Odwalla Settles with 5 Families


The California company whose apple juice was linked to a massive E. coli outbreak in Washington and other states has agreed to pay more than $12 million to five families whose children were sickened, including three in Seattle.

Neither the company, Odwalla Inc., nor lawyers for the families would disclose the sum, but a source familiar with the case confirmed the company will pay between $12 million and $15 million in what is believed to be the largest settlement of a lawsuit involving food poisoning of fresh foods.

The money will be split among the families, with the bulk going to three children who suffered the most serious effects.

"The amounts of the settlement will be substantial enough to fully compensate the children and their families for what they went through and may encounter in the future," said William Marler, a Seattle attorney who represents the families.

Pending final court approval, trust funds will be established for future medical or educational needs of Katherine Wright, 4; Brooke Hiatt, 5; and Michael Beverly, 4, all of Seattle; Brian Dimock of Washington, D.C.; and Amanda Berman, 5, of Chicago.

Four of the children suffered the most serious consequence of the bacterial poisoning, a severe blood and kidney disorder called hemolytic uremic syndrome, although the effects were less serious in one case. Doctors say children with this disorder are at risk of permanent kidney damage and other problems as they grow older.

The settlement, announced yesterday, was reached after two days of mediation in Seattle last week between lawyers for the families and Odwalla, as well as insurance representatives of the company.

Odwalla Chairman Greg Steltenpohl and Chief Executive Officer Stephen Williamson were personally involved in the mediation, Marler said.

"All of us, including the families, appreciate Odwalla being compassionate and doing the responsible thing by settling these cases," Marler said.

As a result of the settlement, two of the families will drop accusations that Odwalla withheld evidence in their cases.

Documents produced by Odwalla did not include 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. Lawyers for the families independently obtained the records after receiving a tip.

Steltenpohl said Odwalla was "pleased to have reached a resolution which allows both the families and our company to move forward in a positive way."

Williamson expressed sympathy to the children and their families.

The outbreak led to the death of a 16-month-old girl in Colorado. Her family previously reached a settlement with Odwalla.

It also sickened 70 other people in Washington, California and British Columbia.

Chris Gallagher, a spokesman for Odwalla, said the company has now settled 17 of 20 lawsuits stemming from the outbreak, which was traced to a strain of bacteria known as E. coli 0157:H7 in unpasteurized Odwalla apple juice.

Odwalla previously paid medical expenses for all those who became sick.

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. 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 0157: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.

A federal grand jury in Fresno, Calif., has been examining whether Odwalla broke food-safety laws in the shipment of the tainted apple juice.

The Post-Intelligencer reported April 14 that Odwalla is negotiating a plea deal with federal prosecutors in which it would plead guilty to more than a dozen misdemeanor charges and pay a $1.5 million criminal fine.

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.

Odwalla executives 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.

Parents of the injured children said yesterday they were relieved at the settlement, but were aware their children would need to be monitored for medical problems throughout 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.

Amanda was the most severely injured, needing blood transfusions and 17 days of kidney dialysis.

Richard Dimock, whose son Brian, now 7, spent 17 days in the hospital after drinking Odwalla in Colorado, lobbied 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."'