A Michigan federal court has denied The International Group Inc.’s (IGI’s) motion for summary judgment in a case alleging that the wax maker and FPC Flexible Packaging Corp. provided Kellogg with non-merchantable cereal bags. Kellogg Co. v. FPC Flexible Packaging Corp., No. 11-272 (U.S. Dist. Ct., W.D. Mich., order entered September 30, 2014). IGI supplied wax to FPC, which used it to construct cereal bags sold to Kellogg. The bags were then used as liners in boxes of Corn Pops, Froot Loops, Apple Jacks, and Honey Smacks, and after consumers complained of nausea and diarrhea, Kellogg destroyed its inventory of the cereals and issued vouchers to consumers who had already purchased boxes.

After ruling that Canadian law applied, the court assessed the contract between FPC and IGI, determining when it began, what terms were implicit and what warranties existed as a result. “Questions of fact exist as to whether the wax was merchantable,” the court found, and thus held that summary judgment was inappropriate. Details about a rejected spoliation motion in the case appear in Issue 534 of this Update.