Eighth Circuit Affirms Judgment in Supply Chain Dispute over Recalled Westland Beef

The Eighth Circuit Court of Appeals has affirmed a $1.6 million award of
damages and attorney’s fees in a contract dispute between General Mills
and the company that sold it beef obtained from the Westland Meat Co.
and recalled in 2008 after “[v]ideo footage from the Humane Society allegedly
showed Westland employees improperly handling cattle designated
for slaughter.” General Mills Operations, LLC v. Five Star Custom Foods, Ltd.,
Nos. 12-1731 and 12-1826 (8th Cir., decided January 7, 2013). General Mills
destroyed the Progresso soups in which the recalled beef had been used.
The Eighth Circuit affirmed the district court’s grant of summary judgment
to General Mills on its breach-of-contract claim and dismissed as moot the
company’s cross-appeal of the lower court’s grant of summary judgment to
Five Star on the breach-of-warranty claims.

At issue was whether Five Star had materially breached its contract with
General Mills. The contract required the meatballs to be of food grade and
for the beef to be procured under “[s]tunning, slaughter, and processing
practices [that] meet or exceed the requirements established by the USDA
and the World Animal Health Organization for safe trade in animal products.”
General Mills relied on the recall press release issued by the U.S. Department
of Agriculture’s (USDA’s) Public Affairs Office to establish that the Food Safety
and Inspection Service (FSIS) had determined the beef was “unfit for human
consumption.” While the court agreed that the document was hearsay, it also
determined that it fell within the public-records exception because it “sets out
findings from an investigation pursuant to authority granted by law, and is
therefore admissible.”

Similarly, the court found that a USDA technical briefing transcript providing
a summary of the investigation which revealed Westland practices “not
compliant with FSIS regulations” fell under the public records exception. This evidence, and the admission of Five Star’s corporate designee at deposition that the beef was recalled because “it didn’t meet the USDA’s regulations,”
according to the court, sufficiently established that the contract was
breached. The court rejected Five Star’s claim that General Mills was required
to prove that the specific product received was adulterated, or procured in a
noncompliant manner.

Additional details about the Westland video and recall appear in Issues 247,
248 and 249 of this Update.