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Townsend Farms, Inc. v. Enerji

United States District Court, C.D. California

July 26, 2017

TOWNSEND FARMS, INC., Plaintiff,
v.
GÖKNUR GIDAMADDELERI ENERJI, IMALAT ITHALAT IHRACAT TICARET ve SANAYI A.Ş., et al., Defendants. PURELY POMEGRANATE, INC. and VALLEY FORGE INSURANCE CO., Plaintiffs,
v.
GÖKNUR GIDAMADDELERI ENERJI IMALAT ITHALAT IHRACAT TICARET ve SANAYI A.Ş., et al., Defendants.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          DAVID O. CARTER UNITED STATES DISTRICT JUDGE.

         I. BACKGROUND

         A jury trial in this matter took place from April 4 to 14, 2017, on claims asserted by Plaintiffs Townsend Farms, Inc. (“Townsend Farms”), Purely Pomegranate, Inc. (“PPI”), and Valley Forge Insurance Company (“Valley Forge”) (collectively “Plaintiffs”).

         Before the jury were claims for equitable indemnity and negligence by Townsend Farms, PPI, and Valley Forge; claims for negligent and intentional misrepresentation by Townsend Farms and PPI; and Townsend Farms' assigned claim for breach of contract. The jury found Defendants Göknur Gida Maddeleri Enerji Imalat Ithalat Ihracat Ticaret ve Sanayi A.Ş. (“Göknur”) and United Juice Corp. (“United Juice”) liable on all of these claims. Redacted Verdict Form (“Verdict Form”) (Dkt. 235).

         The parties have reserved Plaintiffs' claim for declaratory relief. Plaintiffs contend that their Unfair Competition Law (“UCL”) claim, under California Business and Professions Code § 17200, et seq., was also reserved, while Defendants contend that Plaintiffs dropped their UCL claim during the jury trial.

         The parties have also submitted to the Court the issues of United Juice's alter ego liability and the insurers' ability to bring their claims in subrogation of Townsend Farms and PPI.

         Plaintiffs have also requested that the Court enforce the parties' damages stipulation (the “Damages Stipulation”) (Dkt. 214) and that the Judgment be altered to reflect the Damages Stipulation. This would result in a significant increase over the damages awarded by the jury. See Verdict Form.

         The Court issues the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52. To the extent that any findings of fact are included in the Conclusions of Law section, they shall be deemed findings of fact, and to the extent that any conclusions of law are included in the Findings of Fact section, they shall be deemed conclusions of law.

         II. FINDINGS OF FACT

         A. The Hepatitis A Outbreak

         1. In 2013, there was a hepatitis A outbreak (the “Outbreak”) in the western United States linked to consumption of a the Townsend Farms Organic Antioxidant Blend (“Antioxidant Blend”), a blend of frozen berries sold at Costco. Joint Statement of the Case (“Joint Statement”) (Dkt. 201) at 2.

         2. The Antioxidant Blend was a frozen berry blend that contained five fruits- strawberries, cherries, raspberries, blueberries and pomegranate arils. Id.

         3. Townsend Farms packaged and sold the Antioxidant Blend. Id.

         4. Göknur produced some of the pomegranate arils used in the Antioxidant Blend. Id.

         5. PPI sold pomegranate arils supplied by Göknur and used by Townsend Farms in the Antioxidant Blend. Id.

         6. Valley Forge is PPI's insurer. Id.

         7. United Juice imported the Göknur arils that were used in the Antioxidant Blend. Id.

         B. This Lawsuit and Damages Stipulation

         8. Plaintiffs brought this action contending that some of the Göknur pomegranate arils that were used in the Antioxidant Blend were contaminated with hepatitis A, and that Göknur and United Juice are therefore responsible for the Outbreak. Joint Statement at 2.

         9. Plaintiffs asserted various claims for relief, and sought payment from Göknur and United Juice for amounts they and certain other insurance companies have paid to settle underlying consumer claims and for associated litigation costs and other out-of-pocket expenses and lost profits. Id. at 2-3.

         10. All parties stipulated that Plaintiffs and their insurers had paid certain amounts to defend consumer actions arising out of the Outbreak, and to settle those clams: (1) Plaintiff Valley Forge paid $11, 625, 000 in settlements and $3, 996, 144.56 in attorney's fees and costs related to defending PPI and Townsend Farms in the underlying consumer claims; (2) Townsend Farm's insurer Massachusetts Bay Insurance Company paid $2, 769, 986.61 in settlement costs and $1, 241, 764.49 in attorney fees and costs for the defense of the underlying consumer claims; (3) as of March 28, 2017, Townsend Farms' insurer, Great American Insurance Company, paid $874, 382 in settlement payments and $3, 447, 624.26 in attorney fees and costs for the defense of the underlying consumer claims; (4) Fallon Trading's insurer, Maryland Casualty Company, paid $349, 267.07 in attorney fees and defense costs on the underlying consumer claims, as well as $2, 250, 000.00 to settle a lawsuit between Fallon Trading and Townsend Farms. Damages Stipulation ¶¶ 2-9.

         11. Per the stipulation, the Plaintiffs were relieved of proving that the amounts provided in the Damages Stipulation were “reasonable, and that each settlement was based on a reasonable estimate of liability at the time of the settlement.” Id.¶ 10.

         12. Finally, the parties agreed as part of the damages stipulation the Townsend Farms paid $2, 772, 808 for various out-of-pocket expenses ...


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