Two of the most controversial giants in America’s egg industry, both of whom helped establish Iowa as the nation’s No. 1 egg producing state, are locked in a bitter, $47 million legal fight.

The court battle sheds new light on a splintered partnership that over the years has been marked by allegations of human rights abuses, food-safety violations, animal cruelty and the exploitation of immigrant workers.

It also indicates that retail giants Wal-Mart and Costco wanted nothing to do with eggs linked to the Iowa operations that were identified as the cause of the 2010 salmonella outbreak that sickened 1,900 Americans.

The battle is between Austin “Jack” DeCoster, the man who owns the Iowa egg production facilities implicated in last year’s recall of more than a half-billion eggs, and his former right-hand man, John W. Glessner.

An Iowa State professor who has studied the egg industry says the ongoing problems shouldn’t pose a threat to Iowa’s status as the No. 1 egg-producing state.

But industry analyst Donald Bell says the current dispute — paired with the recalls last year and the checkered history of Glessner and DeCoster — threatens to further taint the entire egg industry.

“They are saddling the entire industry, all across the country, with this negative image,” Bell said.

In one lawsuit, former Iowan Glessner alleges that the DeCoster family has mismanaged its Iowa egg production facilities and deprived Glessner of more than $40 million. Glessner claims that since the egg recalls, DeCoster’s companies have defaulted on bank loans, been “blackballed” by food vendors and been barred from bidding on contracts with major retailers.

At the same time, DeCoster’s Ohio Fresh Egg company is suing Glessner, accusing him of looting the company before he was fired this summer. According to Ohio Fresh Eggs, Glessner collected $900,000 in “consulting fees” from the company, billed it for a luxury apartment and $272,000 in personal expenses, and funneled half a million dollars into an Arizona pizzeria in which he has an interest.

The two are also fighting over control of a Hardin County egg production facility that Glessner once managed before turning it over to DeCoster in 1999.

In court papers, both Glessner and DeCoster deny any wrongdoing.

For at least 20 years, Glessner and DeCoster have worked together on egg production in Iowa, Maine and Ohio.

Glessner, as the sole shareholder of two companies, Boomsma’s Inc. and Iowa Ag, has owned an egg production facility in Hardin County for decades. In the 1990s, Glessner operated the Hardin County facility while also managing DeCoster’s Wright County Egg facilities, better known as Quality Egg.

The partnership was marked by controversy, including the state of Iowa labeling DeCoster a habitual violator of environmental laws and Glessner fighting legal battles related to immigrant workers.

But the egg business continued to grow and DeCoster’s and Glessner’s operations were intertwined.

In 1999, Glessner turned over the management of his and DeCoster’s Iowa facilities — known collectively as Iowa Egg Farms — to DeCoster. As part of the deal, Glessner agreed not to compete with Iowa Egg Farms for 10 years. In turn, DeCoster agreed to lease the Hardin County facility for 10 years, with the option to purchase it in 2009 for $100,000.

Under the terms of the lease agreement, DeCoster was to pay Glessner $86,800 per month — $10.4 million, total. According to both parties, DeCoster never made those payments. DeCoster claims that’s because Glessner wanted the payments deferred until the end of the leasing period to lessen his tax liability during that time.

By 2009, Ohio Fresh Eggs, with DeCoster as its primary investor, was being run by Glessner. As the company’s CEO, he was managing the company and all of its production facilities in three Ohio counties.

A year later, one of DeCoster’s egg-production companies in Maine agreed to pay one of the largest penalties ever imposed in an animal-cruelty case involving an egg farm.

After an animal-rights organization released undercover video shot inside a DeCoster hen house, Maine prosecutors filed 10 civil counts of animal cruelty against the company for depriving hens of necessary sustenance and proper shelter. The company agreed to pay $37,000 in fines and restitution and agreed to donate $100,000 to the Maine Department of Agriculture.

Several weeks later, the national salmonella outbreak — which the FDA would link to Iowa egg farms with ties to DeCoster — struck, splintering the partnership between Glessner and DeCoster.

The outbreak forced DeCoster’s Wright County Egg to recall 380 million eggs. The effect on DeCoster’s other business operations was immediate.

In August 2010, an executive with Hillandale Farms of Iowa, which had been forced to recall 170 million eggs produced in Iowa, sent an email to Glessner. The executive, Orland Bethel, indicated DeCoster had become a liability to Hillandale, which had leased one of its Iowa farms from a DeCoster-owned business and had been using DeCoster’s birds and feed.

Bethel wrote to Glessner: “Unfortunately, Hillandale Farms can have absolutely no association with Jack, anywhere. .. We have been told by Costco and Wal-Mart that they will not be doing any business if Jack and his people have any involvement in management.”

Bethel reiterated his concerns in a second email, one day later: “Hillandale needs to totally disassociate itself from Jack, and it has to be real. Hillandale has a good business base, but it will all be gone if I don’t move quickly and I will not try to deceive the public.”

Glessner would later blame the problems on Peter DeCoster, Jack DeCoster’s son and the manager of Quality Egg in Iowa. Glessner wrote to Peter DeCoster that it has “become clear you are no longer the appropriate person to oversee operations” at the company.

“Your management decisions may have contributed directly to what was the largest recall of eggs in known history and irreparable damage to the business that was Quality Egg.”

Glessner wrote that the Food and Drug Administration’s investigation showed that the younger DeCoster was aware that his hen houses had tested positive for salmonella and had failed to take corrective measures.

Within a matter of weeks, Jack DeCoster’s Ohio Fresh Eggs fired Glessner.

In a lawsuit initially filed several weeks ago in Ohio state court, DeCoster’s Ohio Fresh Eggs accused Glessner of racketeering, alleging that he looted the company by improperly transferring millions of dollars to various other companies in which he has an interest.

The lawsuit alleges, for example, that Glessner transferred more than half a million dollars to Vito’s Pizza & Ristorante of Scottsdale, plus $1 million to a title company, with no documentation to justify the expense. Although Ohio Fresh Eggs paid Glessner $500,000 in annual management fees, the company alleges Glessner improperly collected an additional $900,000 in consulting fees and more than $400,000 in loans between 2009 and 2011.

Ohio Fresh Eggs also accuses Glessner of billing the company for $272,000 in personal expenses, partly through his use of a corporate credit card. According to the lawsuit, Glessner used $30,000 of company money to pay for the rent and amenities at a luxury apartment, plus $41,000 for a vehicle. He is accused of ordering a colleague to destroy credit card receipts that documented some of his spending.

In all, the company alleges Glessner was “unjustly enriched” to the tune of $6 million. Glessner denies the allegation, and his attorney, James B. Hadden, said Ohio Fresh Eggs was fully aware of the money transfers that are now being questioned.

Glessner has filed a counterclaim, alleging that his business has been damaged because after he gave DeCoster control over his farms, DeCoster repeatedly violated environmental regulations in Iowa.

In his lawsuit, Glessner also claims DeCoster has seized control of the Hardin County facility and is trying to sell it out from under Glessner.

Glessner is seeking $10 million as payment for the money due him under the lease agreement, plus $31.2 million for inventory, property and marketing services that Glessner billed to DeCoster through an “open account” over the past 13 years.

DeCoster’s attorney declined to comment on the allegations against his client.

DeCoster, meanwhile, has filed a lawsuit in Iowa state court, claiming that his offer to purchase the Hardin County facility has been ignored by Glessner. DeCoster is asking the court for a temporary injunction that would prevent Glessner from taking over the plant.

The lawsuits identify concerns from major retailers who might refuse to do business with DeCoster or his associates, but that will create new opportunities for other Iowa egg farmers, said Daniel Otto, an ISU economics professor.

“The fundamentals are still very strong here in Iowa,” he said. “The lower cost of feed grain is such a major part of Iowa’s advantage, and that’s still the case.”

Bell, the industry analyst, agreed that the problems linked to DeCoster and the egg recall can be addressed.

“Some of these retailers have tremendous buying capacity and influence,” he said. “I’ve always said that the strength of the Wal-Marts is such that if they say they want polka-dot eggs, the producers will find a way to start making polka-dot eggs.”

Reprinted with permission of The Des Moines Register.