Saddle company sues Colorado prison system for breach of contract

This story by Lily O’Neill first ran on BusinessDen, a BizWest news partner.

A Westminster-based company that had inmates make its products for years now says Colorado’s prison system is ripping it off.

Colorado Saddlery sued Colorado Correctional Industries, a division of the Colorado Department of Corrections that provides incarcerated labor, on Dec. 29, accusing CCI of breach of contract and trademark infringement.

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According to the lawsuit, Colorado Saddlery contracted with CCI to have offenders produce some of its saddles and tack for nearly three decades, from 1989 to 2018.

Colorado Saddlery claims CCI has breached the two parties’ labor agreement by selling products outside of the Colorado Saddlery’s stores for below-market prices, as well as misusing the company’s logos and designs despite the end of the contract.

The Colorado Department of Corrections declined a request for comment.

The business relationship began deteriorating well before the contract ended, the lawsuit indicates.

“Beginning around 2007, CCI began aggressively and successfully pursuing direct business relationships with long-standing Colorado Saddlery customers, who informed Colorado Saddlery that they were going to purchase from CCI instead of Colorado Saddlery due to CCI’s much cheaper prices, which were made possible due to the extremely low wages paid to the inmates working in CCI’s production facilities,” the lawsuit reads.

Colorado Saddlery lost customers, such as the Colorado Department of Parks & Wildlife, and the U.S. Border Patrol, and saw sales begin to decline, according to the lawsuit.

Then, starting in 2015, Colorado Saddlery noticed issues with CCI’s quality of production and rejected “numerous” saddles produced by inmates “due to severely deficient craftsmanship and safety concerns given the flimsy construction,” the lawsuit reads.

This continued through 2017, although Colorado Saddlery agreed to accept some of the saddles in return for a reduced price, according to the lawsuit.

CCI has retail shops in Canon City and Colorado Springs, where it sells gift items, fresh food, furniture and household components. In late 2017, Colorado Saddlery President Matthew Wassam visited the Canon City store and saw that some of the saddles rejected by the company — which were branded with the company’s logo — were being sold there.

“Between Dec. 29, 2017 and April 4, 2018, Mr. Wassam made repeated attempts to confront CCI regarding its breach of contract, trademark infringement, unfair competition and price discrimination,” the lawsuit states. “CCI refused to acknowledge that it had done anything wrong and eventually stopped responding to Mr. Wassam altogether.”

The situation led to Colorado Saddlery terminating its relationship with CCI in 2018.

Despite the end of the contract, Colorado Saddlery discovered “that CCI was advertising online using the Colorado Saddlery Denver Mark” in December 2019, the lawsuit reads.

Colorado Saddlery is asking a judge for damages incurred by CCI’s alleged breach of contract, trademark infringement, unfair competition and price discrimination.

CCI employs 1,800 inmates in 60 voluntary employment programs, which the DOC says on its website are intended to educate and train inmates for the workforce when they leave prison. Inmates earn an average of $4.50 a day, according to the Denver Post.