A group of landowners say a Silicon Valley-backed company trying to build a sustainable city northeast of San Francisco used unfair and “strong-armed” tactics to force farmers to sell their land, including pitting family members against each other, court documents show.
The details emerged on Friday as part of a lawsuit the company, Flannery Associates LLC, filed in May in District Court in Sacramento, alleging various farmers conspired to inflate the value of their land by $170 million. The landowners deny the claim and are seeking to dismiss the suit.
The latest allegations, contained in a report on a conference held by both parties in September, provide the most complete account to date of the landowners’ accusations against Flannery, which has backing from former Sequoia Capital Chairman Mike Moritz, LinkedIn co-founder Reid Hoffman and venture capitalist Marc Andreessen, among others.
The defendants say Flannery coerced farmers who didn’t want to sell to give up their land, forced property sales by evicting farmers and terminating leases, misled landowners and used the costly expense of litigation to get them to sell, according to the filing.
A Flannery spokesperson, in an email to Bloomberg, said that the company has specific evidence of price-fixing and that it’s offered reasonable settlements to individuals and is willing to settle with the remaining defendants.
In one instance, the defendants claim, seven of eight landowners within the same family wished to continue to farm, while one wanted to sell. Flannery then allegedly employed a “divide-and-conquer” plan by purchasing the one-eighth share and suing the other seven family members to obtain the remaining shares, according to the filing.
To date, the Delaware-based company has spent about $800 million to purchase at least 52,000 acres of agricultural land, becoming the area’s biggest landowner. It is seeking $510 million in damages from the landowners, or triple the amount allegedly inflated by price fixing.
The company’s plan to build a new city called California Forever, a walkable, green community that would create thousands of jobs, was revealed in late August by the New York Times and other media outlets. The project is led by Jan Sramek, a 36-year-old former Goldman Sachs trader. It has faced backlash from some local city leaders and politicians, who have expressed concerns over the lack of transparency in the process.
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