Meyer Natural Foods v. Greater Omaha Packing Co. ( 2019 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/19/2019 12:08 AM CDT
- 509 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
Meyer Natural Foods LLC and Crum & Forster
Specialty Insurance Company, appellants, v.
Greater Omaha Packing Co., Inc., appellee.
___ N.W.2d ___
Filed March 15, 2019. No. S-18-108.
1. Summary Judgment. Summary judgment is proper when the plead-
ings and the evidence admitted at the hearing disclose that there is no
genuine issue as to any material fact or as to the ultimate inferences that
may be drawn from those facts and that the moving party is entitled to
judgment as a matter of law.
2. Summary Judgment: Appeal and Error. An appellate court will
affirm a lower court’s grant of summary judgment if the pleadings and
admitted evidence show that there is no genuine issue as to any material
facts or as to the ultimate inferences that may be drawn from those facts
and that the moving party is entitled to judgment as a matter of law.
3. ____: ____. In reviewing a summary judgment, the court views the
evidence in the light most favorable to the party against whom the
judgment was granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
4. Contracts: Judgments: Appeal and Error. The meaning of a contract
is a question of law, in connection with which an appellate court has an
obligation to reach its conclusions independently of the determinations
made by the court below.
5. Contracts. A contract written in clear and unambiguous language is not
subject to interpretation or construction and must be enforced according
to its terms.
6. Contracts: Words and Phrases. A contract is ambiguous when a word,
phrase, or provision in the contract has, or is susceptible of, at least two
reasonable but conflicting interpretations or meanings.
7. Contracts. A determination as to whether an ambiguity exists in a
contract is to be made on an objective basis, not by the subjective
contentions of the parties; thus, the fact that the parties have suggested
- 510 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
opposite meanings of a disputed instrument does not necessarily compel
the conclusion that the instrument is ambiguous.
8. Contracts: Appeal and Error. An appellate court will not rewrite a
contract to provide terms contrary to those which are expressed. Nor is
it the province of a court to rewrite a contact to reflect the court’s view
of a fair bargain.
9. Contracts. The parties to a contract must be held to the plain language
of the agreement they entered into.
10. Uniform Commercial Code: Contracts: Intent. The question of
whether it is a contract for the sale of goods depends upon an examina-
tion of the entire contract. The Uniform Commercial Code applies where
the principal purpose of the contract is the sale of goods, even though
in order for the goods to be utilized, some installation is required. On
the other hand, if the contract is principally for services and the goods
are merely incidental to the contract, the provisions of the Uniform
Commercial Code do not apply.
11. ____: ____: ____. The test for inclusion in or exclusion from the sales
provisions of Neb. U.C.C. art. 2 (Reissue 2001) is not whether the
contracts are mixed but, granting that they are mixed, whether their
predominant factor, their thrust, their purpose, reasonably stated, is the
rendition of service, with goods incidentally involved, or whether they
are transactions of sale, with labor incidentally involved.
12. Damages. Damages are not recoverable for loss that the injured party
could have avoided without undue risk, burden, or humiliation.
Appeal from the District Court for Douglas County: Shelly
R. Stratman, Judge. Affirmed.
Thomas A. Grennan and Adam J. Wachal, of Gross &
Welch, P.C., L.L.O., for appellants.
Michael F. Coyle and Jordan W. Adam, of Fraser Stryker,
P.C., L.L.O., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Heavican, C.J.
INTRODUCTION
Meyer Natural Foods LLC (Meyer), together with Crum &
Forster Specialty Insurance Company, sued Greater Omaha
Packing Company, Inc. (GOP), for breach of contract following
- 511 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
a purported E. coli “O157:H7” contamination of beef owned
by Meyer and processed by GOP. The district court for
Douglas County granted summary judgment in favor of GOP.
Although our reasoning differs from that of the district court,
we affirm.
BACKGROUND
On April 27, 2006, Meyer and GOP entered into a process-
ing agreement, which was amended on May 17, whereby GOP
would slaughter Meyer’s cattle, process the beef, and fabri-
cate the same into various beef products. GOP engaged in the
processing of Meyer beef 1 day per week for 5 years, until
May 2011.
Processing of beef by GOP generally entails that after cattle
are “harvested,” the carcasses are chilled for 24 hours. Once
chilled, the beef is “fabricated,” a practice in which workers
process the chilled carcasses into larger cuts of beef known as
intact cuts (e.g., tenderloins, rib eyes, briskets) and into smaller
pieces of beef known as nonintact cuts or trim (used to make
products such as ground beef). Intact cuts are shrink wrapped
and shipped in boxes, referred to as “boxed beef.” The non­
intact beef, or trim, is placed into large cardboard “combo
bins” containing approximately 2,000 pounds of a combination
of raw beef trim. The trim is then shipped to processing facili-
ties across the United States for the purpose of making ground
beef. When making ground beef, trim is mixed and ground
with other nonintact beef products. This requires that the large
cardboard combo bins of beef trim be tested for the presence of
E. coli prior to the production of ground beef.
On April 25, 2011, Meyer delivered 1,600 head of cattle to
GOP for slaughter, processing, and fabrication pursuant to the
agreement. On April 27, GOP slaughtered the cattle delivered
by Meyer. Also pursuant to the agreement, in the days follow-
ing the slaughter and rendering, GOP tested the beef for the
presence of various strains of E. coli.
The Meyer beef that had been fabricated by GOP on April
27, 2011, was then sealed and delivered to Meyer’s offices
- 512 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
in Omaha, Nebraska, under a “hold,” per GOP’s standard
procedure known as the Hazard Analysis and Critical Control
Point plan, which is approved by the U.S. Department of
Agriculture.
Under the plan, the combo bins are tested and then sealed.
Once sealed, the combo bins may be placed on refrigerated
trailers and shipped, but cannot be opened until the results of
the E. coli testing are returned. Any combo bins containing
trim testing presumptively positive for the presence of imper-
missible pathogens are diverted to “cookers” for a lethality
treatment, which is industry standard.
In this case, an independent laboratory found that of the 211
samples tested, 37 resulted in a presumptive positive finding of
the presence of E. coli O157:H7. The 37 presumptive positive
samples constituted a 17½-percent finding of E. coli contami-
nation. This percentage was over three times the number of
presumptive positives necessary to trigger an “event day,” in
which there is a very high percentage of presumptive positive
findings for E. coli.
On April 28, 2011, GOP met with Meyer and informed them
of the presumptive positive test results for the presence of E.
coli. Meyer immediately recalled the trucks. The beef that had
tested presumptively positive for E. coli O157:H7 was either
sent to a cooker so that the product could ultimately be sold
at a reduced charge or transported to a landfill because it was
altogether unsafe for human consumption.
Meyer filed suit against GOP. As set forth in its second
amended complaint, Meyer alleged breach of contract, breach
of warranty, breach of an indemnity obligation, failure to
obtain insurance, and breach of the guarantee. Meyer filed an
amended motion for partial summary judgment, requesting the
court to find that GOP failed to obtain and maintain “‘prop-
erty insurance’” on the value of Meyer’s property. Prior to the
district court’s ruling on Meyer’s motion, GOP filed its own
motion for summary judgment.
The district court concluded the evidence was clear that
GOP had a property insurance policy with Liberty Mutual Fire
- 513 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
Insurance Company, which policy remained in full force and
effect for the duration of the agreement. The court found that
the policy provided insurance coverage for any nonowned per-
sonal property in GOP’s care, custody, and control that GOP
“‘agreed, prior to loss, to insure.’” The court further found that
the policy’s liability limit was $98,836,333 per occurrence,
complying with the terms of the addendum to section 18. The
court noted that the addendum to section 18, which replaced
the original language in section 18 of the processing agree-
ment, required only that GOP “maintain property insurance on
Meyer Natural Angus property in its possession, with a total
value of $1,800,000,” with which GOP complied. The court
interpreted the agreement and addendum as not requiring GOP
to carry property insurance coverage for an E. coli O157:H7
contamination. Therefore, the court held that Meyer’s conten-
tion that GOP failed to obtain insurance as required by the
contract failed as a matter of law.
The court then found that Meyer’s claims against GOP
with regard to breach of contract, breach of warranty, breach
of indemnity obligation, and breach of guarantee failed as a
matter of law due to Meyer’s failure to return the rejected
processed meat to GOP, which the court found was the rem-
edy provided under the agreement for products failing to
meet a specification or warranty provided by GOP. The court
subsequently granted GOP’s renewed amended motion for
summary judgment and denied Meyer’s amended motion for
summary judgment.
ASSIGNMENTS OF ERROR
Meyer alleges 11 assignments of error, which can be con-
densed and restated as 4: The trial court erred in (1) finding
that GOP carried property insurance in accordance with the
agreement and overruling Meyer’s motion for partial summary
judgment; (2) finding that the agreement did not require GOP
to carry property insurance for E. coli contamination and, as
such, granting GOP’s motion for summary judgment; (3) incor-
rectly interpreting section 10 of the agreement to conclude that
- 514 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
Meyer had accepted the E. coli contaminated beef under the
agreement or under the Uniform Commercial Code; and (4)
finding that GOP was not negligent and therefore not liable for
indemnity under the agreement.
STANDARD OF REVIEW
[1,2] Summary judgment is proper when the pleadings and
the evidence admitted at the hearing disclose that there is no
genuine issue as to any material fact or as to the ultimate infer-
ences that may be drawn from those facts and that the moving
party is entitled to judgment as a matter of law.1 An appellate
court will affirm a lower court’s grant of summary judgment
if the pleadings and admitted evidence show that there is no
genuine issue as to any material facts or as to the ultimate
inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.2
[3] In reviewing a summary judgment, the court views the
evidence in the light most favorable to the party against whom
the judgment was granted and gives such party the benefit of
all reasonable inferences deducible from the evidence.3
[4] The meaning of a contract is a question of law, in con-
nection with which an appellate court has an obligation to
reach its conclusions independently of the determinations made
by the court below.4
ANALYSIS
GOP’s Property Insurance
Pursuant to Agreement.
Meyer assigns that the trial court erred in finding that GOP
carried property insurance in accordance with the agreement
and, accordingly, overruling Meyer’s motion for partial sum-
mary judgment. The crux of Meyer’s argument is that the
1
Continental Cas. Co. v. Calinger, 265 Neb. 557, 657 N.W.2d 925 (2003).
2
Edwards v. Hy-Vee, 294 Neb. 237, 883 N.W.2d 40 (2016).
3
Zornes v. Zornes, 292 Neb. 271, 872 N.W.2d 571 (2015).
4
McKinnis Roofing v. Hicks, 282 Neb. 34, 803 N.W.2d 414 (2011).
- 515 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
insurance policy’s exclusion of coverage for damage resulting
from E. coli constituted a breach of section 18 of the agree-
ment, which required GOP to “maintain property insurance on
Meyer Natural Angus Property in its possession, with a total
value of $1,800,000.” Incorporated into Meyer’s claim that
GOP failed to carry insurance in accordance with the terms
of the agreement is Meyer’s claim that the agreement did
not permit the exclusion of E. coli insurance in GOP’s insur-
ance policy.
[5-9] A contract written in clear and unambiguous language
is not subject to interpretation or construction and must be
enforced according to its terms.5 A contract is ambiguous when
a word, phrase, or provision in the contract has, or is suscep-
tible of, at least two reasonable but conflicting interpretations
or meanings.6 A determination as to whether an ambiguity
exists in a contract is to be made on an objective basis, not
by the subjective contentions of the parties; thus, the fact that
the parties have suggested opposite meanings of a disputed
instrument does not necessarily compel the conclusion that the
instrument is ambiguous.7 Further, we will not rewrite the con-
tract to provide terms contrary to those which are expressed.
Nor is it the province of a court to rewrite a contact to reflect
the court’s view of a fair bargain.8 The parties to a contract
must be held to the plain language of the agreement they
entered into.9
Turning to the record, we note that GOP and Meyer first
entered into an agreement that contained a provision requiring
GOP to maintain comprehensive property insurance. We need
5
Gary’s Implement v. Bridgeport Tractor Parts, 270 Neb. 286, 702 N.W.2d
355 (2005).
6
Kluver v. Deaver, 271 Neb. 595, 714 N.W.2d 1 (2006).
7
Sack Bros. v. Tri-Valley Co-op, 260 Neb. 312, 616 N.W.2d 786 (2000).
8
See Wurst v. Blue River Bank, 235 Neb. 197, 454 N.W.2d 665 (1990).
9
See Berens & Tate v. Iron Mt. Info. Mgmt., 275 Neb. 425, 747 N.W.2d 383
(2008).
- 516 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
not pass on the extent to which the original insurance provi-
sion would have covered an E. coli contamination, because
the original language of the provision entered into on April
27, 2006, was replaced by the addendum entitled “Letter of
Understanding - Revisions,” which was executed on or about
May 17. Despite the typographical error with regard to the date
the original agreement was signed, it is clear that the addendum
was to replace the language of the original section 18 contained
in the agreement. This conclusion is evidenced by the language
of the addendum, just below “Section 18 — INSURANCE,”
which states “[t]he following verbiage will replace the signed
Processing Agreement language . . . .”
Under section 18 of the agreement, as amended by the
addendum dated May 17, 2006, Meyer and GOP agreed that
“[t]he following verbiage will replace the signed Processing
Agreement language: [GOP] shall, during term of agree-
ment, maintain property insurance on Meyer Natural Angus
property in its possession, with a total value of $1,800,000.
Additionally, [GOP] agrees to provide coverage as evidenced
in the Certificate of Insurance.”
According to the language of the addendum, GOP was
required to maintain property insurance only on Meyer’s prop-
erty in GOP’s possession. The language of the addendum is
void of any requirements regarding the inclusion of E. coli
coverage or the prohibition of exclusions contained within the
insurance policy. Section 18, as contemplated in the addendum,
further specifies that the coverage to be provided would be
“evidenced in the Certificate of Insurance.” The certificate of
insurance is void of any language guaranteeing coverage for
loss caused by E. coli contamination. Additionally, nothing in
the addendum required GOP to carry property insurance for
coverage for an E. coli O157:H7 contamination. As we have
previously stated, it is not the province of the court to rewrite a
contract to reflect the court’s view of a fair bargain.10
10
Wurst v. Blue River Bank, supra note 8.
- 517 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
As the district court correctly noted, the evidence is clear
that GOP had a property insurance policy with Liberty Mutual
Fire Insurance Company, which remained in full force and
effect for the duration of the agreement. The policy provided
insurance coverage for any nonowned personal property in
GOP’s care, custody, and control that GOP “‘agreed, prior to
loss, to insure.’” The language of the addendum is clear and
unambiguous, requiring only that GOP “maintain property
insurance on Meyer Natural Angus property in its possession,
with a total value of $1,800,000.” The record is clear that GOP
maintained property insurance in accordance with the adden-
dum to the agreement.
Meyer’s assignment of error with regard to whether GOP
carried property insurance in accordance with the agreement,
and accordingly, Meyer’s argument that the court erred in
denying its motion for partial summary judgment, is with-
out merit.
Meyer’s assignment of error in regard to the insurance
policy, as well as the agreement requiring coverage for E. coli
contamination, is without merit.
Section 10 of Agreement as It Pertains to Meyer’s
Alleged Acceptance and Implications of
Uniform Commercial Code.
Next, Meyer assigns that the court erred in granting GOP’s
motion for summary judgment, finding that Meyer had accepted
the E. coli contaminated beef according to section 10 of the
agreement, and that GOP was not liable to Meyer under the
agreement.
Meyer argues that it did not accept the meat under the terms
of the agreement or the Uniform Commercial Code, because
it notified GOP of its nonconforming product within days of
delivery. Meyer argues alternatively that if it is found to have
accepted the meat, GOP is nevertheless responsible for any
breach of express warranties. Specifically, Meyer contends that
GOP breached the guarantee and agreement when it delivered
possession of E. coli contaminated beef to Meyer, because the
- 518 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
beef was adulterated under federal and state law. Meyer argues
that GOP expressly warranted that the meat it processed would
not be adulterated under any applicable law.
We turn first to the contractual argument concerning the
alleged acceptance. Meyer argues that it did not accept the beef
processed by GOP, because the meat was adulterated and thus
a nonconforming good, to which they alerted GOP within days
of the delivery.
The district court found that pursuant to Neb. U.C.C.
§ 2-707(2) (Reissue 2001), Meyer had knowingly accepted
the contaminated meat and “had it sent to either a cooker so
that the product could ultimately be sold at a reduced charge
or was transported to a landfill, since it was altogether unsafe
for human consumption.” The court further found that Meyer
failed to avail itself of its rights under the agreement and that
its claims failed as a matter of law.
[10] The district court improperly applied article 2 of the
Uniform Commercial Code when it relied on Neb. U.C.C.
§ 2-607(2) (Reissue 2001). In Mennonite Deaconess Home &
Hosp. v. Gates Eng’g Co.,11 this court discussed the applicabil-
ity of the Uniform Commercial Code when a contract calls for
both the sale of goods and the rendition of services, noting:
The question of whether this is a contract for the sale of
goods depends upon an examination of the entire con-
tract. The cases are uniform in holding that the [Uniform
Commercial Code] applies where the principal purpose
of the contract is the sale of goods, even though in order
for the goods to be utilized, some installation is required.
On the other hand, if the contract is principally for serv­
ices and the goods are merely incidental to the contract,
the provisions of the [Uniform Commercial Code] do
not apply.
[11] The test for inclusion in or exclusion from the sales
provisions of Neb. U.C.C. art. 2 (Reissue 2001) is not whether
11
Mennonite Deaconess Home & Hosp. v. Gates Eng’g Co., 219 Neb. 303,
307-08, 363 N.W.2d 155, 160 (1985).
- 519 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
the contracts are mixed but, granting that they are mixed,
whether their predominant factor, their thrust, their purpose,
reasonably stated, is the rendition of service, with goods inci-
dentally involved, or whether they are transactions of sale, with
labor incidentally involved.12
Here, the contract spanned several years with the pre-
dominant factor’s being GOP’s fabrication of beef supplied by
Meyer. It is significant that ownership of the cattle never left
Meyer’s control and that it does not appear from the record
that GOP engaged in any exchange of beef products between
Meyer and other GOP clients. Thus, the contract involved
in this case was for that of services and only incidentally
involved goods.
Still, we find no error in the district court’s ultimate conclu-
sion. Under section 10 of the agreement, Meyer had the option
to reject “[a]ll products failing to meet the warranties and
specifications contained in this Agreement . . . .” Section 10
provides that rejected products be “returned or held at GOP’s
expense and risk.” That section further indicates that “Meyer
shall charge GOP its out-of-pocket expenses of storing and
reshipping any products properly rejected by Meyer under this
Agreement.” (Emphasis supplied.)
As the district court noted, some of the contaminated prod-
ucts were sent to cookers where the products were to be
treated in accordance with industry standards to eradicate E.
coli contamination. While the parties contended at oral argu-
ment that some of the contaminated products were returned
to GOP, the record does not demonstrate that any of the con-
taminated products were returned. Specifically, under the head-
ing “5-03-11-Tuesday,” exhibit 101 states, “[GOP] discussed
re-working the product on Saturday. . . . The Meyer Natural
Angus decision was to send the entire product produced within
the event time period to a cooker.” The record demonstrates
that the products were diverted to cookers, landfills, or simply
12
Id.
- 520 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
left unreturned. Under the terms of the agreement, Meyer had
the responsibility of returning to GOP any rejected product. In
this case, Meyer acted unilaterally in disposing of the contami-
nated beef and therefore failed to adhere to the terms specified
to properly reject products under the agreement.
[12] According to the Restatement (Second) of Contracts,
“damages are not recoverable for loss that the injured
party could have avoided without undue risk, burden or
humiliation.”13 Here, Meyer could have avoided the loss
caused by GOP’s breach had Meyer simply returned or held
the rejected product at GOP’s expense according to section 10
of the agreement. The record demonstrates that GOP sought
to “rework” the product in order to cure the breach, which
Meyer rejected. Meyer failed to avoid the damages, and is not
entitled to recover for damages that could have been avoided.
Therefore, although the district court’s reasoning was flawed
in its application of the Uniform Commercial Code, it was
correct in its ultimate conclusion with regard to the products
left unreturned.
Express Warranty.
We turn now to Meyer’s contention that GOP breached
its express warranty that the meat it processed would “not
be adulterated or misbranded within the meaning of any
applicable federal, state, or local law, or any rules and regu-
lations promulgated thereunder[.]” (Emphasis supplied.) As
the meaning of the word “adulterated” is not ambiguous
under the terms of section 15(a)(iv)(A), the issue turns on
statutory interpretation. Meyer argues that under the Federal
Meat Inspection Act (FMIA),14 and Nebraska law, the meat
delivered by GOP was adulterated, in breach of GOP’s
express warranty.15
13
Restatement (Second) of Contracts § 350(1) at 126 (1981).
14
See 21 U.S.C. § 601 et seq. (2012 & Supp. V 2017).
15
See Neb. Rev. Stat. § 81-2,282(2) (Reissue 2014). See, also, Neb. Rev.
Stat. § 54-1902 (Reissue 2010).
- 521 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
Under the FMIA,
[t]he term “adulterated” shall apply to any carcass, part
thereof, meat or meat food product under one or more of
the following circumstances:
(1) if it bears or contains any poisonous or deleterious
substance which may render it injurious to health; but in
case the substance is not an added substance, such article
shall not be considered adulterated under this clause if the
quantity of such substance in or on such article does not
ordinarily render it injurious to health;
(2)(A) if it bears or contains (by reason of administra-
tion of any substance to the live animal or otherwise) any
added poisonous or added deleterious substance (other
than one which is (i) a pesticide chemical in or on a
raw agricultural commodity; (ii) a food additive; or (iii)
a color additive) which may, in the judgment of the
Secretary, make such article unfit for human food;
....
(3) if it consists in whole or in part of any filthy, putrid,
or decomposed substance or is for any other reason
unsound, unhealthful, unwholesome, or otherwise unfit
for human food[.]16
In Texas Food Industry Ass’n v. Espy,17 the U.S. District
Court for the Western District of Texas, when commenting
on the U.S. Department of Agriculture’s program of sampling
retail establishments for the presence of E. coli, stated that
“[a]ny of these samples testing positive for the pathogen E.
Coli would be treated as ‘adulterated’ under the [FMIA].” GOP
argues that Espy is distinguishable, because in that case the
samples tested positive, not merely presumptive positive as is
the case here.
GOP further seeks to have this court hold that in order for
the meat to be considered “adulterated” under the law, it must
16
21 U.S.C. § 601(m).
17
Texas Food Industry Ass’n v. Espy, 870 F. Supp. 143, 145 (W.D. Tex.
1994).
- 522 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
enter into the stream of commerce. GOP argues that the cen-
tral purpose of the FMIA is to prevent the adulteration of food
and to prevent adulterated food from being introduced into, or
received in, interstate commerce. Thus, GOP contends that in
this case, the contaminated beef does not meet the definition of
adulterated, because it was withheld from public distribution
under GOP’s standard procedure plan.
GOP’s argument misconstrues the purpose of the inclusion
of the term “commerce” in the law. As contemplated in the
federal law, “commerce” refers to the constitutional grant of
authority to Congress to enact laws under article I, § 8, of
the Constitution of the United States. That is to say, that in
promulgating the regulatory scheme, the FMIA was describ-
ing that
[t]he commerce power is “the power to regulate; that is, to
prescribe the rule by which commerce is to be governed.
This power, like all others vested in congress, is com-
plete in itself, may be exercised to its utmost extent, and
acknowledges no limitations, other than are prescribed in
the constitution.”18
As the U.S. Supreme Court has noted, the power of Congress to
regulate commerce extends even to that which is not intended
to enter the stream of commerce but may have a substantial
economic effect on interstate commerce.19
Therefore, the contaminated meat did not need to enter the
stream of commerce to be considered adulterated under the
FMIA. However, even if that were the case under the FMIA,
§ 81-2,282 provides:
(2) Food shall be deemed to be adulterated if:
(a) It bears or contains any substance which may ren-
der it injurious to health, considering the quantity of such
substance in or on the food;
18
United States v. Lopez, 514 U.S. 549, 553, 115 S. Ct. 1624, 131 L. Ed. 2d
626 (1995).
19
See Wikard v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122 (1942).
- 523 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
(b) It consists in whole or in part of any diseased, con-
taminated, filthy, putrid, or decomposed substance or is
otherwise unsafe for use as food.
A plain reading of § 81-2,282 demonstrates that when food—in
this case meat—bears or contains any substance which may
render it injurious to health, then the food should be considered
adulterated. As the U.S. Court of Appeals for the Eighth Circuit
noted in Am. Home Assur. v. Greater Omaha Packing,20
E. coli O157:H7 bacteria live in the digestive tracts
of cows and can be transferred to meat during slaughter.
Humans become infected by consuming contaminated
beef, and the O157:H7 strain is so virulent that even a
small dose can make a person ill. Unlike the harmless E.
coli bacteria commonly found in human intestines, E. coli
O157:H7 produces Shiga toxins, which cause inflamma-
tion of the colon and large intestine, resulting in stomach
cramps and bloody diarrhea. Hemolytic uremic syndrome
is a severe complication of E. coli O157:H7 infection that
can cause anemia and kidney damage.
Further, the record demonstrates that the product was processed
by GOP and delivered to Meyer before the E. coli O157:H7
had been eradicated. Therefore, under Nebraska law, every
processed product produced by GOP containing E. coli appears
to have been adulterated in breach of its express warranties.
The district court determined that as a result of Meyer’s
accepting and retaining the adulterated meat, Meyer had failed
to avail itself of its contracted-for remedy. The court relied on
section 19 of the agreement to apply the Uniform Commercial
Code. Section 19 states in relevant part that the “nonbreach-
ing party shall be entitled to pursue, in addition to any
remedies specifically provided herein, all further remedies
then available under the applicable state Uniform Commercial
Code or otherwise available at law or in equity.” The court
20
Am. Home Assur. v. Greater Omaha Packing, 819 F.3d 417, 420 (8th Cir.
2016).
- 524 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
proceeded to apply § 2-607(2), stating that “‘[a]cceptance of
goods by the buyer precludes rejection of the goods accepted
and if made with knowledge of a nonconformity cannot be
revoked because of it unless the acceptance was on the reason-
able assumption that the nonconformity would be seasonably
cured . . . .’”
However, as noted above, the court’s application of article 2
of the Uniform Commercial Code was improper. Specifically,
section 19 of the agreement states that the nonbreaching party
shall be entitled to “all further remedies then available under
the applicable state Uniform Commercial Code.” (Emphasis
supplied.) As previously discussed, article 2 is not applicable
to a contract for services that only incidentally involve goods.
Having found that GOP breached the express warranty
contained in section 15(a)(iv)(A) of the contract, we return
to the fact that Meyer prevented GOP from mitigating the
amount of damages by refusing to allow GOP to “rework”
the E. coli contaminated meat. Additionally, according to the
terms of the contract, Meyer could have, but failed to, return
more of the adulterated meat for full credit. As a result of
Meyer’s failure to mitigate the damages, Meyer is not entitled
to recover.
GOP’s Alleged Negligence
and Resulting Indemnity.
Lastly, Meyer assigns that the court erred in finding that
GOP was not negligent and therefore not liable for indemnity
under the agreement.
As stated above, we will affirm a lower court’s grant of
summary judgment where the pleadings and admitted evidence
show that there is no genuine issue as to any material facts or
as to the ultimate inferences that may be drawn from those
facts and that the moving party is entitled to judgment as a
matter of law. The Restatement (Third) of Torts states:
A person acts negligently if the person does not exer-
cise reasonable care under all the circumstances. Primary
factors to consider in ascertaining whether the person’s
- 525 -
Nebraska Supreme Court A dvance Sheets
302 Nebraska R eports
MEYER NATURAL FOODS v. GREATER OMAHA PACKING CO.
Cite as 302 Neb. 509
conduct lacks reasonable care are the foreseeable likeli-
hood that the person’s conduct will result in harm, the
foreseeable severity of any harm that may ensue, and
the burden of precautions to eliminate or reduce the risk
of harm.21
In support of its argument, Meyer alleges that reports of GOP
workers violating GOP’s own sanitation procedures on days
surrounding the fabrication of Meyer’s cattle, and the failure of
supervisors to investigate those reports, raised a genuine issue
of material fact precluding summary judgment.
Meyer argues that it raised valid sanitary issues, specifically
in regard to three instances of sterilization violations on the
part of GOP employees, within 5 days of the “event day” date,
which provided sufficient evidence to suggest that negligence
occurred on the “event day.” However, Meyer did not present
any evidence of negligence on the “event day.”
The district court noted, and the parties agreed at oral argu-
ments, that E. coli has historically occurred in the production
of raw beef products. The district court concluded that Meyer
had failed to present any evidence to the court to suggest any
negligence occurred on the days in which Meyer’s cattle were
fabricated. Based on the evidence presented and our standard
of review, we agree with the district court.
CONCLUSION
Although the district court incorrectly applied the Uniform
Commercial Code in regard to Meyer’s acceptance of adulter-
ated meat under the agreement, the court nevertheless arrived
at the correct result. Therefore, the decision of the district court
is affirmed.
A ffirmed.
21
1 Restatement (Third) of Torts: Liability for Physical and Emotional Harm
§ 3 at 29 (2010).