A Seymour egg producer may have lost $8 million or more Wednesday
after a United States Court of Appeals decision to vacate
a 2003 lower court ruling.
The decision came against Rose Acre Farms Inc. and its request
that the government repay revenue lost because of regulations
restricting egg sales from farms testing positive for salmonella.
Salmonella is a bacteria that causes various diseases in people
and domestic animals, including typhoid fever and food poisoning.
Tony Wesner, a company executive vice president, said this
morning that he was not free to comment about the decision,
which he described as disappointing.
"I don't know what our next step will be," Wesner
said. The appeals court did remand the lawsuit back to the
U.S. Court of Federal Claims. The appeals court decision,
however, didn't upset at least one organization.
"Corporations should never be paid simply for complying
with laws necessary to protect the health of American consumers,"
said Jason Rylander, litigation and policy counsel for the
Community Rights Counsel. The organization is a public interest
law firm that defends environmental, health and safety protections
in the courts. It filed a friend-of-the-court brief in August
2003 in support of the government after the Court of Federal
Claims ruled in favor of the company in its lawsuit against
Rose Acre Farms contended the U.S. Department of Agriculture
placed restrictions on the company's industrial chicken farms
after salmonella outbreaks were traced back to the company's
The company contended USDA requirements to pasteurize eggs,
clean barns and test hens forced it to sell eggs at a lower
price than it otherwise would have received.
The company also contended that the "taking" of
private property required compensation from the government
under the Fifth Amendment to the Constitution. The company
had originally sought $22.8 million, an amount lowered to
$6.1 million (as well as $2.1 million in fees) by the claims
court in 2003, when it agreed with the company's claims that
the salmonella-control regulations by the USDA were excessive.
The original lawsuit stems from salmonella outbreaks at a
wedding party in Versailles, Ky., a hardware convention in
Chicago and an incident in Tennessee where seven people became
ill after eating banana pudding with meringue. The outbreaks,
traced back to Rose Acre's egg farms, sickened 450 people.
The USDA then designated hen houses on three of the plaintiff's
farms, Cort Acres (Jackson County), Jen Acres (Jennings County)
and White Acres (White County) as "test flocks."
After tests came back positive, the agency forbade the company
from selling eggs from those houses in interstate commerce.
Rose Acre was allowed, however, to sell those eggs in the
pasteurization market (pasteurization kills bacteria), where
eggs sold for 41 cents per dozen rather than 59 cents per
dozen for table eggs. Rose Acre said it was forced to sell
at a loss 700 million eggs that were diverted into low-priced
markets for eggs.
In addition, the USDA removed, killed and tested 6,741 hens,
of which about 2 percent tested positive for salmonellosis.
The government relaxed its oversight on Rose Acre after 21
months of quarantine.
Rylander said the appeals court decision was definitely a
victory for the government and public health.
"We were delighted to see the lower court ruling wiped
off the books," he said.