The juice company, Odwalla Inc., is likely to agree to a deal in which it would plead guilty to misdemeanor food- safety violations and pay a $1.5 million criminal fine, sources said.
The fine would be the second largest in an adulterated-food case in the United States, behind the $2 million fine paid by the Beech-Nut Nutrition Corp. in 1987 for selling phony apple juice intended for babies.
The Odwalla plea agreement is expected to be filed in federal court in California in the next few weeks, barring a breakdown in the negotiations, the sources said.
The settlement would require Odwalla to plead guilty to about a dozen misdemeanor charges related to food-safety deficiencies at its Dinuba, Calif., production plant, according to sources who added that no company officials would be charged.
Lawyers for Odwalla couldn't be reached yesterday.
Chris Gallagher, a spokesman for the fresh-juice supplier, said: "This investigation has been going on since January of last year. We've respected the confidentiality of the process from day one and we will continue to do so."
Assistant U.S. Attorney Joseph Johns, who has headed the investigation, said he could neither confirm nor deny that a plea deal has been reached.
A federal grand jury in Fresno has been investigating whether Odwalla ignored safety standards, including the use of poor-quality apples, at the time of the outbreak that led to the death of a 16-month-old Colorado girl and that sickened 66 other people, including other children, in Washington, California and British Columbia.
More than 20 cases were reported in Washington.
The outbreak, which began in October 1996, was linked to a strain of bacteria known as E. coli 0157:H7 in unpasteurized Odwalla apple juice.
Executives of the company, based in Half Moon Bay, Calif., have acknowledged their safety systems didn't keep out the bacteria and said they didn't realize E. coli could live in something as acidic as apple juice.
But they have denied they took undue risks or violated the law.
The contamination led to a mass recall of some Odwalla juices in the western United States. The company has since begun flash pasteurization of its apple juice.
The plea negotiations come at a time when lawyers in Seattle representing the families of two Washington infants sickened by Odwalla apple juice have accused Odwalla's attorneys of withholding evidence in two civil suits.
Documents produced by Odwalla didn't contain two letters in which the U.S. Army, citing concerns about the company's sanitation procedures, refused to list Odwalla as an armed-services supplier months before the E. coli outbreak, according to papers filed in King County Superior Court by the Seattle lawyers.
The lawyers, William Marler and Dennis Stearns, who represent the families of the two infants, Amanda Berman and Michael Beverly, said they learned of the Army documents in an unsolicited telephone phone call from a tipster and obtained them through a federal Freedom of Information request.
In an Aug. 6, 1996, letter, an Army official told Odwalla that an inspection had "determined that your plant sanitation program does not adequately assure product wholesomeness for military consumers."
In a July 22, 1996, letter, the Army informed Odwalla that after a "careful review of the product, production methods and our microbial test results, we have decided that control measures and established criteria are not available to ensure maximum reduction of the risk involved with foodborne disease."
Marler and Stearns have asked the judges presiding over separate cases to conduct hearings to examine why the documents were withheld and consider monetary sanctions.
Attorneys for a San Francisco law firm representing Odwalla in the civil cases didn't respond yesterday to telephone messages.
They have previously filed documents objecting to the scope of requests for evidence.
In their motion seeking an inquiry, Stearns and Marler assert that Odwalla's responses to their request for evidence fell "far short" of requirements imposed by the Washington Supreme Court in a landmark 1993 decision.
In that case, the court set broad standards for the production of evidence in civil proceedings, saying the truth and judicial process must be put before a client's interest.