Innovative Solutions International Inc V. Houlihan Trading Co Inc Et Al

Case Background

On March 10, 2022, Plaintiff Innovative Solutions International Inc. filed a product liability lawsuit for negligent misrepresentation of chicken products—products that Defendants labeled and represented to be boneless, but in fact, contained excessive bones.

Plaintiff brought consumer protection act violation and negligent misrepresentation claims against Houlihan Trading Company, Inc., Marcus Technologies LLC, Brighton Group, LLC, Cook International Trade & Brokerage, Inc., Shumaker International Corporation, North South Foods Group, Inc., Henley’s Wholesale Meats, Inc., Pilgrim’s Pride Corporation, and unnamed Doe Defendants.

The lawsuit was filed in the United States District Court, Washington Western (Seattle). U.S. District Judge John C. Coughenour presided over this case. [Case number: 2:22cv296]

Cause

Innovative, a family-owned company based in Washington, produced over 30 poultry and meat products distributed nationwide. For 15 years, it exclusively supplied Trader Joe’s with the highly popular Chile Lime Chicken Burgers. These boneless burgers required high-quality, boneless raw chicken materials, which Innovative also uses in its other boneless chicken products.

Between July and September 2021, Innovative purchased chicken products from Houlihan Trading Company, Inc. Houlihan explicitly represented these products as boneless. While Houlihan sold the products to Innovative, Pilgrim’s Pride Corporation produced, prepared, and packaged them. Other supply chain companies handled the products before Houlihan’s possession. After receiving the shipments, Innovative used the chicken to produce Chile Lime Chicken Burgers and other boneless products.

In September 2021, Trader Joe’s customers began reporting bones and bone fragments in the Chile Lime Chicken Burgers. Following these complaints, Innovative conducted tests and inspections. It confirmed that the chicken products purchased from Houlihan during the summer contained excessive bones. This discovery led to a recall of the affected products.

In December 2021, Trader Joe’s terminated its business relationship with Innovative due to the adulterated chicken. As a result, Trader Joe’s discontinued the Chile Lime Chicken Burgers, ending a 15-year partnership.

Damages

The mislabeled shipments caused severe financial losses for Innovative, including unsellable inventory and damaged relationships. Despite informing Pilgrim’s of the issue, the supplier denied responsibility. Innovative estimated its losses exceeded $5 million, encompassing recall costs and the termination of its Trader Joe’s contract.

Key Arguments and Proceedings

Legal Representation

  • Plaintiff(s): Innovative Solutions International Inc.
    • Counsel for Plaintiff(s): Janjeera S Hail | Elizabeth H White | Emaan Reza Jaberi | Henry G Ross | Madisyn Uekawa | Philip M Guess
  • Defendant(s): Pilgrim’s Pride Corporation | Houlihan Trading Co Inc | Marcus Technologies LLC [Terminated: 01/04/2023] | Brighton Group, LLC [Terminated: 01/06/2023] | Shumaker International Corporation [Terminated: 08/23/2022] | Cook International Trade & Brokerage, Inc. [Terminated: 02/16/2023] | North South Food Groups, Inc. [Terminated: 11/17/2023] | Henley’s Wholesale Meats, Inc. [Terminated: 08/23/2022]
    • Counsel for Defendant(s): Bennett J Hansen and Daniel W Rankin for Houlihan Trading Co Inc | Daniel E Blegen, Kevin M Kuhlman, Sarah K Hobbs, and Theo A Lesczynski for Pilgrim’s Pride Corporation

Claims

Count I: Breach of Contract (Against Defendant Houlihan)

Innovative fulfilled all its obligations under its agreement with Houlihan. However, Houlihan breached the contract by delivering chicken products that did not meet the agreed specifications. Specifically, the products contained numerous bones and excessive bone fragments, despite the agreement requiring boneless chicken. This breach was significant and struck at the core of the contract.

Count II: Breach of Express Warranty (Against All Defendants)

Defendants explicitly promised that the chicken products would be boneless. These promises came through labels, verbal assurances, and other communications. Innovative relied on these warranties as a fundamental part of the agreement. However, Defendants failed to meet these assurances.

Count III: Breach of Implied Warranty (Against All Defendants)

Before delivery, Defendants knew Innovative needed the chicken to produce boneless, consumer-safe products. Defendants implicitly guaranteed the chicken was suitable for this purpose. Innovative trusted Defendants to deliver products that met these needs. Yet, Defendants provided defective chicken that was unfit for production and unsafe for consumers.

Count IV: Negligent Misrepresentation (Against All Defendants)

Defendants marketed and labeled the chicken as boneless in their 2021 shipments. In doing so, they misrepresented key facts. Innovative relied on these representations when purchasing the product.

Count V: Negligence (Against All Defendants)

Defendants, as poultry distributors, had a duty to ensure their products were correctly labeled, safe, and sourced reliably. A reasonable distributor would inspect products and verify their quality. Defendants breached this duty by providing mislabeled chicken with excessive bones, rendering it unsafe. Their failure foreseeably caused damages to Innovative.

Count VI: Violation of Washington’s Consumer Protection Act (Against All Defendants)

Defendants engaged in unfair and deceptive practices by misrepresenting the chicken as boneless. These actions had the capacity to deceive the public and posed a health risk, such as choking. Defendants’ conduct harmed Innovative’s business and property.

Defendant Houlihan filed a cross-complaint against Pilgrim alleging breach of express warranty.

Defense

Pilgrim’s responded to the claims from Innovative and Houlihan by presenting several defenses. First, it argued that Innovative knowingly accepted the risks involved in using its chicken products. Additionally, Pilgrim’s claimed that any damages suffered by Innovative and Houlihan resulted from their own actions or the actions of other parties outside Pilgrim’s control.

The company further contended that responsibility for the negligence and misrepresentation claims should be shared among all parties involved, including non-parties. Pilgrim’s also accused Innovative of acting negligently by contributing to the issue and failing to exercise proper care.

Moreover, Pilgrim’s alleged that both Innovative and Houlihan did not take reasonable steps to reduce their losses. It maintained that Houlihan, in particular, failed to notify Pilgrim’s about the product defects within a reasonable time after discovering—or when they should have discovered—the issue.

Jury Verdict

On December 11, 2024, the jury found in favor of Innovative Solutions on the counts of violation of the Washington Consumer Protection Act, negligence, and negligent misrepresentation. The jury assigned 100% of the fault to Pilgrim’s. The jury awarded Innovative Solutions $10.5 million.

Additionally, the Court also found that Pilgrim’s had breached an express warranty to Houlihan and awarded $1.5 million for this claim.

Court Documents:

Available for purchase upon request

Press Release:

K&L Gates