AMC, LLC v. Nw. Farm Food Coop.

Decision Date21 August 2020
Docket NumberCase. No.: 6:17-cv-00119-AA
Citation481 F.Supp.3d 1153
Parties AMC, LLC, Plaintiff, v. NORTHWEST FARM FOOD COOPERATIVE and National Food Corporation, Defendants.
CourtU.S. District Court — District of Oregon

Stanton R. Gallegos, Jeffrey M. Edelson, Markowitz Herbold PC, Portland, OR, for Plaintiff.

Jason H. Daywitt, Emma P. Pelkey, Lewis Brisbois Bisgaard & Smith LLP, Portland, OR, for Defendant Northwest Farm Food Cooperative.

Robert D. Scholz, Megan L. Ferris, MacMillan Scholz & Marks, P.C., Portland, OR, for Defendant National Food Corporation.

OPINION & ORDER

AIKEN, District Judge:

Plaintiff AMC, LLC, ("AMC") filed this action against defendant Northwest Farm Food Cooperative ("NW Farm"), alleging product liability, negligence, gross negligence, and contract claims in connection with "spent hen" mink feed that AMC bought from NW Farm. NW Farm moves for summary judgment (doc. 50) on all claims. For the reasons discussed below, NW Farm's Motion for Summary Judgment (doc. 50) is GRANTED with respect to AMC's breach of implied warranty of merchantability and breach of implied warranty of fitness claims and DENIED with respect to all other claims.

BACKGROUND

AMC is a commercial mink breeder. AMC alleges that almost 11,000 of its mink died in November 2016 after eating spent hen feed supplied by NW Farm that was contaminated with botulism toxin. AMC is an Oregon limited liability company with its principal place of business in Mt. Angel, Oregon.

NW Farm is an agricultural cooperative that supplies raw animal ingredients to mink ranchers and other commercial breeders of fur-bearing animals. Its principal place of business is in Burlington, Washington. In 1999, AMC became a member of the NW Farm cooperative and signed a "Membership and Supply Agreement" (the "Agreement") with NW Farm to purchase mink feed. Under the Agreement, AMC agreed to purchase a predetermined percentage of its mink feed from NW Farm. The Agreement at 1 (doc. 69-9). In return, NW Farm promised to "procure mink feed ... at cost" and to "use its best endeavors to procure and distribute all feed ... at the best prices and on the best terms obtainable in its judgment." Id. Because NW Farm operates as a cooperative, it may not lawfully make any profit for itself. Instead, NW Farm returns a proportionate share of the net proceeds to each member at the end of each fiscal year or, in the event of a loss, allocates that loss among the members on the same basis. Id.

NW Farm provides mink ranchers several feed options, including two different chicken products—spent hen and whole chicken parts. The spent hen product consists of spent hens—hens that have reached the end of their productive laying life. The spent hen is made into feed by grinding the whole chicken, including feathers, heads, feet, and viscera, and then freezing, but not cooking, the product. The chicken parts product consists of neck, back, and thigh parts. Both products consist of raw (uncooked) chicken.

According to NW Farm General Manager Rowe, the spent hen product is priced lower than the chicken parts product because it poses a greater risk of disease due to the presence of raw viscera. Rowe Decl. ¶ 8 (doc. 53). To minimize the risk of disease in its spent hen product, NW Farm requires that its hen suppliers—who euthanize the hens before providing them to NW Farm—select only alive and healthy hens for euthanization and later processing. In his deposition, Rowe stated that "it's [his] understanding that botulism doesn't live inside a live chicken." Rowe Dep. 16:22–23 (doc. 69-8). NW Farm also requires its suppliers to purge the hens—take them off feed three days before euthanization—to "clean out the intestinal track [to] try to eliminate" the risk of Clostridium botulinum (the bacteria that produces the toxin responsible for botulism toxicity) and other bacteria colonizing the food remnants in the intestinal tracks. Rowe Dep. 16:5–19 (doc. 69-8).

According to AMC, it is standard practice in the mink industry to feed spent hen to mink, and it is safe to do so "as long as the spent hen is properly sourced, euthanized, and handled[.]" Hildebrandt Reply Report 7 (doc. 62-2). AMC has been feeding spent hen to its mink for approximately 20 years. AMC owner Richard Arritola prefers the spent hen product to the chicken parts product because "[t]he mink love it," they "don't get near as big" when they eat only chicken parts, and "[t]he feathers [in the spent hen product] help stabilize the feed [so] we can add more moisture, which is a big plus for the animal." Arritola Dep. 147:19–148:9 (doc. 51-1).

In 2016, NW Farm obtained a new source of spent hen, National Food Corporation ("NFC"), which operates several egg farms in Washington. Typically, after euthanizing its spent hen, NFC would transport them to a rendering plant or landfill. But between January and July 2016, NFC instead provided spent hens to NW Farm without charge, saving NFC transportation and disposal costs. Rowe Decl. ¶ 12 (doc. 53); Dynes Dep. 25:1–4 (doc. 69-22). On approximately eight different occasions during that period, NW Farm dispatched a driver to an NFC location to pick up and process spent hens. Rowe Decl. ¶¶ 9, 12 (doc. 53).

General Manager Rowe testified that on each occasion, when NW Farm picked up hens at an NFC site, NW Farm "followed the same [spent-hen-processing] procedures it had followed over the last 20 years" without incident. Rowe Decl. ¶ 12 (doc. 53); NW Farm Answer ¶ 60 (doc. 17). Those procedures were as follows. NW Farm would dispatch to one of NFC's sites a driver with a mobile processor (a meat grinder), a truck, and a trailer filled with ice. According to Rowe, it was NFC's responsibility to select, euthanize, and load the hens onto a conveyer belt set up and maintained by NFC. Rowe Dep. 26:2–18 (doc. 69-8). The conveyer belt would then transport the euthanized hens onto a platform where the NW Farm driver raked or forked the chickens into NW Farm's processor. The driver who operated the processor was charged to ensure that the machine did not malfunction, and that "the chickens fit[ ]" into the processor, but the driver was not charged to inspect each chicken that was going into the processor. Rowe Dep. 26:24–25 (doc. 69-8); Abhold Dep. 40:6–17 (doc. 69-23). After grinding the chickens into meat, the spent hen product would be deposited into the trailer and the driver would immediately return the load to NW Farm's plant. At the plant, NW Farm would re-grind the product, freeze it into 50-pound blocks, and store it in a freezer kept at minus 10° Fahrenheit until it was delivered to Co-op members. Rowe Decl. ¶ 10 (doc. 53).

In July 2016, AMC received a shipment of mink feed from NW Farm that NW Farm had produced from NFC's spent hens. Compl. ¶ 12 (doc. 1); Rowe Decl. ¶¶ 16, 17 (doc. 53). The day after being fed the spent hen product, AMC's mink began to get sick and die. Approximately 11,000 of AMC's mink died over the course of a week, which AMC alleges "crippled its operation, and ultimately brought an end to a long-standing family business." Pl.’s Resp. Def's Mot. Summ. J. 13 (doc. 67); Arritola Decl. ¶¶ 18–22 (doc. 68).

AMC alleges that the mink died from the botulism neurotoxin contained in the spent hen feed. Laboratory testing of serum from four of the affected mink and samples of the spent hen feed delivered by NW Farm in July 2016 showed the presence of botulism neurotoxin Type C in the mink and in the feed that NW Farm obtained from spent hen supplier NFC. USDA Laboratory Report, August 15, 2016 (doc. 69-17); see also Hildebrandt Expert Report 6–8 (doc. 70-1).1 Dr. Hildebrandt, AMC's veterinary expert, opined that AMC's mink were killed by botulism toxin and that "the spent hen sold to AMC by Northwest Farm ... was the source of [that] botulism toxin[.]" Hildebrandt Expert Report 9 (doc. 70-1). Dr. Hildebrandt also opined that the most likely cause of the botulism neurotoxin in the spent hen feed was a dead bird previously infected with the neurotoxin-producing bacteria, Clostridium botulinum , or similar contaminant in the spent hen feed. Hildebrandt Expert Report 9 (doc. 70-1). AMC owner Arritola testified that he was instructed by AMC's veterinarian that "due to the botulism AMC had to destroy the mink and could not keep and sell any of their pelts." Arritola Decl. ¶ 19 (doc. 68).

On January 24, 2017, AMC filed a complaint alleging tort and contract claims against NW Farm. Defendant now seeks summary judgment on those claims.

STANDARD OF REVIEW

Summary judgment is appropriate if the moving party shows that there is no genuine dispute of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The materiality of a fact is determined by the substantive law on the relevant issue, while the authenticity of a dispute is determined by inquiring whether a reasonable jury could return a verdict for the nonmoving party in light of the evidence presented. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n , 809 F.2d 626, 631 (9th Cir. 1987). A dispute of material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Cortez v. Skol , 776 F.3d 1046, 1050 (9th Cir. 2015) (citing Thomas v. Ponder , 611 F.3d 1144, 1150 (9th Cir. 2010) ).

The moving party has the burden of establishing the absence of such genuine issues of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548 ; Fed. R. Civ. P. 56(e). "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the...

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