Taco Bell franchisees win case over 2006 E. coli outbreak

Source of Article:  http://thepacker.com/Taco-Bell-franchisees-win-case-over-2006-E--coli-outbreak/Article.aspx?articleid=367757&authorid=351&categoryid=200&feedid=215&src=recent


Published on 06/29/2009 09:33am By Ashley Bentley


Tainted lettuce that sickened more than 70 Taco Bell patrons in four states in 2006 is still an issue on the table for the restaurants. Franchise owners finally heard a decision in a lawsuit they filed against their insurance company for damages caused by the outbreak.

The judge ruled in the franchisees’ favor, meaning that their insurance company could not deny them coverage for damages from lost revenue due to the contamination.

The case, tried in a New Jersey superior court, went in the franchisees’ favor because the insurance company changed the policy without notifying the franchise owners, and without wording the new policy clearly, according to media reports.

The franchisees had originally signed a policy with Lloyd’s of London to have foodborne illness coverage. In the early 2000s, the insurance company discontinued that policy, but the franchisees bought a new policy from the same underwriter, understanding their foodborne illness coverage was the same.

The policy underwriters had changed the policy to include a zero dollar sublimit, but had not clearly conveyed that in the policy, nor explained it to the franchisees, the judge said, according to media reports.

Lloyd’s tried to argue that the losses were the supplier’s fault.

The judge also ruled that the lettuce should be considered an ingredient, which would be covered by the policy, instead of a product, which would not be covered, according to the ruling.

The franchise owners have not recovered any damages yet. The policy limit was originally set at $30 million, according to media reports.

Green onions were first suspected in the outbreak, but the spotlight was later turned to bagged lettuce tainted before it reached the restaurants.

More than 70 people were sickened, 53 of them requiring hospitalization, in New Jersey, New York, Pennsylvania and Delaware.


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