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1998 Trial Set in E. coli Lawsuit

Family of Seattle Child Who Suffered Renal Failure Takes on Odwalla

The San Francisco Examiner

May 14, 1997

A trial date has been set in one of the most serious injury claims resulting from an E. coli outbreak last year associated with unpasteurized Odwalla apple juice.

After an attempt at mediation for an out-of-court settlement failed, U.S. District Court Judge John Coughenour in Seattle on Tuesday set trial for March 26, 1998, in the case of a 21/2-year-old boy who suffered severe kidney damage allegedly from drinking Odwalla apple juice.

Michael Beverly of Seattle, who suffered hemolytic uremic syndrome with acute renal failure, was hospitalized 15 days and underwent dialysis. According to his lawyer's experts, Beverly has a strong chance of developing diabetes and a 15 percent to 30 percent chance of developing renal disease requiring a transplant.

However, it is impossible to forecast with authority long-term health consequences of E. coli bacterial infections, experts also say.

The Centers for Disease Control and Prevention identified 66 E. coli bacterial infections, and one death, associated with Odwalla apple juice. The company quickly ordered a product recall and began to flash-pasteurize its apple juice.

Odwalla has settled five of eight lawsuits filed against the company, as well as more than 350 claims by people who said they suffered ill effects from the juice, some likely dubious, with an average settlement of $ 1,888.26. The remaining cases are more serious.

Stock analysts and business executives praised Odwalla for acting responsibly and for being a good corporate citizen, as company officers in part said following confirmation of the outbreak they would pay medical bills of people affected.

Those bills, however, were not paid and the stage is set for difficult settlement talks in remaining cases and perhaps even a trial or trials.

The Beverly child is represented by William Marler of Seattle, who helped arrange $ 35 million of the total $ 100 million in settlements against Food Maker, the parent of Jack-In-The-Box Family Restaurants, responsible for an E. coli bacterial infection four years ago.

On April 26, a mediation hearing in the Beverly suit was held with Edward Panelli, a retired California Supreme Court justice, in San Jose. At the hearing, Marler said he wanted $ 8 million in a settlement. He said the attorney for Odwalla, John Carlson of San Francisco, made a counter offer of $ 200,000.

After a few hours, Panelli said continued discussions seemed pointless and the meeting ended.

Carlson won't discuss the case. Odwalla's chairman, Greg Steltenpohl, said at an event Tuesday in The City to promote a new Odwalla product that the company "is sincere and serious about taking care of (settlements)."

He said the track record of settled cases "speaks for itself" and added, "I think the benefit of settling as soon as possible is beneficial in healing and moving past what happened.

"Against the lawyers' advice, we talked to families and we said we will pay any associated medical claims and we understand that there can be ongoing medical problems and we are willing to address those. That is usually not done," said Steltenpohl.

Without being solicited, Odwalla paid an undisclosed sum to the family of 16-month-old Anna Gimmestad of Evans, Colo., who on Nov. 8 died of heart and lung failure associated with E. coli infection. She, too, had drunk Odwalla apple juice.

The Half Moon Bay-based company also settled with the family of 2 -year-old Tara Azizi of Concord, who was hospitalized in Oakland with kidney failure after drinking Odwalla juice. Her family had filed suit in Alameda County Superior Court.

However, Odwalla has not admitted liability in the Beverly case.

A Seattle lawyer, William Dussault, who attended the mediation session as an independent analyst appointed by the court to protect the best interests of a child involved in litigation, said the Beverly case should be settled in the same range as serious Jack-In-The-Box cases.

Dussault, who performed the same overseeing role as guardian ad litem in the Jack-In-The-Box cases, said in an interview last week, "I have a pretty clear estimate of the value of this case compared to the Jack-In-The -Box cases, and I believe the (Beverly) case is worth between $ 3 and $ 5 million."

"The best thing a company can do is get these things behind them and pay fair amounts," said Marler, the Beverly family lawyer. "But an offer of $ 200,000? We'll see them in court."

The trial date in the Beverly case was set on a day that Steltenpohl made an important announcement: the release of a sweet and creamy blend called Future Shake, in the meal replacement category. With its distribution, and sales that exceeded expectations Tuesday, Steltenpohl said that for the first time since the crisis Odwalla is about to hire employees.

"That is another reason we called this Future Shake, for the company to stop looking back, start looking ahead," he said.


CORRECTION: A Wednesday, May 14, Examiner story about an E. coli outbreak associated with unpasteurized Odwalla apple juice misstated Odwalla's reaction to the matter. The company has paid medical bills of some of those infected with E. coli, said spokesman Sydney Fisher.

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