September 2018

Brand Owner Favorably Resolves Dispute With Toll Processor Following Arbitration

Faegre Baker Daniels was the lead counsel for the respondent, a brand owner. The claimant, a toll food processor, and the brand owner were parties to a long-term toll processing agreement with a contractual minimum/take-or-pay term. A contamination event and material recall occurred, resulting in a dispute between the parties. The food processor reimbursed the brand owner $13.3 million in recall-related costs and the parties entered into a partial settlement agreement. The food processor then demanded millions in shortfall fees flowing from the brand owner’s failure to meet the contract minimum/take-or-pay provisions of the parties’ agreement. The food processor sought arbitration first, seeking $17.3 million in past-due fees for two years plus similar fees for future years. The brand owner filed a counterclaim seeking $84.3 million in damages, representing additional costs associated with the recall as well as resulting brand damage. The matter was resolved by a confidential settlement post-hearing. Confidential Toll Food Processor v. Confidential Brand Owner, No. 01-17-001-7218 (AAA 2018).

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