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The Story of Sriracha: A Case Study in Legal Analytics and Litigation Funding

By Nicole Clark |
May 8, 2024

The Story of Sriracha: A Case Study in Legal Analytics and Litigation Funding

The following is a contributed piece by Nicole Clark, CEO and co-founder of Trellis. Trellis is pleased to offer LFJ members a complimentary 2 week free trial to its state trial court database.  Click here to access it today. 

Nobody knows exactly what happened. Each party has their own account of the events that unfolded. This, however, is what we do know. Jalapeno peppers were everywhere. Nestled within the rolling hills of Ventura County in Southern California, Underwood Ranches, a family farm operated by Craig Underwood, had been growing the fruit for the past three decades, serving as the sole supplier for Huy Fong Foods, the company responsible for sriracha. Business boomed. Both companies expanded. The world was their oyster.

Then, in 2016, the paradise they built crumbled. Huy Fong Foods filed a lawsuit against Underwood Ranches, accusing the farm of overcharging for growing costs. In response, Underwood Ranches countersued, claiming breach of contract and financial loss. After a three week trial, a jury for the Ventura County Superior Court found merit with both claims, awarding Huy Fong Foods $1.45 million and Underwood Ranches $23.3 million. Huy Fong Foods appealed the verdict, and, unable to claim its award, Underwood Ranches stood on the brink of financial collapse, left without the funds needed to pay its suppliers or its workers.

The Flames of Uncertainty

“The benefit you get from litigation is that litigation doesn’t fluctuate the same way that the markets do,” explains Christopher Bogart of Burford Capital. The financial service company had been called by the attorneys of Underwood Ranches to assist the farm, providing it with $4 million in non-recourse financing—enough to carry it through the appeal process. Still, according to Bogart, the comparative stability of litigation doesn’t eliminate the risks of financing a case like this. The risks, and the costs, can be big.

It’s easy to overlook the uncertainties embedded within the legal system. After all, this is a system that relies on precedents, a situation which suggests that the outcome of any future case should reflect that which came before. As Gail Gottehrer, an emerging technologies attorney based in New York City, remarks, “[i]f your case is similar and has similar facts to another case, the results shouldn’t be too surprising.” The problem, however, is that the results often are surprising. Judges aren’t computers. Neither are juries. They are people, filled with their own beliefs and their own experiences, both of which shape how they interpret laws, apply facts, and consider arguments.

Over the years, attorneys have developed their own rudimentary tools for grappling with this uncertainty. These rudimentary tools have now morphed into powerful machine learning technologies, packed with the ability to comb through millions of state trial court records in order to analyze court dockets, judicial rulings, and verdict data in ways that have rendered civil litigation more transparent and more predictable. But what does the story of sriracha mean for litigation funding teams? How can litigation finance companies use state trial court records to navigate uncertain legal terrains, not just for cases at the end of their lifecycle, but also for those that have only just begun?

Harvesting the Seeds

It could start with a ping. That’s just one way litigation funding companies can tap into new business opportunities. By registering for alerts with a legal analytics platform, litigation funding teams no longer need to source leads through collaborating attorneys. Alerts afford litigation funders with their own bird’s-eye view of the litigation landscape as it unfolds in real-time. These systems can notify users whenever a new case has been filed against a particular company, a new entry has been added to a case docket, or a new ruling has been issued on a legal claim.

To help manage the scale—and the urgency—of this reality, litigation funding teams can also turn to a different tool: the daily filings report. A daily filings report is a spreadsheet that contains detailed coverage of all new civil actions filed in a specific jurisdiction. Each report is emailed to subscribers every morning and includes all case data (i.e., judge, party, counsel, practice area) and metadata (i.e., case summary) as well as direct links to the docket and the complaint. With reliable access to daily filings reports, litigation funders can be the first to know about any new cases filed within a particular jurisdiction, pinpointing the most lucrative cases before anyone else.

Heat Indexing

What happens, then, when a litigation funding team finds a potential case? The daily filings report lets funders access the complaint within seconds, gathering all of the information they need to perform a Google-like search through the millions of state trial court records that have been curated by their preferred legal analytics provider. The goal? To quickly learn more about the litigation history of the parties that are named in the complaint (What other cases does Underwood Ranches have pending? What practice areas drain its budget? Who is its primary outside counsel?) and the law firm that has chosen to represent them (How experienced is Ferguson Case Orr Paterson with this jurisdiction, practice area, opposing counsel? Who are its typical clients? How were those cases resolved?).

The due diligence process deepens with a look at the merits of the case. Here, a litigation funding team can use legal analytics to follow the logics of conventional legal research. With access to a searchable database of prior decisional law, funders can conduct element-focused analyses of each asserted cause of action in the case, identifying the ways in which judges in the county have ruled on similar actions in the past. And, if a judge has already been assigned to the case, these funders can take their due diligence even further, turning their eyes to a judge analytics dashboard—an interactive interface developed by legal analytics platforms to highlight the patterns, the inclinations, and the past experiences of specific judicial officers.

Consider the dispute between Underwood Ranches and Huy Fong Foods, a case presided over by the Hon. Henry J. Walsh. According to Trellis, the average case length in Ventura County is 945 days. Knowing where Walsh sits in relation to this average, as well as the number of cases he has on deck, could help a litigation funder anticipate the likely pace of a case, a key piece of information to have when designing different investment portfolios. But what about juries? How might a jury respond to a breach of contract case in California? Legal analytics platforms like Trellis have also integrated verdict data into their systems, amending their archives of state trial court records to also include information related to case outcomes and settlement awards. A litigation funder conducting due diligence on Underwood Ranches could quickly pull a random sample of agricultural-related breach of contract claims in California, identifying the value range of verdict and settlement amounts (median: $5,650,798; average $9,331,712) and the frequency of plaintiff verdicts (62.5 percent). Litigation funders no longer need to wonder how much a case might be worth. The numbers are there.

The Spiciest Pepper

“There is idiosyncratic risk in the court system that can’t be anticipated,” begins Eva Shang, the co-founder of Legalist. It is widely known that predicting the outcome of litigation can be a risky business. Yet, there is something to be said about the magic of big numbers. Whenever we feed our computers the (meta)data of thousands of cases, deviations get smoothed out and patterns begin to emerge. By shifting our thinking away from stories about individual lawsuits, we can redirect our attention towards that which is frequent, recurrent, predictable. As a case study, the story of sriracha opens the door to a more predictable world, a world where the outcomes of litigation don’t have to fluctuate the way that markets do, not because the courtroom is inherently less uncertain than a stock exchange, but because the magic of big numbers finds increasingly novel ways to make it that way.

By Nicole Clark

CEO and co-founder of Trellis | Business litigation and labor and employment attorney

Trellis is an AI-powered legal research and analytics platform that gives state court litigators a competitive advantage by making trial court rulings searchable, and providing insights into the patterns and tendencies of your opposing counsel, and your state court judges.

Trellis is pleased to offer LFJ members a complimentary 2 week free trial to its state trial court database.  Click here to access it today. 

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About the author

Nicole Clark

Nicole Clark

Case Developments

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Case Developments Commercial

Pogust Goodhead Defeats BHP Bid To Block Deposition Of Former Renova Chief

The High Court has rejected mining giant BHP’s application for an anti-suit injunction (ASI) that sought to prevent Pogust Goodhead from pursuing lawful evidence-gathering measures in the United States against the former president of the Brazilian redress scheme foundation set up after the Mariana dam collapse.

The Court found no basis to characterise Pogust Goodhead’s use of Section 1782 to seek a deposition of Mr André de Freitas, former CEO of the Renova Foundation[i] as vexatious, oppressive, or unconscionable, as argued by BHP.

In November 2024, Pogust Goodhead filed the §1782 application in the District Court of Arkansas seeking limited testimony from Mr de Freitas in relation to Pogust Goodhead’s claim arguing that BHP unlawfully interfered with Pogust Goodhead’s retainer rights and the compensation due to its Brazilian clients.  The U.S. court granted the subpoenas in January 2025.

Since then, BHP has sought to block the deposition by filing motions to quash the subpoenas in April 2025 and seeking an ASI in the High Court. A ruling from the Arkansas court is pending.

In Wednesday’s judgment, Mr Justice Waksman rejected BHP’s request for an injunction that would have halted the U.S. evidence-gathering process, finding no basis to prevent Pogust Goodhead from continuing with its §1782 discovery efforts.

Justice Waksman wrote in his decision: “I agree with PG that the depositions serve a distinct and legitimate purpose, being to better understand Renova’s role in relation to the various settlements and their form.”

Alicia Alinia, CEO at Pogust Goodhead commented: “We welcome the Court’s clear judgment. BHP has repeatedly attempted to obstruct legitimate investigations into its conduct. Mr de Freitas’s testimony is central to understanding how our clients’ rights may have been undermined. It is essential that he gives evidence. Only by hearing directly from those involved can our clients’ rights be properly safeguarded and the full truth established.”

Key Findings

  • The court held that English courts do not control how parties lawfully obtain evidence abroad, and that the U.S. court is the appropriate authority to decide the scope and propriety of discovery sought under Section 1782.
  • The Court also highlighted BHP’s significant delay in bringing the ASI application — nearly four months after learning of the U.S. subpoenas — which weighed against granting any injunctive relief.
  • Any concerns about the scope of the subpoenas, alleged misstatements, or burden on the witness are squarely matters for the U.S. District Court, which has already engaged with the issues in detailed hearings.

As a result, BHP cannot use the English courts to derail the ongoing U.S. process. The parties now await the District Court of Arkansas’s decision on whether BHP’s motions to quash the subpoenas will succeed.

Case Developments Commercial

AmTrust Sues Sompo Over £59M in Legal Funding Losses

By John Freund |

A high-stakes dispute between insurers AmTrust and Sompo is unfolding in UK court, centered on a failed litigation funding scheme that left AmTrust facing an estimated £59 million in losses. At the heart of the case is whether Sompo, as the professional indemnity insurer of two defunct law firms, Pure Legal and HSS, is liable for the damages stemming from their alleged misconduct in the operation of the scheme.

An article in Law360 reports that AmTrust had insured the litigation funding program and is now pursuing Sompo for reimbursement, arguing that the liabilities incurred by Pure and HSS are covered under Sompo’s policies. The two law firms entered administration, leaving AmTrust to shoulder the financial burden. AmTrust contends that the firms breached their professional duties, triggering coverage under the indemnity policies.

Sompo, however, disputes both the factual and legal underpinnings of the claim. The insurer denies that any breach occurred and further argues that even if the law firms had acted improperly, their conduct would not be covered under the terms of the policies issued.

This case follows AmTrust’s recent resolution of a parallel legal battle with Novitas, another financial party entangled in the scheme. That settlement narrows the current dispute to AmTrust’s claim against Sompo.

Case Developments Commercial

Woolworths Faces Shareholder Class Action Over Underpayments

By John Freund |

Woolworths Group is facing a new shareholder class action that alleges the company misled investors about the scale and financial impact of underpaying salaried employees. The action, backed by Litigation Lending Services, adds a fresh legal front to the long-running fallout from Woolworths’ wage compliance failures.

According to AFR, at the heart of the claim is the allegation that Woolworths did not adequately inform the market about the risks posed by its reliance on annualised salary structures and set-off clauses. These payment methods averaged compensation over longer periods instead of ensuring employees received correct pay entitlements for each pay period. This included overtime, penalty rates, and other award entitlements.

Recent decisions by the Federal Court of Australia have clarified that such set-off practices are non-compliant under modern awards. Employers must now ensure all entitlements are met for each pay period and maintain detailed records of employee hours. These rulings significantly raise the compliance bar and have increased financial exposure for large employers like Woolworths, which has tens of thousands of salaried employees.

As a result, Woolworths could face hundreds of millions of dollars in remediation costs. The shareholder class action argues that Woolworths failed to disclose the magnitude of these potential liabilities in a timely or accurate way. Investors claim that this omission amounts to misleading conduct, and that they were not fully informed of the risks when making investment decisions.