Chinese Dog Treat Lawsuit Sent to Arbitration

(CN) - An arbitrator should determine whether the Chinese manufacturer of allegedly poisonous Del Monte dog treats adhered to U.S. safety standards, a federal magistrate ruled.

The 2012 class action involves Lisa Mazur's claim that her healthy 7-year-old dog, Riley Rae, suffered kidney failure and had to be euthanized after about a month of occasionally eating chicken jerky treats sold by a Del Monte subsidiary, Milo's Kitchen.

The "defendants intentionally concealed known facts concerning the safety of their dog treats in order to increase or maintain sales," Mazur claims.

Despite a warning from the U.S. Food and Drug Administration, Del Monte refused to recall the dangerous products or place warnings on the packages, according to the complaint.

Though the company was one of a dozen manufacturers in a $24 million settlement in 2011 for wet pet food contaminated with melamine and cyanuric acid, its legal troubles live on.

Another dog owner sued Milo's in Los Angeles last year, claiming that the biscuits brought her dog "close to death" from kidney failure.

Christopher Langone later filed a similar claim in San Francisco, but voluntarily dismissed his case in February.

U.S. District Judge Jeffrey White agreed in April to transfer two other Northern California cases to Pittsburgh, where Mazur's is pending.

Mazur seeks punitive damages for the class for common law fraud, unjust enrichment, negligence, product liability, unfair trade, breach of warranty, failure to warn and defective manufacture or design.

After Del Monte and Milo's moved to dismiss last year, U.S. District Judge Cathy Bissoon adopted U.S. Magistrate Judge Maureen Kelly's recommendation of dismissing the unjust enrichment claim only.

Months later, the defendants filed a third-party complaint against Nova World, the Chinese corporation that allegedly exclusively manufactured the dog treats at issue.

Del Monte and Milo's said that Nova World breached their supply agreement by failing to provide all the required ingredients, material, and equipment necessary to manufacture the treats in accordance with the Federal Food, Drug and Cosmetic Act and state regulations.

The American companies assert claims for contribution, contractual and implied indemnification, breach of contract and express and implied warranty.

Nova World moved to stay Del Monte and Milo's new claims and compel arbitration on Oct. 17, and Judge Kelly recommended that the motion be granted last week.

The court tossed aside Del Monte's argument that although the plaintiffs' claims "arise (whether in whole or part) out of Nova World's conduct pursuant to the terms of the supply agreement," the dispute at hand has nothing to do with the contract. (Parentheses in original).

"Del Monte has alleged, and the supply agreement provides, that Nova World has agreed to indemnify Del Monte against any claim, loss, damage, liability or expense for bodily injury, death, property damage or damage to brand reputation ... where such injury, death or damage is caused by any products, ingredients or materials furnished by [Nova World] . . . not in compliance with specifications, and by any negligence of [Nova World], or by any act or omission on part of [Nova World] ... in violation of this [supply agreement]," Kelly wrote.

The judge later added: "Under these circumstances it is difficult to give any countenance to defendants' argument that their claims brought against Nova World, fall outside the scope of the supply agreement. Because the dispute between Del Monte and Nova World clearly fall within the scope of the supply agreement, they are subject to the arbitration clause."

Although "it is not at all clear" why the parties failed to meet within 10 days of the start of the dispute, as their contract requires, Nova World's demand for arbitration is not premature, Kelly ruled.

The parties have 14 days to appeal Kelly's order.

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