819 F.3d 417 (8th Cir. 2016), 15-1313, American Home Assurance Co. v. Greater Omaha Packing Co.

Docket Nº:15-1313
Citation:819 F.3d 417, 94 Fed.R.Serv.3d 418
Opinion Judge:WOLLMAN, Circuit Judge.
Party Name:American Home Assurance Company; Cargill Meat Solutions Corporation, Plaintiffs - Appellees v. Greater Omaha Packing Co., Inc., Defendant - Appellant
Attorney:For American Home Assurance Company, Plaintiff - Appellee: Thomas A. Grennan, Adam J. Wachal, GROSS & WELCH, Omaha, NE. For Cargill Meat Solutions Corporation, Plaintiff - Appellee: Jacob Bylund, Kimberly J. Walker, FAEGRE & BAKER, Des Moines, IA; Bruce Gregory Jones, FAEGRE & BAKER, Minneapolis,...
Judge Panel:Before WOLLMAN, BEAM, and GRUENDER, Circuit Judges.
Case Date:April 05, 2016
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
SUMMARY

Cargill and American Home filed suit against Greater Omaha, alleging breach of contract and warranties based on allegations that Greater Omaha sold raw beef trim tainted with E.coli O157:H7. Greater Omaha counterclaimed for tortious interference with business relationships and expectancies. The district court granted summary judgment in favor of Cargill on Greater Omaha’s counterclaim. A jury... (see full summary)

 
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Page 417

819 F.3d 417 (8th Cir. 2016)

American Home Assurance Company; Cargill Meat Solutions Corporation, Plaintiffs - Appellees

v.

Greater Omaha Packing Co., Inc., Defendant - Appellant

No. 15-1313

United States Court of Appeals, Eighth Circuit

April 5, 2016

Submitted October 20, 2015.

Appeal from United States District Court for the District of Nebraska - Omaha.

For American Home Assurance Company, Plaintiff - Appellee: Thomas A. Grennan, Adam J. Wachal, GROSS & WELCH, Omaha, NE.

For Cargill Meat Solutions Corporation, Plaintiff - Appellee: Jacob Bylund, Kimberly J. Walker, FAEGRE & BAKER, Des Moines, IA; Bruce Gregory Jones, FAEGRE & BAKER, Minneapolis, MN.

For Greater Omaha Packing Co., Inc., Defendant - Appellant: Jordan W. Adam, Patrick S. Cooper, Michael Francis Coyle, David J. Stubstad, FRASER & STRYKER, Omaha, NE.

Before WOLLMAN, BEAM, and GRUENDER, Circuit Judges.

OPINION

WOLLMAN, Circuit Judge.

Cargill Meat Solutions Corporation (Cargill) and American Home Assurance Company filed suit against Greater Omaha Packing Company, Inc. (Greater Omaha), alleging breach of contract and warranties.1 Cargill claimed that Greater Omaha sold raw beef trim tainted with E. coli O157:H7, which Cargill then used in its ground beef products, causing several people to become ill. Greater Omaha counterclaimed for tortious interference with business relationships and expectancies. The district court2 granted summary judgment in favor of Cargill on Greater Omaha's counterclaim. Following a three-week trial, the jury returned a general verdict for Cargill and awarded $9 million in damages. On appeal, Greater Omaha argues that the district court erred in admitting certain evidence, that the jury instructions were improper, that the jury reached an impermissible compromise verdict, and that Greater Omaha's counterclaim should have survived summary judgment. We affirm.

I. Background

E. coli O157:H7 bacteria live in the digestive tracts of cows and can be transferred to meat during slaughter. Humans become infected by consuming contaminated beef, and the O157:H7 strain is so virulent that even a small dose can make a person ill. Unlike the harmless E. coli bacteria commonly found in human intestines, E. coli O157:H7 produces Shiga toxins, which cause inflammation of the colon and large intestine, resulting in stomach cramps and bloody diarrhea. Hemolytic uremic syndrome is a severe complication of E. coli O157:H7 infection that can cause anemia and kidney damage.

When infected patients seek treatment, health care providers report the cases of E. coli O157:H7 to state health departments, and clinical laboratories send bacterial isolates to state public health laboratories for pulsed-field gel electrophoresis (PFGE), which is a method of DNA fingerprinting. State health departments then submit the PFGE results to the Centers for Disease Control and Prevention's (CDC) national molecular subtyping database, PulseNet, which helps detect outbreaks of foodborne disease.

In September and October 2007, the Minnesota Department of Health (MDH) received several reports of cases of E. coli O157:H7. Clinical laboratories sent bacterial isolates to the MDH for two-enzyme PFGE testing. The results revealed that the Minnesota cases had indistinguishable PFGE patterns. MDH submitted the results to PulseNet, and the Minnesota cases were considered to be part of an existing national outbreak of E. coli O157:H7, consisting of cases having the same PFGE pattern. Although the outbreak's PFGE pattern was rare, it had been reported to the CDC in 2005 and 2006.

According to the supervisor of the foodborne diseases unit in the MDH, " when isolates of bacteria from different people have the same DNA fingerprint, that suggests that they -- the people may have acquired their illness from a common source." Several Minnesota patients reported having consumed the same brand of frozen hamburger patties from Sam's Club--American Chef's Selection Angus Beef Patties--which was produced by Cargill. State officials collected leftover patties and packaging materials from those patients and tested the patties for the presence of E. coli O157:H7. That testing revealed that the human and ground beef bacterial isolates had the same two-enzyme PFGE pattern, and packaging materials indicated that the patties were produced within minutes of each other on two production lines in the same facility. Accordingly, on October 5, 2007, the MDH issued a news release, instructing the public to discard or return to Sam's Club any American Chef's Selection Angus Beef Patties.

Meanwhile, the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) notified Cargill of the E. coli O157:H7 outbreak. Cargill determined that the contaminated patties were produced at its Butler, Wisconsin, beef grinding facility on August 16, 2007. Angie Siemens, Ph.D., then Vice President of Technical Services, served as Cargill's recall coordinator. She traveled to the Butler facility to work with the on-site technical services team and FSIS officials to determine the scope of the recall. On October 6, 2007, Cargill recalled 845,000 pounds of frozen ground beef.

Cargill had used raw materials from the following four suppliers in its August 16 production: Greater Omaha; Beef Products, Inc. (BPI); Lone Star Beef Processors (Lone Star); and Frigorifico PUL (Frigorifico), a foreign company. Greater Omaha produced the raw beef trim included in this production on August 9 and 10, 2007. Cargill contacted the four suppliers the same day it announced the recall.

Although the four suppliers had submitted to Cargill certificates of analysis showing that samples of their beef had tested negative for E. coli O157:H7, it is undisputed that raw materials caused the contamination. To determine the source of the contamination, Cargill reviewed microbiological data from the suppliers and sent personnel to visit the domestic suppliers. Cargill learned from its audit of Greater Omaha's E. coli sampling procedures that Greater Omaha had been testing a new sampling procedure that, according to Cargill, did not comply with the procedure Cargill required. Cargill claimed that when Greater Omaha resumed using the appropriate method in October 2007, Greater Omaha experienced a spike in E. coli O157:H7-positive samples. On December 5, 2007, Cargill threatened to delist the Greater Omaha plant if it did not improve its process control or institute corrective actions. Greater Omaha's December 18, 2007, response outlined the improvements that it had made, including that it had modified its sampling procedures.

In early October 2007, FSIS also notified Greater Omaha that its beef had been used in the Cargill patties that had tested positive for E. coli O157:H7. Thereafter, in December 2007, FSIS completed a comprehensive review of Greater Omaha's food-safety systems, documenting several instances of non-compliance with federal regulations. Because it had failed to maintain adequate sanitary conditions in its facility, FSIS issued a Notice of Intended Enforcement (NOIE) to Greater Omaha on December 20, 2007. The NOIE stated that from June 1, 2007, to November 29, 2007, Greater Omaha had " failed to meet regulatory requirements for pre-operational sanitation, on average, 48% of the time." FSIS thus concluded that the recurring noncompliance " indicate[d] failure to properly implement [Greater Omaha's] sanitation program." The NOIE also addressed a spike in E. coli O157:H7-positive results from Greater Omaha samples from mid-October to early November 2007. In its response to FSIS, Greater Omaha attributed the spike to a fan that had been placed on the kill floor and was subsequently removed.

The CDC created a line list3 for the E. coli O157:H7 outbreak, using data provided by state health departments. The line list included information about fifty-four case patients, all of whom had the same strain of E. coli O157:H7. The spreadsheet had fields for the patient's age, sex, onset date, symptoms, and food history. Because the most common vehicle for E. coli O157:H7 is beef, the spreadsheet also included fields for brands, types, and purchase dates of any beef consumed by the case patient.

Of the fifty-four cases on the line list, twenty-seven case patients reported exposure to American Chef's Selection Angus Beef Patties. Of the twenty-seven case patients who had not been exposed to the Cargill patties, the line list included no food-history information...

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