Sargento sues supplier after receiving cheese later recalled due to possible listeria contamination

Anticipates $42 million in damages from recall

By Ashley Smart

Mar 11, 2024 12:14 pm

Sargento's headquarters in Plymouth. Image courtesy of Sargento.

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Plymouth-based Sargento Foods is suing Modesto, California-based Rizo-Lopez Foods (RLF) for breach of contract after the company supplied Sargento with Cotija cheese that was later recalled due to a risk of listeria contamination. Sargento has incurred, and continues to incur, damages that the company expects to exceed $42 million, according to the lawsuit. On Jan. 24,

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Plymouth-based Sargento Foods is suing Modesto, California-based Rizo-Lopez Foods (RLF) for breach of contract after the company supplied Sargento with Cotija cheese that was later recalled due to a risk of listeria contamination. Sargento has incurred, and continues to incur, damages that the company expects to exceed $42 million, according to the lawsuit. On Jan. 24, RLF notified Sargento it was recalling a batch of aged Cotija Mexican Grating Cheese. RLF had been notified by Hawaii’s Department of Health that a single, 8-ounce package of the cheese tested positive for listeria. [caption id="attachment_586414" align="alignleft" width="300"]

The recalled Cotija cheese. Image courtesy of the FDA.[/caption] Before RLF’s recall, Sargento used the recalled product to produce a variety of its own cheese products, some of which was sold to other food manufacturers. Sargento was required to recall 10,498 cases of products it had already shipped to customers. The company was also forced to put 8,177 cases of finished products and 54,275 pounds of bulk products on hold. "While Sargento cannot yet fully determine the amount of damages it has suffered as a result of RLF’s recall, Sargento has documented at least $1,914,455.85 in damages to date," according to the complaint. "Upon information and belief, Sargento estimates that its damages caused by RLF’s recall will exceed $42 million." On Feb. 15, legal counsel for Sargento sent a letter to RLF demanding that the company compensate Sargento for losses caused by the recall. Last week, Sargento announced it had ended its business relationship with RLF. "To date, RLF has refused to reimburse Sargento for its costs and expenses directly caused by RLF’s recalled product, as required by the terms and conditions, or to acknowledge that contractual obligation," according to the complaint. Sargento is seeking a judgement that RLF breached a contract agreement between both companies by supplying products that were later recalled. Sargento is also seeking an order requiring RLF to repay the company for any damages it suffered from the recall, along with any future damages. In a Monday statement, RLF said this is the first time any of its products have been linked to a foodborne illness. "We regret the impact this has had on our loyal customers who have had to recall their products containing cheese we supplied to them," the company said in the statement. "We have always aimed to provide safe, high-quality products to our customers. We are working hard to find the root cause of the problem and take corrective actions to prevent it from happening again. We are committed to doing the right thing to protect the health of our consumers and will not resume production at our facility until we can deliver on that commitment. The health and well-being of our consumers is our top priority."