A study Rye Brook-based Snapple Beverage Corp. has presented in court “apparently establishes� that the company used questionable distribution practices to meet a sales quota, a lawyer for 60 distributors suing the company said in a recent letter to the judge.

The letter by Howard B. Cohen to U.S. District Court Magistrate Judge Mark D. Fox says the study seems to show Snapple “engaged in a pattern and practice of channel stuffing. …â€? The letter says the study — which is not part of the court file in White Plains — also seems to show that the company sold product at greatly reduced prices to certain distributors — but not to those who brought the lawsuit.

Channel stuffing, also known as “trade loading,� involves sending customers more product than they want in the hope they’ll eventually pay for it.

By doing this, a company can increase its cash receivables. The risk is that the customers will not sell extra product and will return it, forcing the company to make a later downward adjustment in its cash receivables.
Snapple apparently used these tactics even though they had a “serious impact� on the 60 distributors suing the company, Cohen said. The tactics also violated contracts and statutes, Cohen said in the letter.

Cohen represents Mitchell Camarda of Bronxville and other current and former Snapple distributors who allege that the company granted exclusive rights to sell juice to stores, restaurants and other retailers in certain territories but then let other distributors — called “transshippers� in the court papers — sell in those areas.
Bart G. Van de Weghe, a Manhattan lawyer defending the company, would not comment yesterday on Cohen’s letter. Spokespeople for Snapple and its parent company, Cadbury Schweppes PLC, could not be reached for comment.

The company has said in court papers that it does all it can to prevent distributors from selling in sales regions that it has granted to others.

The issue has been raised before. Sanford C. Bernstein & Co. LLC beverage analyst Andrew Wood said in a 2004 research report that the company might have reported sales figures higher than they should have been.
Wood pointed to written statements Cadbury issued and said the statements were indications Snapple had “destocked� or “de-loaded� product. Wood said that meant the company had previously loaded product to artificially boost its sales.

The letter also discloses that a former Snapple employee, identified only by his last name, complained to the U.S. Securities and Exchange Commission about the company’s activities. The SEC investigated but did not take any action.

In another development in the 2004 lawsuit, U.S. District Court Judge Charles L. Brieant dismissed the claims of eight distributors after lawyers for the plaintiffs reported the eight did not respond to letters sent to them. Sixty distributors are still pursuing the lawsuit.