A federal lawsuit filed Tuesday by Girl Scouts San Diego alleges that Ferrero U.S.A., a massive multinational corporation whose subsidiary bakes Girl Scout cookies, broke a contract with the local Girl Scouts in 2024, throwing the nonprofit organization’s local council into a crisis that led to more than $1.1 million in lost revenue and the elimination of 25 jobs.

The lawsuit alleges that Ferrero — which owns dozens of candy, cereal and snack brands such as Keebler, Blue Bunny, Famous Amos, Butterfinger and Kellogg’s cereals — unlawfully voided the final year of a fixed-priced, four-year contract and tried to force Girl Scouts San Diego into a new contract with a 22% price increase.

The suit alleges that the lost revenue was particularly damaging, given that the cookie program is the source of more than 70% of revenue for Girl Scouts San Diego.

“This action arises because a global confectionery giant decided that its bottom line mattered more than keeping its promises,” the lawsuit alleges. “The consequences for Girl Scouts were devastating: a forced emergency transition to a new baker, over $1.1 million in lost revenue, reduced earnings for the troops of young women the organization serves … and the elimination of twenty-five employees due to the lost revenue.”

Carol Dedrich, CEO of Girl Scouts San Diego, said in a statement that Ferrero’s actions “took away critical girl program funding, diminished trust with our volunteers, and negatively impacted our customer base.” She said Girl Scouts San Diego tried unsuccessfully to negotiate a resolution with Ferrero for nearly two years.

“Because we teach girls the importance of integrity and business ethics, we were left with no other choice but to formally file a lawsuit,” she said.

A spokesperson for Ferrero declined to respond to the lawsuit’s allegations, saying the company does not comment on ongoing litigation.

The lawsuit alleges that Girl Scouts troops in San Diego and Imperial counties in 2024 sold more than 2.3 million packages of cookies for a net revenue of more than $8.3 million. But after the contractual dispute with Ferrero forced the local Girl Scouts to switch bakers, those numbers dipped in 2025 to 2.1 million packages sold and a net revenue of roughly $7.2 million.

The suit also alleges that “most devastating of all,” the contract dispute and its fallout forced the San Diego-Imperial Council to lay off 15 employees and terminate 10 vacant positions, most of which had allegedly been held open for months to help offset the lost revenue.

“These reductions have diminished Girl Scouts’ capacity to serve its mission and pursue new initiatives to make meaningful impacts in the community,” the suit alleges.

According to the lawsuit, Girl Scouts San Diego signed a four-year cookie contract in May 2021 with Little Brownie Bakers, one of two licensed bakers in the country authorized to produce Girl Scout cookies. Ferrero acquired Little Brownie Bakers in 2022. The lawsuit alleges that Ferrero and Little Brownie Bakers complied with their contractual obligations through the first three years, covering the cookie-selling seasons of 2022, 2023 and 2024.

But that allegedly changed in preparation for the 2025 cookie season, which was the last covered by the four-year contract, according to the lawsuit. That’s when representatives from Little Brownie Bakers allegedly demanded that Girl Scouts San Diego agree to a 22% price increase.

“As justification for this extraordinary demand, (a Little Brownie Bakers executive) invoked ‘force majeure’ based on ‘hyperinflation of cocoa’ prices,” according to the lawsuit.

Force majeure is a provision in a contract that can free parties from their obligations due to certain extraordinary events, such as fires, floods, wars or labor disputes. However, unforeseen economic forces are not typically enough to trigger such a clause.

In its lawsuit, Girl Scouts San Diego argues that the four-year contract had specifically acknowledged that Little Brownie Bakers would assume the risk of commodity price fluctuations.

Little Brownie Bakers “apparently failed to hedge against foreseeable price increases and now seeks to shift the consequences of its own inaction onto the Girl Scouts,” the lawsuit says.

The alleged refusal by Little Brownie Bakers and Ferrero to abide by the terms of the contract set off a crisis within Girl Scouts San Diego as its CEO and other executives scrambled to work out a last-minute deal with the nation’s only other Girl Scout cookie producer, the lawsuit claims.

“The cookie program — the source of over seventy percent of organizational revenue — was in jeopardy,” according to the lawsuit. “Not having the program, even for one year, would threaten Girl Scouts’ ability to continue operations.”

Ultimately, the local Girl Scouts council was able to reach a deal with ABC Bakers, the only other Girl Scout cookie producer, but it was “significantly less advantageous” than the previous contract with Little Brownie Bakers and Ferrero, according to the lawsuit.

“The transition to ABC Bakers brought increased pricing, different cookie names, changes to cookie varieties, and the loss of a specialty cookie,” according to the suit.

The lawsuit alleges a single cause of action, for breach of contract, and seeks unspecified monetary damages.

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