Commercial Liability Cases

A contractor accidentally unplugged a freezer wire in the warehouse of a food distribution company. The following morning, the distribution company found that a large quantity of meat had spoiled. Prior to that discovery, some of the meat was sold to local restaurants and there were reports of patrons getting sick from the food. The food service company claimed that the contractor caused not only a loss of inventory, but caused the company to lose several customers. The company claimed a loss of several hundred thousand dollars.

We were hired to review the claim. We found adequate support to justify the company’s claimed inventory loss. However, the claim for lost customers was contradicted by the records. We found that some of the claimed customers had stopped doing business with the company before the spoilage incident. In addition, we found that other customers had shown decreasing sales volume for months. Instead of lost customers, we calculated lost sales for approximately 2 days. The claim was settled based on our findings.

A manufacturing firm unintentionally used a faulty chemical while producing labels for a fortune 500 cigarette company. The labels were applied to cigarette packages and the chemicals permeated the package and ruined the tobacco. The cigarette company eventually destroyed the cigarettes with a retail value of over $1 million and requested the label manufacturer to reimburse the full retail value. We were requested to review the reasonableness of the claimed loss. We analyzed the cigarette company’s production records, internal cost reports as well as publicly available financial statements. We determined that the cigarette company did not lose sales and had the capacity to reproduce the inventory. Therefore, the true economic loss of the cigarette maker was limited to the variable raw material and labor costs required to reproduce the cigarettes. Our analysis did reveal some increased operating expenses that were not included in the claim. The matter was settled with our calculations.

A cake manufacturer received a batch of contaminated eggs from its supplier. The eggs were used in production before the contamination was discovered. As a result, the manufacturer discarded several days of production. The manufacturer claimed a loss of inventory and additional expenses associated with identifying and segregating the contaminated production. We reviewed production, inventory and sales documents and determined that some of the cakes that were destroyed were already expired. Also, we noted that some of the expenses that were claimed would have been incurred regardless of the product contamination. Based on our findings, we excluded some of the claimed inventory and expenses from our calculation and the matter was settled at the amount we calculated.