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Odwalla Pleads Guilty, Will Pay $1.5 Million in Juice Case

July 24, 1998|From Times Wire Services

Odwalla Inc., whose tainted apple juice killed a baby and sickened dozens of other people in 1996, has pleaded guilty to criminal charges and will pay a $1.5-million fine, the biggest ever in a food-poisoning case, officials said Thursday.

The company, based in Half Moon Bay, agreed to plead guilty to 16 counts of shipping an adulterated food product after an outbreak of bacteria traced to its juice, according to the U.S. attorney's office in Fresno.

Federal officials said the agreement marked the nation's largest criminal fine for a food-injury case.

"The plea entered today sends a strong message: The government will vigorously prosecute those individuals and firms who jeopardize the safety of our nation's food supply," the Food and Drug Administration said in a statement.

Odwalla stock, which is trading at half its pre-outbreak high, closed at $12.50, up 75 cents, on Nasdaq.

The agreement brought to a close a 14-month federal investigation of the E. coli outbreak that killed a 16-month-old Denver girl and sickened at least 66 people in the western United States and Canada.

The company also said it has settled 17 of the 21 civil lawsuits brought against it after the October 1996 outbreak.

The criminal and grand jury investigations found that the outbreak started in contaminated apple juice made at Odwalla's Dinuba plant south of Fresno.

Odwalla, the nation's largest fresh-juice producer, pleaded guilty to misdemeanor offenses. The company will serve five years of court-supervised probation, the U.S. attorney's office said.

"While [the agreement] closes a very painful chapter for our customers and our company, we will never forget the lessons we have learned," Odwalla said in a statement. "Our sympathies remain forever extended to the individuals and families who were affected by this incident."

Of the fine, $250,000 will go toward expanding research and increasing consumer awareness of the causes of food-borne disease.

The outbreak resulted from a batch of unpasteurized juice, and Odwalla said it now pasteurizes all apple juice.

The contamination prompted federal regulators to propose rules requiring processors to take steps against contamination and place warning labels on juice that hasn't undergone pasteurization, which kills disease-causing bacteria.

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