NYT19980526.0388
NEWS
NEWSWIRE
In what is believed to be the largest resolution of a case involving
food poisoning from fresh foods, Odwalla, Inc. has agreed to a multimillion
dollar settlement to resolve claims by five families whose children
were sickened in an October 1996 outbreak caused by the bacterial
contamination of the company's apple juice. As part of the agreement,
lawyers for both sides declined to disclose the amount of the settlement
or discuss details of the resolution, which was worked out in Seattle
over two days of mediation involving the families, Odwalla officials
and insurance company representatives. A person familiar with the
settlement said the total amount the five families would receive was
between $12 and $15 million. Most of the money will go to the families
of the three children who were the most seriously injured, but survived
poisoning from the toxic bacteria, E.coli O157:H7. In all, the outbreak
sickened 70 people in several states, mostly in the West, and in Canada,
and took the life of one child, a 16-month-old girl from Colorado.
``What we tried to do in each of these settlements is look at how
these kids were injured, the extent of their injures and the extent
that they might suffer risks in the future,'' said William Marler,
a Seattle lawyer who represented the families. Four of the five children,
who range in age from 4 to 7, suffered the most serious consequence
of E. coli poisoning, a severe blood and kidney disorder called hemolytic
uremic syndrome. Doctors say children with this disorder are at risk
of permanent kidney damage and other problems as they grow older.
Odwalla's chairman, Greg Steltenpohl, said, ``It's certainly been
a long road, but I'd say it was very important for us to settle these
cases within a positive atmosphere and the constructive format of
a mediation.'' The Odwalla outbreak had reverberations around the
country because it showed that this dangerous strain of E. coli could
infiltrate fresh fruits and vegetables, which have soared in popularity
as consumers become increasingly health conscious. Indeed, Odwalla,
based in Half Moon Bay, Calif., near San Francisco, grew into one
of the nation's largest fresh juice companies as demand rose for its
juices and nutritional shakes. Until the Odwalla outbreak and a few
others involving lettuce, E.coli O157:H7 was primarily associated
with the 1993 Jack in the Box hamburgers outbreak, which killed three
children and made hundreds of people sick. As a result of the Odwalla
outbreak, federal regulators proposed rules that would require processors
to take new steps against contamination and place warning labels on
juice that is not pasteurized to kill disease-causing bacteria. Odwalla
began pasteurizing its apple juice after the outbreak and hired experts
to help it overhaul its safety systems. The Odwalla case also spurred
a federal grand jury investigation, which is looking at whether the
company committed any criminal violations of food safety laws. The
New York Times reported in January that in the weeks before the outbreak,
Odwalla began relaxing its standards on accepting blemished fruit
and began to rein in the authority of its own safety officials, according
to company documents and interviews with former Odwalla managers.
By these accounts, on the day that the contaminated juice was pressed,
production managers brushed aside warnings from a young company inspector
that a batch of apples was too rotten to use without taking special
precautions against contaminants. People with knowledge of the criminal
investigation have said recently that a plea agreement is being negotiated.
One scenario that is being discussed is that Odwalla would plead guilty
to 15 misdemeanor food safety violations and pay a $1.5 million penalty.
That would make Odwalla's settlement the second largest in a criminal
case involving adulterated food; the largest was a $2 million fine
paid by Beech-Nut Nutrition Corp. in 1987 for selling watered-down
apple juice for infants. A spokesman for Odwalla, Chris Gallagher,
declined to discuss the grand jury investigation. Odwalla officials
have acknowledged that their safety systems failed to keep out the
E. coli, but they deny that the company took any undue risks and insist
no laws were broken. Top company executives say that, like many others
in their industry, they simply did not realize that E. coli O157:H7
could live in apple juice. Soon after the outbreak, Odwalla settled
dozens of smaller cases and paid medical expenses for all the victims.
It also paid about $250,000 to the family of the child who died. But
Marler, who represented some of the most serious Jack in the Box victims
and who hired two lawyers who had represented the fast-food chain,
Denis Stearns and Bruce Clark, to work on the Odwalla case, said he
pressed for larger settlements because of the unpredictability of
the longterm effects of E. coli contamination. He said that the money
would be placed in trusts for future medical or educational needs
of the children. Parents of the injured children said Tuesday they
were relieved at the settlement, but were aware that their children
would need to monitored for medical problems all their lives. ``It's
basically an up in the air thing,'' said Adam Berman, a Chicago lawyer,
whose daughter Amanda, now 4, drank Odwalla apple juice while in Seattle,
where he was having a bone marrow transplant performed. Amanda was
the most severely injured, needing blood transfusions and 17 days
of kidney dialysis. Richard Dimock, whose son Brian, now 7, spent
15 days in the hospital after drinking Odwalla in Colorado, became
involved in lobbying for stricter food safety regulations as a result
of his son's illness. ``He's doing pretty good,'' said Dimock, whose
family now lives in Maryland. ``But as the doctor said, see me in
10 years when the kid's fully grown.''