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American Home Assurance Co. v. Greater Omaha Packing Company, Inc.

United States District Court, D. Nebraska

April 2, 2014

AMERICAN HOME ASSURANCE COMPANY and CARGILL MEAT SOLUTIONS CORPORATION, Plaintiffs,
v.
GREATER OMAHA PACKING COMPANY, INC., Defendant.

MEMORANDUM AND ORDER

LYLE E. STROM, Senior District Judge.

This matter is before the Court on the Daubert motion of plaintiff Cargill to exclude proposed expert testimony and reports of Dr. Michael Thomsen (Filing No. 216). Cargill filed a supporting brief and index of evidence (Filing No. 217 and Filing No. 218). The defendant filed a responsive brief and indices of evidence in opposition to the motion (Filing Nos. 319 and 320, 321 and 322). Cargill filed a responsive brief (Filing No. 319) and indices of evidence (Filing Nos. 320, 321, 322 and 323). The motion will be denied.

I. BACKGROUND

An E. coli outbreak occurred in 2007 which gravely injured several people. An investigation traced the E. coli back to a ground-beef patty manufacturer, Cargill Meat Solutions, Corp. ("Cargill"), who is the plaintiff in this case along with American Home Assurance Company ("Assurance"). The plaintiffs have brought various contract claims against the defendant, Greater Omaha Packing, Co. ("GOPAC"). Essentially, the plaintiffs claim that GOPAC sold Cargill meat contaminated with the E. coli strain in violation of a contract between GOPAC and Cargill. GOPAC denies all claims and asserts a counterclaim against the plaintiffs for the tortious interference with business relationships and expectancies (hereinafter "Tortious Interference"). Filing No. 40, at 8.

The impetus for GOPAC's counterclaim is an article in which an attorney retained by Cargill allegedly commented on aspects of this case to a reporter before it was filed. Cargill had retained Shawn Stevens, attorney at Gass, Weber, & Mullins, to defend Cargill from claims brought by those injured by the E. coli outbreak (Filing No. 220, at ¶22). In the course of Mr. Stevens's work with Cargill, Mr. Stevens discovered facts which led Cargill to assert claims against GOPAC and file this current claim against it. In late March 2009, New York Times reporter, Michael Moss, first spoke to Mr. Stevens on the phone. The two men spoke five times. According to Mr. Stevens, the conversations were initially innocuous and generalized regarding how one performs traceback investigations in E. coli outbreaks; however, Mr. Moss garnered additional facts underlying the 2007 Cargill recall and began to ask Mr. Stevens more pointed questions. At that point, Mr. Stevens refused to answer additional questions and ended the conversations.

On October 3, 2009, Mr. Moss published a ten-page, Pulitzer-prize winning story regarding the E. coli outbreak, "The Burger That Shattered Her Life" (Filing No. 210-1, at 1-10). In salient part, the New York Times article (hereinafter "the Article") read as follows:

Shawn K. Stevens, a lawyer in Milwaukee working for Cargill, began investigating. Sifting through state health department records from around the nation, Mr. Stevens found the case of young girl in Hawaii stricken with the same E. coli found in the Cargill patties. But instead of a Cargill burger, she had eaten raw minced beef at a Japanese restaurant that Mr. Stevens said he traced through a distributor to Greater Omaha.
"Potentially, it could let Cargill shift all the responsibility, " Mr. Stevens said. In March, he sent his findings to William Marler, a lawyer in Seattle who specializes in food-borne disease cases and is handling the claims against Cargill.
"Most of the time, in these outbreaks, it's not unusual when I point the finger at somebody they try to point the finger at somebody else, " Mr. Marler said. But he said Mr. Stevens's finding "doesn't rise to the level of proof that I need" to sue Greater Omaha.
It is unclear whether Cargill presented the Hawaii findings to Greater Omaha, since neither company would comment on the matter.

Filing No. 210-1, at 9. It is important to note that GOPAC's claims do not focus on whether the Article itself was the cause of damages. Rather, GOPAC asserts the statements Mr. Stevens made to Mr. Moss were disseminated to GOPAC's clientele during Mr. Moss's investigation of the Article and thereby caused damages ( See Filing No. 40, at ¶17-21).

In order to determine whether GOPAC experienced damages related to the Article or the statements Mr. Stevens made to Mr. Moss, GOPAC commissioned an event study. An "event study" determines whether a causal connection exists between correlated events; for example: whether the publication of an investigatory news article caused a depreciation in sales prices. The "event" of Dr. Thomsen's study was October 3, 2009, the publication date of the Article. The study's "event window, " the period of time Dr. Thomsen studied surrounding the "event, " was from August 14, 2009[1] until December 28, 2009. In order to create a basis of comparison for GOPAC's sales prices and prices of the broader beef market, Dr. Thomsen focused on "boxed-beef cutout values" (Filing No. 217, 34).

When comparing the national average price for beef and the price GOPAC sold beef during the event window, Dr. Thomsen observed a lower sales price for GOPAC meat. The decrease in sales price for GOPAC's meat began August 31, 2009, and ended on December 14, 2009. In other words, two weeks into the event study, Dr. Thomsen's study showed GOPAC was selling beef for a lower price but GOPAC's sales prices reached the national average on December 14, ...


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