Accord Is Reached in Food-Poisoning Case
In what is believed to be the largest settlement of a case involving food poisoning from fresh foods, Odwalla Inc., agreed today 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 details of the resolution, which was worked out in Seattle over two days of mediation last week involving the families, Odwalla officials and insurance company representatives. A person familiar with the settlement said the total amount that the families of the five children will receive is between $12 million 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 are 4 to 7 years of age, suffered serious consequence of E. coli poisoning, a severe blood and kidney disorder called hemolytic uremic syndrome. Three of those four had especially severe reactions, Mr. Marler said.
Doctors say children with this disorder are at risk of permanent kidney damage and other problems as they get 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 a nationwide impact because it showed that this strain of E. coli could infiltrate fresh fruits and vegetables, which have soared in popularity as consumers become increasingly health conscious. 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 an outbreak in 1993, when four children died and more that 500 others became ill from eating undercooked hamburgers at the Jack in the Box fast-food chain in the Pacific Northwest.
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. Odwalla began pasteurizing its apple juice after the outbreak, and hired experts to help overhaul its safety systems.
The Odwalla case also spurred a Federal grand jury investigation, which is looking into 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 the contaminated juice was pressed, production managers brushed aside warnings from a company inspector that a batch of apples was too rotten to use without taking special precautions against contaminants.
A spokesman for Odwalla, Chris Gallagher, declined to discuss the grand jury investigation. Company 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 that 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 a dozen 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 Mr. Marler, who represented some of the most serious victims in the Jack in the Box outbreak and who hired two lawyers who had represented the fast-food chain to work on the Odwalla case, said he had pressed for larger settlements because of the unpredictability of the long-term effects of E. coli contamination. Mr. Marler said the money would be placed in trusts for the children's future needs.
Parents of the injured children said today that they were relieved over the settlement, but were aware that their children would have to be monitored 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 undergoing a bone marrow transplant.
Amanda, the most severely injured, was hospitalized for 24 days, needing 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 Mr. Dimock, whose family now lives in Maryland. "But as the doctor said, see me in 10 years when the kid's fully grown."