Beef producers and packers have been required for years to “identify hazard points and critical points during beef slaughtering, which is a necessary first step toward developing a hazard analysis and critical control point system to control meat contamination by Escherichia coli O157:H7.” See R. Guyon, et. al, Hazard Analysis of Escherichia coli O157:H7 Contamination during Beef Slaughtering in Calvados, France, J. Food Protection, Vol 64, No. 9, 2001, pp 1341-1345. While protecting the health of employees and customers is of utmost importance, in addition to the development and implementation of robust HACCP plans that address the former, food producers can help protect themselves from the financial impact of an E. coli outbreak or similar contamination in food products by ensuring that agreements with suppliers, producers, and insurers includes a provision that expressly covers such a situation. The following summary of a recent case provides guidance for others to use, to avoid similar outcomes.
In April 2011, beef from Meyer Natural Angus (“Meyer”), a Colorado natural beef producer, and processed by Greater Omaha Packing (“GOP”) allegedly tested positive for a dangerous strain of E. coli bacteria. Meyer Natural Foods LLC v. Greater Omaha Packing Co., Inc. 302 Neb. 509 at *2 (Neb. 2019).
Meyer had a processing agreement with Greater Omaha Packing (“GOP”), pursuant to which GOP would slaughter, process, and fabricate Meyer’s cattle into various beef products. Id. The processing agreement also required GOP to maintain property insurance on Meyer property in its possession, with a total value of $1.8 million. Id. at *5. Further, Meyer had the option to reject “all products failing to meet the warranties and specifications” contained in the agreement and return said rejected products to GOP and charge GOP its out of pocket expenses of storing and reshipping any products properly rejected by Meyer. Id. at *6.
On April 25, 2011, Meyer delivered 1600 head of cattle to GOP for slaughter and processing. After processing, GOP sealed and delivered the beef to Meyer. Id. at *2. While on “hold” for testing prior to delivery to stores, 17.5% of the beef tested returned presumptively positive for E. coli. Id. Meyer immediately recalled the trucks with the contaminated beef, and sent the beef either to the cooker to be sold at a reduced charge or to a landfill because it was unsafe for human consumption. Id. at *3.
After the contamination, Meyer sued GOP claiming...
