Wis. SC makes ruling in Sizzler E. coli cases

Jessica M. Karmasek Jul. 5, 2012, 7:00am

Justice Patience Drake Roggensack authored the Court's majority opinion.

MADISON, Wis. (Legal Newsline) - The Wisconsin Supreme Court, in a ruling last week, upheld an appeals court's decision in a group of cases over damages sustained due to food contaminated by E. coli at two Sizzler restaurants in the Milwaukee area in 2000.

The plaintiffs in the underlying actions settled years ago. The claims before the state's high court related to the apportionment of liability and costs among the defendants.

In a 40-page majority opinion filed Friday, the Court affirmed the state Court of Appeals' decision on all five issues raised.

First, it held that defendant Sizzler USA Franchise Inc. is entitled to recover consequential damages for fellow defendant Excel Corporation and American Home Assurance Co.'s breach of implied warranties in the parties' meat supply contract, notwithstanding limiting language in the Continuing Guaranty.

Second, the Court ruled that Sizzler is entitled to indemnity from Excel for the entirety of Sizzler's $1.5 million advance partial payment to the Kriefall family because the payment was not voluntary and the jury found that Sizzler was 0 percent liable for the E. coli contamination.

Third, pursuant to the Hold Harmless Agreement and Guaranty/Warranty of Product, Excel is required to indemnify fellow defendant E&B Management Co., Waukesha, d/b/a Sizzler for payments E&B made to certain non-Kriefall plaintiffs in exchange for releases, it said.

However, the Court noted, Excel's obligation extends only so far as its apportioned liability, which is 80 percent.

Fourth, Excel is not required to indemnify E&B for payments that Federal Insurance Company made on E&B's behalf in settling the non-Kriefall plaintiffs' claims, it said.

Finally, notwithstanding the jury's determination that Sizzler was 0 percent responsible for the E. coli contaminated food that caused the illnesses of so many people, the Court ruled Sizzler may not recover attorney fees from Excel.

In late July and early August 2000, about 150 people became sick from ingesting food contaminated with E. coli at the two Milwaukee-area Sizzlers.

Their illnesses ranged from diarrhea and cramps to, in the case of three-year-old Brianna Kriefall, death.

According to the Mayo Clinic, Escherichia coli, or E. coli, bacteria normally live in the intestines of healthy people and animals.

Most varieties of E. coli are harmless or cause relatively brief diarrhea. But a few particularly nasty strains -- in this case, E. coli O157:H7 -- can cause severe abdominal cramps, bloody diarrhea and vomiting.

People can be exposed to E. coli from contaminated water or food, especially raw vegetables and undercooked ground beef.

Healthy adults typically recover from infection with E. coli O157:H7 within a week, but young children and older adults can develop a life-threatening form of kidney failure called hemolytic uremic syndrome, or HUS.

In the cases at issue, Excel processed and distributed the contaminated meat that was the source of the E. coli pathogens.

The company's role was confirmed by tests of sealed packages of its tri-tip beef that had been shipped to Sizzler restaurants. Also, Excel eventually stipulated to its meat having been the source of the bacteria.

Excel's contaminated meat was distributed to Sizzler franchisees, including E&B, which operated the two Milwaukee-area restaurants.

E. coli contamination occurred at both of E&B's restaurants, although the Wisconsin Department of Health and Family Services classified the two outbreaks as separate occurrences, caused by different food handling errors.

Many of those sickened by the contamination asserted claims against Excel, Sizzler, E&B, E&B's shareholders and Sysco Food Services of Eastern Wisconsin, the local distributor for Excel's meats.

The claims included negligence, strict liability, and breaches of implied warranties of merchantability and fitness.

The plaintiffs' claims were broadly classified into two groups. One group, the Kriefall plaintiffs, includes Brianna Kriefall's estate and Brianna's mother, father and brother.

The plaintiffs in the second group, referred to collectively as the "non-Kriefall plaintiffs," proceeded separately and were subject to different settlement proceedings than the Kriefall plaintiffs.

Prior to trial, the Kriefall plaintiffs settled with Excel, E&B, Sizzler and their insurers.

They received $10.5 million, including $8.5 million in settlement of claims against Excel, and $2 million in settlement of claims against E&B and Sizzler. Excel paid the entire $10.5 million amount.

The 138 non-Kriefall plaintiffs also settled their claims. The plaintiffs received differing amounts, depending on the severity of their injuries.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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