An Oregon grocer and its beef supplier are split over who pays for outbreak costs
A grocer wants to recover more than $2.7 million from its beef supplier for an incident involving the sale of product contaminated with E. coli O157:H7.
The claim by New Seasons Market LLC and New Leaf Community Markets Inc. filed in Oregon Circuit Court in Portland was lodged against Country Natural Beef Inc. and Oregon Country Beef. The sales occurred in 2019.
New Seasons operates a chain of full-service grocery stores in Oregon, Washington and Northern California. Since its founding, the grocery store chain has featured local producers like Country Nature Beef. It provided the stores with “premium and delicious” beef products from cattle raised without antibiotics, added growth hormones, or growth promotions.
According to the complaint, New Seasons stores relied on Country Natural Beef for “uncontaminated, consumer-grade beef products.”
In the runup to October and November 2019, New Seasons made regular “fully paid” purchases for its stores from Country Natural Beef for stores in and around Portland.
On Nov. 8, 2019, the Oregon Health Authority (OHA) and the Oregon Department of Agriculture (ODA) told New Seasons that illnesses were caused by beef sold in their stores because it was contaminated with E. coli O157:H7.
New Seasons agreed to immediately terminate all sales of ground beef and beef products and to begin recalling the products the OHA and ODA suspected might contain the bacteria. New Season stores removed beef products from its display case and ceased all sales, which continued for one to three months.
The initial recall notices were expanded to include all-beef products packed from Oct. 19, 2019, to Nov. 8, 2019, with sell-by dates from Oct. 23, 2019, to Nov. 11, 2019. New Seasons says the recall caused many of its customers to return their beef purchases to their stores.
IEH Laboratories & Consulting Group, Oregon’s independent testing lab, found E. coli O157:H7 in two beef samples taken from a New Seasons beef counter, and the 20 percent fat ground beef was supplied by Country Natural Beef.
New Seasons credits Country Natural Beef, which is based in Redmond, OR, with conducting a “root cause analysis” on the E. coli outbreak and implementing a new testing policy.
But, New Seasons reports it has incurred “significant losses,” which may not be over:
“These losses include, without limitation, the following, all of which were reasonably and necessarily incurred by New Seasons under the circumstances: (i) the expenses associated with issuing and implementing the recall; (ii) the property damage loss arising from the disposal of all of the ground beef and beef products covered by the recall (as well as the refunds issued to customers); (iii) the expenses associated with non-routine cleaning of New Seasons stores; (iv) the expenses associated with investigating the source of the E. coli O157:H7 contamination; (v) professional and consulting fees related to the E. coli O157:H7 outbreak and the resulting recall; (vi) business interruption losses, including lost revenue arising from the suspension of sales of ground beef and other beef products; and (vii) loss of goodwill.”
In its complaint, New Seasons cites multiple claims, complaints, and inquiries from customers that may have been negatively impacted by the outbreak. At the time the lawsuit was filed, New Seasons said its damages totaled more than $2.7 million.
New Seasons is suing to recover those damages used on claims of breach of contract, breach of implied warranty common law indemnity, and negligence.
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