703 F.3d 1104 (8th Cir. 2013), 12-1731, General Mills Operations, LLC v. Five Star Custom Foods, Ltd.

Docket Nº:12-1731, 12-1826.
Citation:703 F.3d 1104
Opinion Judge:BENTON, Circuit Judge.
Party Name:GENERAL MILLS OPERATIONS, LLC, Plaintiff-Appellee v. FIVE STAR CUSTOM FOODS, LTD., Defendant-Appellant Westland Meat Company, Inc., also known as Hallmark Meat Packing Co.; Hallmark Meat Packing, Inc., Third Party Defendants. General Mills Operations, LLC, Plaintiff-Appellant v. Five Star Custom Foods, Ltd., Defendant-Appellee Westland Meat Company
Attorney:Meaghan C. Bryan, argued, Peter G. Van Bergen, Andrea E. Reisbord, on the brief, Minneapolis, MN, for Appellant. Rolf Edward Gilbertson, argued, Christopher R. Paar, Kaisa M. Adams, on the brief, Minneapolis, MN, for Appellee.
Judge Panel:Before MURPHY, BENTON, and SHEPHERD, Circuit Judges.
Case Date:January 07, 2013
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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703 F.3d 1104 (8th Cir. 2013)

GENERAL MILLS OPERATIONS, LLC, Plaintiff-Appellee

v.

FIVE STAR CUSTOM FOODS, LTD., Defendant-Appellant

Westland Meat Company, Inc., also known as Hallmark Meat Packing Co.; Hallmark Meat Packing, Inc., Third Party Defendants.

General Mills Operations, LLC, Plaintiff-Appellant

v.

Five Star Custom Foods, Ltd., Defendant-Appellee

Westland Meat Company, Inc., also known as Hallmark Meat Packing Co.; Hallmark Meat Packing, Inc., Third Party Defendants.

Nos. 12-1731, 12-1826.

United States Court of Appeals, Eighth Circuit.

January 7, 2013

Submitted: Nov. 14, 2012.

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[Copyrighted Material Omitted]

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Meaghan C. Bryan, argued, Peter G. Van Bergen, Andrea E. Reisbord, on the brief, Minneapolis, MN, for Appellant.

Rolf Edward Gilbertson, argued, Christopher R. Paar, Kaisa M. Adams, on the brief, Minneapolis, MN, for Appellee.

Before MURPHY, BENTON, and SHEPHERD, Circuit Judges.

BENTON, Circuit Judge.

General Mills Operations, LLC purchased meatballs from Five Star Custom Foods, Ltd. After delivery and use of the meatballs, Five Star's supplier of ground beef issued a recall. Accordingly, General Mills destroyed its products containing the meatballs. It sued Five Star for breach of contract and breach of warranties. The district court 1 granted summary judgment to General Mills on the breach-of-contract claim, and to Five Star on the breach-of-warranty claims. The parties cross-appeal. Five Star also challenges the award of attorneys' fees to General Mills. Having jurisdiction under 28 U.S.C. § 1291, this court affirms the grant of summary judgment to General Mills and the award of attorneys' fees. General Mills' cross-appeal is dismissed as moot.

I.

Five Star is a manufacturer and supplier of food products. General Mills is a manufacturer of food products that are sold to retail consumers. For over ten years, Five Star sold products to General Mills, including meatballs for Progresso soups.

This case involves two orders for meatballs by General Mills in September 2007. The orders were subject to General Mills' Terms and Conditions (printed on the reverse of the purchase order) and General Mills' Ingredient Specifications. The meatballs were delivered on September 29 and October 5, 2007, and used in Progresso soups.

Five Star purchased some of the beef used to manufacture the meatballs from Westland Meat Company, Inc. In February 2008, Westland voluntarily recalled over 143 million pounds of beef, including

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some used in General Mills' meatballs. Video footage from the Humane Society allegedly showed Westland employees improperly handling cattle designated for slaughter. There were no reports of illness from the beef, but after discussions with the United States Department of Agriculture and the Food Safety Inspection Service, Westland issued the voluntary recall. The USDA issued a Product Recall Recommendation describing the circumstances of the recall, issued a Recall Release to the public, and held a Technical Briefing for members of the industry. The recall reached only the retail level, meaning that end consumers were not required to destroy their products.

Per instructions from the USDA, Five Star notified its customers, providing instructions on destroying affected products. General Mills complied, destroying all of the affected soups. In 2010, General Mills sued Five Star for negligence, breach of contract, breach of express warranties, and breach of the implied warranties of merchantability and fitness for a particular purpose. General Mills voluntarily dismissed the negligence claim. The parties cross-moved for summary judgment. The district court granted summary judgment to General Mills on the breach-of-contract claim, and to Five Star on the breach-of-warranty claims. General Mills Operations, LLC v. Five Star Custom Foods, Ltd., 789 F.Supp.2d 1148, 1160 (D.Minn.2011). The parties stipulated to $1,473,564 in damages and $150,000 in attorneys' fees.

II.

Five Star argues that the district court should not have granted summary judgment to General Mills on the breach-of-contract claim. This court reviews de novo a grant of summary judgment, construing all facts and making all reasonable inferences favorable to the nonmovant. Cent. Platte Natural Res. Dist. v. U.S. Dep't of Agric., 643 F.3d 1142, 1146 (8th Cir.2011). " The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).

A successful breach-of-contract claim under Minnesota law has four elements: " (1) formation of a contract; (2) performance by plaintiff of any conditions precedent; (3) a material breach of the contract by defendant; and (4) damages." Parkhill v. Minn. Mut. Life Ins. Co., 174 F.Supp.2d 951, 961 (D.Minn.2000). At issue here is the third element— whether Five Star materially breached the contract. Because General Mills accepted the meatballs, it has the burden to establish a breach. Minn.Stat. § 336.2-607(4).

Several contract provisions are at issue in this case. The Terms and Conditions state:

5. GOODS: The Goods shall conform in all respects to the description on the face of this Order, and/or [General Mills'] then current specifications furnished to [Five Star]. The Goods, including, without limitation, tools and equipment shall be new, of first class commercial type and of the latest approved design, unless otherwise specified on the face of this Order. Workmanship and materials shall be of the best quality and free from defects that might render the Goods unsuitable or inefficient for the purpose for which it is to be used. [Five Star] warrants and guarantees its Goods for the period of time normally specified for the type of Goods involved. During the warranty period, all Goods or parts disclosing defects in design, material, and/or workmanship shall be replaced and delivered to the job site by [Five Star] without cost or delay to [General Mills]. This warranty is in addition to and not in lieu

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of, any other warranties or guarantees made by [Five Star] or created or implied as a matter of law. The above warranties, as well as all other warranties contained herein, including, without limitation, the warranties in paragraphs 6, 8, 9, 10, 12, 18, 20, 21, 25 and 26 shall collectively be defined herein as " Warranties."

....

25. COMPLIANCE WITH LAW: [Five Star]'s performance under this Order shall be in compliance with all applicable federal, state, and local laws, ordinances, regulations, rules and statutes (" Laws" ).

The Ingredient Specifications include:

REGULATORY

....

This ingredient shall be of food grade and in all respects, including labeling in compliance with the Meat Inspection Act of 1906 as amended.

....

Stunning, slaughter, and processing practices must meet or exceed the requirements established by the USDA and the World Animal Health Organization for safe trade in animal products.

These regulations require the meatballs to be of food grade, and for the beef to be procured pursuant to USDA regulations. Five Star contends, however, that there is no admissible evidence establishing the alleged breach of those duties. Even viewing the record most favorably to the nonmovant, the court should not consider statements that are inadmissible hearsay. Novotny v. Tripp County, 664 F.3d 1173, 1178 (8th Cir.2011); Fed.R.Civ.P. 56(c)(2). Five Star argues that General Mills relies exclusively on the Recall Release issued by the USDA Public Affairs Office. That release stated: " all beef product produced during the period of time for which evidence indicates such activity occurred had been determined by FSIS to be unfit for human consumption, and is, therefore, adulterated."

Five Star objects that the press release is inadmissible hearsay. General Mills responds that it is not hearsay because it was not offered to prove the truth of the matter asserted. See Fed.R.Evid. 801(c)(2); see also Stevens v. Moore Bus. Forms, Inc., 18 F.3d 1443, 1449 (9th Cir.1994) (press release admissible to prove knowledge), citing Kunz v. Utah Power & Light Co., 913 F.2d 599, 605 (9th Cir.1990) (press release admissible to prove notice). General Mills asserts that the press release is offered to show why it destroyed the beef, not the truth of the matter asserted— that the Westland beef was actually adulterated. There must be some evidence, however, demonstrating that the beef did not comply with the contract. As to that, the press release is hearsay.

Even so, the press release falls within the public-records hearsay exception. The exception provides that a " record or statement of a public office" is not hearsay if it sets out, in a civil case, " factual findings from a legally authorized investigation." Fed.R.Evid. 803(8)(A)(iii). The cases Five Star cites where press releases were inadmissible hearsay do not foreclose admissibility as a public record. In fact, Five Star's only published opinion supports this point. See Zeigler v. Fisher-Price, Inc., 302 F.Supp.2d 999, 1021 n. 10 (N.D.Iowa 2004). Five Star cites Zeigler for the proposition that " a press release regarding a product recall was hearsay unless used as an admission by party-opponent under Fed.R.Evid. 801(d)(2)." This ignores the court's statement, " To the extent the press release can be construed as stating conclusions or opinions of the CSPC, it also was admissible under Federal Rule of Evidence 803(8)(c)." Id. , citing

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Patterson v. Cent. Mills, Inc., 64 Fed.Appx. 457, 462 (6th Cir.2003).2

Many press releases are certainly hearsay. Rule 803(8), however, is construed broadly. Pat...

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