The US-based firm this week filed a lawsuit against FPC Flexible Packaging Corp (FPC) in the wake of the country-wide recall in June 2010 alleging the Ontario outfit was responsible for the supply of tainted inner linings that sickened dozens of consumers.
The incident, which attracted global headlines, also saw the company change it packaging formulation for the affected products, Kellog revealed.
In papers file in the US District Court for the Western District of Michigan, Kellogg is demanding FPC pay it damages resulting from the purchase of what it claims to be “defective liners” bought from the Scarborough company.
Kellogg claims that elevated levels of hydrocarbons in the liners caused “offensive, off-characteristics that caused symptoms including nausea and diarrhoea”.
It said the subsequent “costly recall” of an estimated 28 million boxes of four types of cereal and the destruction of millions more in its warehouses not only hit its annual profits but also injured its reputation and damaged customer goodwill.
The cereal firm said that as a result of the incident it had stopped using “all packaging lines that require wax-coated laminate film” at the affected site.
Breach of agreement?
Kellogg is also refusing to pay a US$4.3m bill to FPC, which the flexible packaging company says it is owed in relation to the manufacture and supply of the inner linings.
FPC is accused of breaching its supply agreement that its products would be “free from any defects”, meet Kellogg’s standards and be “fit and sufficient” for use. The Canadian firm claims that liners provided for the recalled cereals were “consistent with the parties’ contractual arrangements and product specifications”, said court documents.
Kellogg said that it signed a contract with FPC in 2009 to provide inner bags consisting of a five-layer laminate of paper, foil and wax – with the wax serving a sealing and barrier function.
In June 2010, Kellogg said it received numerous complaints from customers of off taste and smell characteristics from Corn Pops and Fruit Loops brands. On testing of retained liner samples from FPC and wax supplied to the flexible packing company by International Group Inc (IGI) elevated levels of hydrocarbons, including methylnaphthalene, usually found in the wax and films of the liners were discovered.
The company said it racked up millions of dollars in expenses over the recall, investigating the cause of the problem and for finding another supplier which charged more than FPC.
It also claims to have suffered damage to its property after being forced to destroy FPC’s “unmerchantable” liners at its own expense.
Kellogg said it notified FPC about the problem but that the flexible supplier “refused to repair or to replace” the liners. It has also refused pay all costs and damages resulting from the incident, which Kellogg said it is contractually obliged to do.
Kellogg spokesperson Kris Charles told FoodProductionDaily.com that the company could not comment on pending litigation. Calls to FPC went unanswered prior to publication.