Supply Chain Litigation Follows Soy Grit Salmonella Contamination and Recall
A company that makes name- and store-brand food products, including cereals, granola products, pastas, and bakery goods, has sued the supplier of soybean food ingredients allegedly contaminated with Salmonella, seeking in excess of $7 million in damages. Ralcorp Holdings, Inc. v. Thumb Oilseed Producers’ Coop., No. 10-1898 (E.D. Mo., filed October 8, 2010). According to the complaint, the companies contracted for the purchase of the defendant’s soy grits under an agreement that guaranteed they would be suitable for human consumption and that the defendant would indemnify and pay damages to the plaintiff for any warranty breaches.
Plaintiff Ralcorp Holdings alleges that it incorporated most of the soy grits into its products, specifically granola bars and trail mixes, for sale to a number of retail companies with which Ralcorp had also contracted. Before delivering the final products, Ralcorp claims that it discovered the soy grit ingredient “was, and had been at the time of delivery, contaminated with salmonella.” Ralcorp then notified the retailers, the defendant and the Food and Drug Administration (FDA), which confirmed the contamination. Ralcorp has attached to its complaint FDA’s “inspectional observations” following inspection of the defendant’s facilities, finding unsafe manufacturing practices and unsanitary conditions, as well as the agency’s June 24, 2010, warning letter to the defendant.
Claiming actual damages of about $1 million and lost future profits due to loss of existing customers in excess of $6 million, Ralcorp alleges breach of contract and express warranties, negligence and negligent misrepresentation, breach of implied warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. According to a news source, the contamination affected a Trader Joe’s outlet in California, which was forced to recall the Chocolate Chip Chewy Coated Granola Bars that a Ralcorp subsidiary had manufactured under the Trader Joe’s brand. The plaintiff reportedly had revenue of $3.9 billion in 2009. See St. Louis Business Journal, October 12, 2010.