at PL's expense, 5 correctly manufactured pallets and replace the balance of the 20 pallet container with correctly manufactured product ASAP at PL's expense. To this date, this has not happened. It should also be noted, our Australian distributor has advised us that the delay in them receiving their product has cost them at least 100K in out of pocket expenses such as brand promotion, interest expense, 45K in air freight expenses etc and they have lost substantial profits due to lost opportunity cost by being unable to sell in their peak season. They lost the opportunity to sell during Christmas and New Years. With regard to why the order for the bulk liquid order was cancelled, please note that the date we were told by PL that it would be ready for us to have picked and shipped (as is stated on the PO) was 1PM Eastern Standard Time on 1-29-2013. The product was not available at that time as promised, but we remained patient until Feb 8, 2013 when we had no other choice but to move forward with another manufacturer because we had deadlines to meet with our customers and given PL's track record of not delivering on time, we could not wait any longer. In addition to the problem with our AU distributor, please let me call to your attention these other issues that were caused by PL that have been extremely costly and damaging to our company and brand with our US customers. All of these orders were prepaid to Private Label.
1.) Coremark: Coremark ordered 10 pallets (5 to two different DCs) to be shipped in early November for December holiday sales. Both orders were shipped by Private Label without the standard master cases as required by Coremark. (Private Label has the Coremark standards and have been shipping correctly for the previous 6 months.) Private Label also shipped inconsistent qtys not matching the packing slips. The week of Thanksgiving, Coremark informed us of the shipping discrepancies and refused to accept and process the orders. For the west coast shipments, our company had to find a 3rd party fulfillment company to pick up the product, repack and redeliver. Upon delivery, the product was now too late to go our for holiday sales. The Arkansas shipment was not reshipped or redelivered by PL for several weeks. The value of these orders to us was apx $100,000. We lost all of the holiday sales which were approximately this same amount. 2.) Harold Levinson: This distributor order was paid for the first week of Dec. The first order was for 1 pallet to be followed by several others. They were a new customer with 30,000 accounts. The order was not shipped until the 2nd week of Jan and we had to give the customer a special discount to accept the order. It cost us a minimum of 2 pallets in sales for the holiday season. They were going to cancel our agreement because we had done a trade show for them and never shipped the orders because of this delivery issue.
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 12 of 18
4
3) A-1 Discount Distributing: They placed a PO right after the NACs show and Private Label didn't ship for a month. By the time the order got to the distributor, they refused it. This was 2 pallets (over $18,000) 4.) Republic National New Mexico: Ordered a pallet and shipped 6 weeks late. By the time it had already arrived, we had spent several thousand dollars in the sales presentation without product available. This cost us one pallet at $ 9,000 5.) Private Label shipped product in the US this year and used a wrong bottle (Mr Chow from Canada) The product has a different UPC on it and will not ring the register with our accounts. We sent notice to Private Label asking for the list of customers they shipped it to and they have not answered the question. We are in jeopardy of chargebacks when the item won't go through the register. Cost is still to be determined. 6.) In September of 2012 Private Label shipped our US product without perforations. They were shipped to all customers and we found out at a trade show for Mclane and the Rodman conference. 7.) 2 pack program: All 2 packs were not glued and properly assembled by Private Label. The were also packed into oversized boxes causing damage to all pieces shipped. The cost to us was delayed shipments and charges from a third party company to re-pack all of the product.
Please review and let's discuss at your earliest convenience. Michael On Feb 26, 2013, at 6:31 PM, Bjarte Rene < bjarte.rene@privatelabelnutra.com> wrote: Thanks, Michael! Looking forward to hearing from you. Bjarte On Tue, Feb 26, 2013 at 5:18 PM, Michael <mike@hangoverjoes.com> wrote: Hi Bjarte, Thank you for your email. I'm away from my office on business, but should be back tomorrow and can get you a response.
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 13 of 18
5
Regards, Michael Sent using Siri so expect an occasional misspelled or wrong word! On Feb 25, 2013, at 5:59 PM, Bjarte Rene < bjarte.rene@privatelabelnutra.com> wrote: Hi Michael, Thank you for your email. If you don't mind, could you please detail in an email the issues about the shipment to Australia as well as the issues that led HOJ to want to cancel the bulk order you placed a deposit on on 1/29? Looking forward to hearing from you. Thanks, Bjarte On Mon, Feb 11, 2013 at 5:37 PM, Michael <mike@hangoverjoes.com> wrote: Bjarte, This is Michael Jaynes, CEO for Hangover Joe's, Inc. From the email I received from Shawna Brown at Private Label today, I'm getting the feeling neither she or Kevin is keeping you in the loop of how the relationship between of our companies is getting into crisis mode. Perhaps they are, and my forwarding the following emails to you is a waste of your time, but if you haven't seen these emails I thought you should. We would certainly like to resolve the issues before us in an amicable fashion, but I'm getting no cooperation out of Kevin. Please feel free to contact me if you would like to discuss a resolution before this matter escalates further. There will be 2 more emails to follow FYI. Sincerely, Michael Jaynes Begin forwarded message:
From:
Hangover Joe's Get Up & Go <mike@hangoverjoes.com>
Subject: Cancellation of PO #50036 and Resolution of Australia defective product issue
Date:
February 8, 2013 5:53:52 PM CST
To:
Kevin Harden <kevin.harden@privatelabelnutra.com>, Jay Connaughton < jconnau@pstel.net>, Jay Connaughton <metaugus.jay@gmail.com>, Shawna Brown <shawna.brown@privatelabelnutra.com>
Case 1:14-cv-00683-ODE Document 1-2 Filed 03/07/14 Page 14 of 18
