Two months ago Foster Farms filed suit against Orkin pest control for allegedly failing to control cockroaches at one Foster Farms processing plant. The FSIS suspended operations at that Foster Farms plant because the bugs were found on four occasions. The finding of the cockroaches resulted in a three-day shutdown of the plant in January 2014.
According to the lawsuit, Orkin entered a contract with Foster Farms in May 2013 to control pests at the Livingston facility. Foster Farms claims the exterminators did substandard work. The lawsuit alleges Orkin did not cooperate with Foster Farms and the FSIS to deal with the infestation. The suit also claims that Orkin failed to provide six-days-a-week service promised in the contract, instead often coming only three days a week.
Foster Farms is seeking unspecified damages from Orkin for lost profits, property damage, business disruptions and fumigation costs.
Interestingly, as Foster Farms recalled chicken due to Salmonella illnesses, it also filed suit seeking to compel XL Insurance and Lloyd’s of London to cover $14 million in losses it sustained when the FSIS inspection found the cockroaches in Livingston – forcing it to shut its doors and destroy 1.3 million pounds of product. In the complaint Foster Poultry Farms Inc. alleges the insurers wrongfully denied it coverage for its $14 million in losses, including lost profits, increased operating costs and expenses associated with customer shortages.
According to the complaint, Foster Farms held a product contamination policy with the two insurers under which they agreed to pay it for loss arising out of insured events. Accidental contamination, government recalls and product extortion are covered under the policy.
In addition to lost profits, Foster also incurred expenses related to fumigation services and costs associated with the destruction and disposal of adulterated products.
Hmm, sounds a bit like double-dipping to me?