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Beef Companies Opt to Settle It Among Themselves

Not much of the story behind the story of the 2008 Nebraska Beef recalls was ever going to see the light of day anyway.

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But in another month– when U.S. Magistrate Judge F.A. Gossett III gets all the papers collected, signed, and filed–a federal court case over responsibility for the recalls of upward of 6.66 million pounds of beef will truly be history.

That’s because Nebraska Beef Ltd. and Meyer Foods Holdings have agreed to settle their legal dispute outside Nebraska’s U.S. District Court.

Even if the case had gone to trial, the chance that the public was ever going to get much enlightenment out of the dispute was plenty slim.   

U.S. District Court Judge Laurie Smith Camp, appointed to the federal bench by former President George W. Bush in 2001, had already signed a “protective order” last April 30 making almost everything “confidential material.”

For example, even Hazard Analysis and Critical Control Point (HACCP), Standard Operating Procedures (SOP) and Sanitation Standard Operating Procedures (SSOP) documents would all be secret and kept away from the public.

The broad protective order makes it unlikely that much would have been learned about why there was a business relationship between Meyer and Nebraska Beef in the first place.  

It was a relationship that even caught Whole Foods Markets by surprise, when the Coleman Natural brand purchased by Meyer in April 2008 was swept up in the recall.  Coleman Natural was called “the storied brand that pioneered the natural meat business” by an Organic Consumers Association publication.

About 800 employees work at the Omaha-based Nebraska Beef slaughterhouse, which kills and processes about 2,000 head of cattle per day. Loveland, CO-based Meyer Natural Foods sells “premium and healthy beef” mostly under the Meyer Natural Angus and Laura’s Lean Beef brands. It employs about 125.

One part of the untold story is bad timing. Meyer Foods entered into an agreement with Nebraska Beef to provide “custom beef processing services” for the period of May 30 to July 5, 2008.

For the scant five-week period, Nebraska Beef was to deliver finished products to customers of CNF Acquisition LLC, the Meyer subsidiary that had only recently purchased the license to sell the Coleman brand of beef.

Those customers, including Whole Foods, were about to get blindsided.

On June 30 and July 3, 2008, USDA’s Food Safety and Inspection Service (FSIS) announced beef recalls for contamination by E coli O157:H7, first for 531,707 pounds and then expanded to 5.3 million pounds.

Several Coleman Natural brand beef products were on the recall lists for meat that was turned out at the Omaha slaughterhouse between May 16 and June 26, 2008.

On July 1, in between recall announcements, Nebraska Beef notified its customers by mail of the recall of certain beef products.  A second letter then went out telling customers to cease distribution of any of the recalled products and arrange for pick up of product removed from store shelves.

Retailers like Whole Foods received those letters, which included mention of the Coleman brands.

On Aug 8 and 14, FSIS announced Nebraska Beef was recalling 1.2 million (expanded to 1.36 million) pounds of prime and sub prime cuts and boxed beef, including some additional “Coleman Natural ” products.

Nebraska Beef sent out another letter to customers the same day asking recipients to check their inventories for the better cuts and boxed beef.

At this point, the Nebraska Beef recalls totaled 6.66 million pounds.  Less than 10 percent was ever recovered.

Also by mid-summer, 49 people were infected with E. coli O157:H7, according to the federal Centers for Disease Control and Prevention in Atlanta.

As it turned out, the meat processed by Nebraska Beef was also available at retail outlets owned by food giant Kroger.  That fact accounted for most of the cases (41) at that point being in Ohio and Michigan.

Lawsuits would fly, the number of confirmed E. coli infections would rise to 80 in 16 states and Canada, including at least one involving life-threatening hemolytic-uremic syndrome (HUS).

Back in Omaha, Nebraska Beef sued Meyers because the Colorado company wanted indemnification against all claims against it.

Nebraska Beef denied the contamination originated at its processing plant or that it was negligent in processing or handling cattle or anything else that would amount to a breach of its agreement with Meyers.

Nebraska Beef claimed its agreement with Meyers was silent on the issue of indemnification.  It wanted the court to issue a declaration of the rights and liability that Meyers had with regard to the recalled beef.

In its counterclaim, Meyer said it reacted in response to those FSIS announcements and Nebraska Beef’s letters. 

It said it was obligated to issue customer credits, and that it received no refunds from Nebraska Beef or reimbursements for what it paid for beef cattle slaughter, fabrication, processing and handling.

When the settlement reached by the two parties does get to the judge on April 25, it will probably also get stamped as “confidential material.”

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