Organic and non-GMO food manufacturer SunOpta Inc. has made a monetary offer to TreeHouse Foods Inc., a major U.S. food and beverage manufacturer, in a bid to settle a 2017 breach of contract lawsuit.
In November 2017, Oak Brook, Ill.-based TreeHouse (NYSE: THS), a $4.3 billion manufacturer of packaged foods and beverages primarily for private label products, and supplier of organic and natural ingredients, had sued SunOpta for breach of contract and breach of express warranty, among other claims.
Toronto-based SunOpta (NASDAQ:STKL), which maintains a U.S. headquarters in Edina, Minn., is a major supplier of organic ingredients to North American food and beverage producers, as well a producer of plant-based beverages.
In 2016, SunOpta issued a massive recall of sunflower kernels after Listeria monocytogenes was detected in the product, of which more than two million pounds were sold by SunOpta to TreeHouse.
TreeHouse maintains that SunOpta “negligently misrepresented” that the sunflower kernels “were free of contaminants that would cause serious and potentially deadly health and safety problems.”
TreeHouse claimed the recall cost it $16.2 million in damages, including payments, credits, discounts “and other valuable consideration extended to its customers impacted by the recalls.”
Then, in March 2018, SunOpta countersued for breach of contract, stating that under the terms of the sales contract, its liability for TreeHouse’s losses related to the recall “is exclusively limited to the purchase price of the product at issue.”
SunOpta said Treehouse is actually the one in breach of contract because it owes it $606,509, plus finance charges and applicable interest, for product purchases “over one year ago,” which it said constitutes a breach of the parties’ contract.
The case (No. 1:18-cv-01412) is being heard in U.S. District Court for the Northern District of Illinois, Eastern Division.
SunOpta’s monetary offer was made on June 11 and, according to a status report filed Friday, the parties continue to negotiate a settlement as well as “potential alternative dispute resolution methods.” The parties said they anticipate filing a more substantive status report by July 10.
Other plaintiffs named in the lawsuit include TreeHouse subsidiaries Bay Valley Foods LLC, Flagstone Foods, Inc., and Treehouse Private Brands, Inc., as well as insurance company Lloyd’s Syndicate CVS 1919, which paid out $8 million to TreeHouse as a result of the damage claims, and now wants to recoup the monies from SunOpta.