Page 1 - COMPLAINT

LISA D. HARDIE, OSB #080783

TROUTMAN SANDERS LLP

1000 SW Main, Suite 1000

Portland, OR 97204

Telephone: (503) 290-2334;

Facsimile: (503) 290-2405

lisa.hardie@troutmansanders.com

TERRENCE R. McINNIS, CSB #155416

(pending admission pro hac vice)

terrence.mcinnis@troutmansanders.com

WILLIAM D. BURGER, JR., CSB #234915

(pending admission pro hac vice)

william.burger@troutmansanders.com

TROUTMAN SANDERS LLP

5 Park Plaza, Suite 1400

Irvine, CA 92614

Telephone: (949) 622-2756

Facsimile: (949) 769-2090

Attorneys for Plaintiffs Amy’s Kitchen, Inc.

and Houston Casualty Company

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT COURT OF OREGON

MEDFORD DIVISION

AMY’S KITCHEN, INC., a California

corporation; and HOUSTON

CASUALTY COMPANY, a Texas

corporation;

Plaintiffs,

v.

STUKEL MOUNTAIN ORGANICS

LLC., an Oregon limited liability

company; and MALIN POTATO

COOPERATIVE, INC., an Oregon

corporation

Defendants.

No. 1:16-cv-00071

COMPLAINT FOR

(1) NEGLIGENCE

(2) BREACH OF CONTRACT

(3) BREACH OF EXPRESS WARRANTY

(4) BREACH OF THE IMPLIED

WARRANTY OF FITNESS FOR A

PARTICULAR PURPOSE

(5) BREACH OF THE IMPLIED WARRANTY

OF MERCHANTABILITY

DEMAND FOR JURY TRIAL

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 1 of 12
Page 2 - COMPLAINT

COMPLAINT

Amy’s Kitchen, Inc. and Houston Casualty Company (collectively referred to as

“Plaintiffs”), by and through their attorneys, for their Complaint against Stukel Mountain

Organics LLC, and Malin Potato Cooperative, Inc. (collectively referred to as “Defendants”),

allege as follows:

THE PARTIES

1. Plaintiff Amy’s Kitchen, Inc. (“Amy’s”) is a corporation established under the

laws of the State of California and with its principal place of business in Petaluma, California.

At all times relevant hereto, Amy’s has been authorized to and has conducted business in the

State of Oregon.

2. Amy’s is the manufacturer of organic, vegetarian foods. It offers in excess of 250

organic products and sells those products to supermarket stores across the United States and

internationally. Amy’s operates a production plant in White City, Oregon, at which it

manufactures, among other food items, soups containing potatoes.

3. Plaintiff Houston Casualty Company (“HCC”) is an insurance company

incorporated under the laws of the State of Texas and with its primary place of business in

Houston, Texas.

4. HCC issued a Malicious Product Tampering/Accidental Product Contamination

Insurance Policy to Amy’s (the “Policy”). Pursuant to the terms of the Policy, HCC issued

payment to Amy’s – in excess of the jurisdictional minimum of this Court – for loss suffered by

Amy’s arising from the acts and omissions of Defendants discussed below. Accordingly,

pursuant to the terms of the Policy, and pursuant to applicable law, HCC is subrogated to Amy’s

claims against Defendants to the extent of the payment issued.

5. Defendant Stukel Mountain Organics LLC (“Stukel”) is a limited liability

company established under the laws of the State of Oregon and with its principal place of

business in Merrill, Oregon.

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 2 of 12
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6. Stukel is a supplier of organic potatoes. Stukel supplied, shipped and delivered

some or all of the potatoes which form the basis for the allegations contained in this Complaint.

7. Defendant Malin Potato Cooperative, Inc. (“Malin”) is a corporation organized

under the laws of the State of Oregon and with its principal place of business in Klamath Falls,

Oregon.

8. Malin is a potato cooperative to which Stukel belongs, and to which it belonged at

all times relevant to the allegations contained in this Complaint. On information and belief,

Malin assisted Stukel with, and served as Stukel’s agent, in the supplying, packing, shipping and

delivery of the potatoes which form the basis of the allegations contained in this Complaint.

9. Plaintiffs are informed and believe and thereupon allege that at all relevant times,

all Defendants were agents, servants, partners and/or employees of all other Defendants, and that

each of the Defendants was acting within the course and scope of their authority as agents,

servants, partners and/or employees of the other Defendants when committing the acts and

omissions described herein.

JURISDICTION AND VENUE

10. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1332.

11. Plaintiff Amy’s is a citizen of California within the meaning of 28 U.S.C.

§ 1332(c)(1).

12. Plaintiff HCC is a citizen of Texas within the meaning of 28 U.S.C. § 1332(c)(1).

13. Defendant Stukel is a citizen of Oregon within the meaning of 28 U.S.C.

§ 1332(c)(1).

14. Defendant Malin is a citizen of Oregon within the meaning of 28 U.S.C.

§ 1332(c)(1).

15. This action involves a dispute over whether Defendants should be held

responsible for the over $1.5 million in damage caused as a result of Defendants’ supplying

contaminated potatoes to Amy’s. Accordingly, the amount in controversy exceeds $75,000,

exclusive of interest and costs.

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16. This action is currently ripe for adjudication.

17. Venue is proper in this Court pursuant to 28 U.S.C. §1391. Defendants both

maintain their principal place of business in this District, and a substantial part of the events

giving rise to the claims at issue occurred in this District.

BACKGROUND ALLEGATIONS

18. On or about May 28, 2014, Stukel executed a “Continuing Food Guarantee and

Indemnification” agreement (the “Agreement”) with Amy’s. A copy of the Agreement is

attached hereto as Exhibit A.

19. The Agreement provides, in pertinent part, that

[Stukel] gives Amy’s its continuing agreement and guarantee that all food

and packaging Ingredients (“Raw Materials”) supplied by [Stukel] to

Amy’s shall be: (1) in compliance with Amy’s applicable Purchase

Orders (“PO”), Specification(s), this Guarantee and other documentation

supplied by Amy’s to [Stukel] (collectively “Contractual Documents”),

and (2) In compliance with all applicable federal, state and local laws

governing (i) the quality, condition and safety of food for human

consumption and (ii) non-adulteration and misbranding (the “Applicable

Laws”), and shall otherwise meet Amy’s quality assurance standards.

20. The Agreement further provided that “All Raw Materials supplied by [Stukel]

shall be shipped in accordance with Amy’s Contractual Documents, or, absent shipping

information, under conditions consistent with industry standards.”

21. Moreover, the Agreement provides that Stukel “agrees to indemnify, defend and

hold harmless Amy’s at all times after the Effective Date of [the Agreement] from and against

any and all costs, liabilities, loss and/or damages (including reasonable attorneys fees) resulting

from any negligent or intentional act or omission or the violation of any federal, state or local

law or regulation by [Stukel] arising out of or in connection with [Stukel’s] supply of Raw

Materials to Amy’s.” Finally, the Agreement provides that its interpretation, and the

interpretation of all other “Contractual Documents,” shall be subject to California law.

22. Defendants are, and at all times were, aware that Amy’s intended to use the

potatoes in the production of food for human consumption.

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23. In December 2014, Amy’s purchased a bulk order of over 27,000 pounds of

organic potatoes from Stukel. Amy’s shipped to Defendants in an enclosed and sealed truck

enough cleaned and folded collapsible bins to hold the potatoes.

24. On information and belief, following arrival at Defendants’ facilities, Defendants

or their agents unsealed the truck, unloaded the collapsed bins, and reconstructed them to be

filled with potatoes. In the course of reconstructing the bins, and later preparing them to be

loaded with potatoes, Defendants had the opportunity to observe any debris that may have been

present in the bins or any damage to the bins, and to remove such debris or damaged bins.

25. After Defendants filled the bins with potatoes, they were returned to Amy’s

White City, Oregon facility in an enclosed and sealed truck. Upon arrival, the bins were

unloaded by Amy’s personnel and held in cold storage for use in producing soup.

26. During the course of emptying the bins for processing, and after some of the

potatoes had already been processed into soup, Amy’s discovered foreign debris in some of the

bins, including pieces of glass, plastic, paper and metal. At least one potato was discovered with

embedded metal. Most of the debris was located at or near the bottom of the bins, and so was

not visible until after the bins were emptied. The type and amount of debris discovered was

highly unusual and unprecedented in Amy’s experience.

27. In light of the discovery of the substantial amount of dangerous debris in the bins

of potatoes provided by Defendants, Amy’s stopped production of the food products containing

the potatoes supplied by Defendants. The finished product containing those potatoes was

destroyed, as were the potatoes that had not yet been used. As a result, Amy’s suffered damage

in excess of $1,500,000. Pursuant to the terms of the Policy, HCC issued payment to Amy’s for

a portion of that loss in excess of the jurisdictional minimum of this Court.

28. Upon suffering the loss noted above, HCC and Amy’s tendered their losses to

Defendants for payment pursuant to the Agreement and applicable law. In response, Defendants

refused to reimburse Plaintiffs for any costs, liabilities, loss, damages and/or attorney’s fees

incurred as a result of Defendants’ acts or omissions.

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 5 of 12
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FIRST CAUSE OF ACTION

NEGLIGENCE – AGAINST DEFENDANTS

29. Plaintiffs incorporate by reference each of the preceding paragraphs of this

Complaint as if fully restated here.

30. Defendants had a duty to supply Amy’s with potatoes of sufficient quality that

were appropriate for human consumption.

31. Defendants breached that duty by providing Amy’s with bins of potatoes

containing dangerous debris – including glass, plastic, and metal – such that the potatoes

provided by Defendants were unfit for human consumption.

32. As a direct and proximate cause of Defendants’ breach of their duty to Amy’s,

Amy’s was required to destroy thousands of pounds of potatoes as well its finished product, lost

profits, and suffered other damage in a total amount to be established at trial but in excess of

$1,500,000.

33. By virtue of its payment under the Policy, HCC was also harmed by Defendant’s

conduct in an amount in excess of the jurisdictional minimum of this Court, and is subrogated to

Amy’s claims against Defendants in the amount of its payment to Amy’s under the Policy and

other amounts to be established at trial.

SECOND CAUSE OF ACTION

BREACH OF CONTRACT – AGAINST STUKEL

34. Plaintiffs incorporate by reference each of the preceding paragraphs of this

Complaint as if fully restated here.

35. Pursuant to the Agreement, and all documentation incorporated into the

Agreement, Stukel was obligated to indemnify and hold Amy’s harmless with regard to all

costs, liabilities, loss and/or damages (including reasonable attorney’s fees), associated with any

negligent or intentional act or omission by Stukel in providing potatoes to Amy’s.

36. Amy’s relied on Stukel’s promises contained in the Agreement and all

documentation incorporated into the Agreement through its December 2014 purchase of potatoes

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 6 of 12
Page 7 - COMPLAINT

from Stukel. Further, Amy’s satisfied each of its obligations under the Agreement and all

documentation incorporated into the Agreement.

37. Stukel breached the Agreement by failing to supply potatoes in compliance with

(a) Amy’s specification(s), (b) applicable federal, state and local laws governing the quality,

condition and safety of food for human consumption, (c) non-adulteration laws, and (d) Amy’s

quality assurance standards. Moreover, Stukel further breached the Agreement by failing and

refusing to indemnify, defend and hold harmless Amy’s from and against any and all costs,

liabilities, loss and/or damages (including reasonable attorneys fees) resulting from any negligent

or intentional act or omission or the violation of any federal, state or local law or regulation by

Stukel arising out of or in connection with Stukel’s supply of potatoes.

38. As a direct and proximate cause of Stukel’s breach of contract, Amy’s was

harmed in the amount to be established at trial, but at least in the amount of $1,500,000.

39. By virtue of its payment under the Policy, HCC was also harmed by Stukel’s

breach of contract in an amount in excess of the jurisdictional minimum of this Court, and is

subrogated to Amy’s claims against Stukel in the amount of its payment to Amy’s under the

Policy and other amounts to be established at trial.

THIRD CAUSE OF ACTION

BREACH OF EXPRESS WARRANTY – AGAINST STUKEL

40. Plaintiffs incorporate by reference each of the preceding paragraphs of this

Complaint as if fully restated here.

41. Pursuant to the Agreement, Stukel warranted, among other things, to supply

potatoes in compliance with (a) Amy’s specification(s), (b) applicable federal, state and local

laws governing the quality, condition and safety of food for human consumption, (c) nonadulteration laws, and (d) Amy’s quality assurance standards. Moreover, Stukel further

warranted that it would indemnify, defend and hold harmless Amy’s from and against any and all

costs, liabilities, loss and/or damages (including reasonable attorneys fees) resulting from any

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 7 of 12
Page 8 - COMPLAINT

negligent or intentional act or omission or the violation of any federal, state or local law or

regulation by Stukel arising out of or in connection with Stukel’s supply of potatoes.

42. Stukel breached its warranties by failing to supply potatoes in compliance with (a)

Amy’s specification(s), (b) applicable federal, state and local laws governing the quality,

condition and safety of food for human consumption, (c) non-adulteration laws, and (d) Amy’s

quality assurance standards. Stukel further breached its warranties by failing and refusing to

indemnify, defend and hold harmless Amy’s from and against any and all costs, liabilities, loss

and/or damages (including reasonable attorneys fees) resulting from any negligent or intentional

act or omission or the violation of any federal, state or local law or regulation by Stukel arising

out of or in connection with Stukel’s supply of potatoes.

43. As a direct and proximate result of Stukel’s breach of express warranty, Amy’s

was harmed in the amount to be established at trial, but at least in the amount of $1,500,000.

44. By virtue of its payment under the Policy, HCC was also harmed by Stukel’s

breach of warranty in an amount in excess of the jurisdictional minimum of this Court, and is

subrogated to Amy’s claims against Stukel in the amount of its payment to Amy’s under the

Policy and other amounts to be established at trial.

FOURTH CAUSE OF ACTION

BREACH OF IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE –

AGAINST STUKEL

45. Plaintiffs incorporate by reference each of the preceding paragraphs of this

Complaint as if fully restated here.

46. At the time of Amy’s December 2014 potato purchase, Stukel, which is and at all

relevant times was a merchant of potatoes, was aware of Amy’s intent to use the purchased

potatoes in food products for human consumption.

47. Amy’s relied on Stukel’s skill and judgment to select and supply potatoes that

were suitable for human consumption, and to provide those potatoes to Amy’s in a manner and

condition for use in food products.

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 8 of 12
Page 9 - COMPLAINT

48. Accordingly, Stukel impliedly warranted to Amy’s that the potatoes provided to

Amy’s would be suitable for human consumption.

49. Stukel breached this implied warranty in that it provided potatoes to Amy’s which

were contaminated with dangerous debris, including glass, plastic and metal, and as such, were

unfit for human consumption.

50. As a direct and proximate cause of Stukel’s breach of this implied warranty,

Amy’s was harmed in the amount to be established at trial, but at least in the amount of

$1,500,000.

51. By virtue of its payment under the Policy, HCC was also harmed by Stukel’s

breach of warranty in an amount in excess of the jurisdictional minimum of this Court, and is

subrogated to Amy’s claims against Stukel in the amount of its payment to Amy’s under the

Policy and other amounts to be established at trial.

FIFTH CAUSE OF ACTION

BREACH OF THE IMPLIED WARRANTY OF MERCHANTABILITY – AGAINST

STUKEL

52. Plaintiffs incorporate by reference each of the preceding paragraphs of this

Complaint as if fully restated here.

53. Stukel is, and at all relevant times was, a merchant of potatoes.

54. Accordingly, an implied warranty that the potatoes Stukel sells shall be

merchantable and usable for their ordinary purpose is implied in any contract for sale of Stukel’s

potatoes.

55. Stukel breached this implied warranty in that it provided potatoes to Amy’s which

were contaminated with dangerous debris, including glass, plastic and metal.

56. As a direct and proximate cause of Stukel’s breach of this implied warranty,

Amy’s was harmed in the amount to be established at trial, but at least in the amount of

$1,500,000.

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 9 of 12
Page 10 - COMPLAINT

57. By virtue of its payment under the Policy, HCC was also harmed by Stukel’s

breach of warranty in an amount in excess of the jurisdictional minimum of this Court, and is

subrogated to Amy’s claims against Stukel in the amount of its payment to Amy’s under the

Policy and other amounts to be established at trial.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs requests that the Court enter a judgment:

A. Finding that Defendants acted negligently in connection with their actions

referenced in this Complaint;

B. Finding that Stukel breached the Agreement and the documentation incorporated

into the Agreement;

C. Finding that Stukel breached the express warranties provided in the Agreement

and the documentation incorporated into the Agreement;

D. Finding that Stukel breached the implied warranty of fitness for a particular

purpose;

E. Finding that Stukel breached the implied warranty of merchantability;

F. Awarding Plaintiffs damages in an amount to be determined at trial, but in no

event less than $1,500,000.

G. Awarding Plaintiffs attorney’s fees and costs; and

H. Ordering Defendants to comply with any additional terms of relief that this Court

deems just and proper.

DEMAND FOR JURY TRIAL

Pursuant to Fed. R. Civ. P. 38(b), Plaintiffs respectfully request a trial by jury.

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 10 of 12
Page 11 - COMPLAINT

DATED: January 15, 2016. Respectfully submitted,

TROUTMAN SANDERS LLP

_/s/ Lisa D. Hardie _____________________

Lisa D. Hardie, Esq.

Terrence R. McInnis, Esq.

William D. Burger, Jr., Esq.

Attorneys for Plaintiffs Amy’s Kitchen, Inc.

and Houston Casualty Company

Case 1:16-cv-00071-CL Document 1 Filed 01/15/16 Page 11 of 12
CONTINUING FOOD 

qVARANTEE.AND 

1NDEMNIFICATION 

$u.PplieriSia rite 

Stufeel Mountain 

1;;/.le • 

6-9-14 

eo..RfAr,p.!s::KIT.N•1:JSp .NW. ;

Fdirdroviewed and approved by 

Sourcing 

C. 

• 1.5te.: *

• 

Prys 14tchert,. iRevised:4/:1c/1.4; 

ThlSiCs.3intinuind Ouarantee and Indemnification agreement ("Continuing Guar:an:tee') is.:entered between the 

undersigned seller ("Seller"} and Amy's Kitchen, Inc. ("Amy's"). Amy's and Seller: agree asfthllows: " 

Seller4Ves AmYs..its. continuing agreement and.guarantee thatall food and: packaging ingredientS.("Raw 

.Materiel") supplied by. Seller to Amy's shall be: 

1) In compliance with Arnys .appliCable Purchase Order(S) ("Pa l specificAtibriWthis Guarantee and 

other documentation .supplied. by Amy's to Seller (bolleotively "Contractual Documents"); and 

2). In compliance with all applicable federal, state.and.lboal laws governing (0.the;:quality,.Condition and 

Safety of food for human conspi:1'106n and (ii) non-adulteration and rnisbranding.:'(c011eCtiyelY 

. • "ApplidabletawS"), andshall-OtherivIse meet Amy's qualityaSSuranbe:standardS. 

None.of the Contractual QOcuments.may be.modified or:supplemented rtior WrittPrr OP.U.Pnt. 

:SellOS•:shiPtrielitof a- NO/Mgertal pursuant to an Amy's PO .Shall constitute SpOr's.-Aptaptanc of the Terrris • 

of pirily*Pc5.andkriys..qpacifigation..Any term or-condition contained: in a SaleSo .Order apknoWledgMent or . 

-6ther,:dddirrieht proVided .by Seller adds to, differs from or conflicts Vvith:a terra-dr.conditibri in any of the 

Qontkadtupj Documents',shall: be unenforceable as to that provision unless.apptced by :Amy's in writing. All 

Raw Ma erialssuppliec by:Salia.r be shipped.inaccordance with Amy;°S or, 

absent shipping-information f.under conditions consistent withinduStrystandardS.,. Sailer shduid fail to • 

• 

comply any proViSlOri of the .Gontractuai pocurnents or Laws;:.or. 

.6f4he:partiee relationship; the prevailing party in any resulting litigation or Otharproceeding.Shalrbeenfitled,0 . 

recOx.ie;ritS reasonable .attomeysfees and -costs. The Contractual DocurrientS;Shal1betoverned C8lifOrrira 

a;kr.. • 

Seller agrees to indemnify, defend and hold harmless. Amy's at all titnes.a4erthe EffectivalDatp oftnis 

COnfinuin9 Guarantee frorn and against any and all costs., liabilities,.IO.Ssiand/cf:aniageS(inCluding 

reasonable attornays.fees) resulting, from any. negliaent or intentional act or:Orniisionior the.violatiOnzof-:any. 

fe‘ral,,State•or local law or regulation by Seller,arising out of or in corinedioriwith,:-S.ellefs.supPly of Rai.i)) • 

to Amy's. 

liar.bePririted: \ i*L.,..; ea. rLe4-0:-.. Titlek.9(:g. 

I 0.onil5a61:.-. )\--L:,2t< c. C_. k'nc.,A__;-&-\\;<Ivc\ POraco•N•Nc .,_ . 0....(-- d:: afe: • • -.; "--- 2. 1S• I. . : 

15:-m aiii- 

,... 

phdrie:. wi..-a/;-'544.9.q. 

1:81.1Pfjl.Sicira.aturaz . • 

EXHIBIT A

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