A California federal court has rejected in part and granted in part Total Sweeteners Inc.’s motion for summary judgment in a case alleging that the molasses supplier sold American Licorice Co. shipments tainted with lead that American Licorice then used to create Red Vines black licorice candy, resulting in a costly recall. Am. Licorice Co. v. Total Sweeteners Inc., No. 13-1929 (U.S. Dist. Ct., N.D. Cal., order entered October 22, 2014). Additional details about the case appear in Issue 494 of this Update.
American Licorice argued that, under the sales contract, Total Sweeteners was obliged to provide molasses that complied with state and federal regulations; Total Sweeteners asserted that American Licorice knew that molasses has some naturally occurring lead and should have tested for it upon receipt. The court focused on the contract, agreeing with Total Sweeteners that the sales contract between the parties, and not a subsequent purchase order with terms favorable to the licorice maker, governed American Licorice’s purchases. The court also determined that a contractual limitation on consequential damages applied to the claims. The court refused, however, to rule as a matter of law that American Licorice had waived its rights under the contract by failing to notify Total Sweeteners about any problems within 45 days of receiving the product. According to the court, whether the 45-day time limit was reasonable presented a genuine issue of material fact. The court also found that the sales contract did not, as Total Sweeteners argued, effectively disclaim express and implied warranties.