throbber
UNITED STATES DISTRICT COURT FOR THE
`EASTERN DISTRICT OF WISCONSIN
`
`
`
`
`Court File No. ____________
`
`
`
`
`COMPLAINT
`
`
`Liguria Foods, LLC,
`
`
`
`vs.
`
`Palermo Villa, Inc.,
`
`
`
`
`Plaintiff,
`
`Defendant.
`
`
`Liguria Foods, LLC, as and for its Complaint against Palermo Villa, Inc., states and alleges
`
`as follows:
`
`PRELIMINARY STATEMENT
`
`1.
`
`This lawsuit concerns Palermo Villa, Inc.’s (“Palermo”) failure to pay Liguria
`
`Foods, LLC’s (“Liguria Foods”) for agreed-upon deliveries of more than $500,000 of pepperoni
`
`that it received from Liguria Foods in 2019.
`
`2.
`
`Specifically, Liguria Foods seeks to recover $528,485.76 arising from separate
`
`purchase orders issued by Palermo for which it never paid, plus interest and any costs allowable
`
`by contract or other applicable law.
`
`3.
`
`Additionally, Liguria Foods seeks to recover damages associated with Palermo’s
`
`fraudulent misrepresentations related to Liguria Foods product.
`
`4.
`
`On information and belief, in early-2019, Palermo lost control of its own operations
`
`and began producing contaminated frozen pizzas.
`
`5.
`
`Rather than remedy its own food-safety failure, Palermo embarked on a nearly
`
`three-year fraudulent quest to wrongfully assign responsibility to Liguria Foods.
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 1 of 18 Document 1
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`

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`6.
`
`On information and belief, Palermo knew Liguria Foods was not the source of
`
`the contamination.
`
`7.
`
`Now, after an exhaustive examination, which included testing by Palermo of the
`
`pepperoni, Liguria Foods and Palermo have adduced irrefutable proof that Liguria Foods is not—
`
`and never was—the source of any of the contamination alleged by Palermo.
`
`8.
`
`Despite this confirmation, Palermo persists in its efforts to assign blame to Liguria
`
`Foods, and Palermo continues to refuse to pay money rightfully owed to Liguria Foods for the
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`pepperoni it received in 2019.
`
`JURISDICTION
`
`9.
`
`This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1), in that this is a civil
`
`action between citizens of Iowa and Wisconsin, and the amount in controversy exceeds $75,000,
`
`exclusive of interest and costs.
`
`VENUE
`
`10.
`
`Venue is proper in this district under 28 U.S.C. § 1391(b)(1) and 28 U.S.C.
`
`§ 1391(b)(2), in that Palermo is a resident of this district and a substantial part of the events or
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`omissions giving rise to the claims occurred in this district.
`
`PARTIES
`
`11.
`
`Liguria Foods is a limited liability company formed under the laws of Delaware
`
`and does business in Humboldt, Iowa.
`
`12.
`
`None of Liguria Foods’ members, up to and including its ultimate parent
`
`corporation, Chef Holdings, Inc., are citizens of Wisconsin.
`
`13.
`
`Upon information and belief, Palermo is a Wisconsin corporation, with its principal
`
`place of business in Milwaukee, Wisconsin.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 2 of 18 Document 1
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`2
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`

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`I.
`
`Background on Liguria Foods.
`
`FACTS
`
`14.
`
`Liguria Foods is a leading provider of premium quality meat toppings, including
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`what many consider to be the market’s best pepperoni.
`
`15.
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`Founded in 1974, Liguria Foods specializes in supporting food service customers.
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`To that end, Liguria Foods creates quality pepperoni, salami, and other products for quality-
`
`minded pizzerias and sandwich shops that seek authentic Italian pepperoni and Italian-
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`specialty meats.
`
`16.
`
`In 2016, Liguria Foods began its next chapter when it was acquired by its current
`
`parent company, CTI Foods, LLC, a leading provider of custom food solutions to America’s top
`
`restaurant chains.
`
`17.
`
`Today, Liguria Foods continues to operate out of its Humboldt, Iowa facility,
`
`supplying more than twenty million pounds of pepperoni and other Italian-specialty meats per year
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`to dozens of customers across the United States.
`
`II.
`
`Liguria Foods’ Overarching and Consistent Commitment to Food Safety.
`
`18.
`
`19.
`
`Food safety is of the utmost priority to Liguria Foods.
`
`Liguria Foods maintains a robust system of daily top-to-bottom sanitation,
`
`microbiology testing, equipment inspection, facility inspection, and general quality protocols to
`
`guarantee that its products are safe for human consumption.
`
`20.
`
`21.
`
`Liguria Foods undergoes routine inspections and audits.
`
` As a United States Department of Agriculture (“USDA”) regulated entity, Liguria
`
`Foods is subject to regular governmental inspection, and USDA officials even maintain offices
`
`onsite to access Liguria Foods’ production areas.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 3 of 18 Document 1
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`3
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`22.
`
`Liguria Foods conducts a Good Manufacturing Processes audit once each month,
`
`and it is subject to a third-party Global Foods Safety Initiative audit annually.
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`23. With respect to foreign material contamination, Liguria Foods maintains numerous
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`mechanisms to prevent contamination.
`
`24.
`
`Everything from Liguria Foods’ employee dress code, to its materials-handling
`
`guidelines, to its daily preoperational inspection of the facility is designed to make sure that foreign
`
`material never ends up inside Liguria Foods’ product.
`
`25.
`
`Blue belting and other means of conveying product are inspected daily, and the
`
`results of the inspection are recorded. If a blue belt shows any signs of wear, it will be cut down
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`to create a food-safe surface that cannot tear or crumble into the product.
`
`26.
`
`Liguria Foods maintains metal detectors at various critical intercept points along
`
`the production line. If the metal detector detects metal in the product, the product is
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`automatically rejected.
`
`27.
`
`Liguria Foods stands behind its product and provides customers with a guarantee
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`that the product leaving the facility is safe for human consumption and is unadulterated.
`
`III.
`
`Palermo Falsely Accuses Liguria Foods of Selling Contaminated Product.
`
`28.
`
`Liguria Foods has done business with Palermo since 2016, pursuant to a Master
`
`Supply Agreement.
`
`29.
`
`On or about April 19, 2019, Palermo notified Liguria Foods that it discovered what
`
`was described as “blue plastic” on pepperoni provided to Palermo by Liguria Foods. The discovery
`
`allegedly was made while slicing pepperoni for use on frozen pizzas.
`
`30.
`
`Palermo alleged, but provided no evidence, that blue belting was discovered during
`
`slicing of the pepperoni sticks provided by Liguria Foods.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 4 of 18 Document 1
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`4
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`

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`31.
`
`Palermo claimed that the blue belting was embedded in the pepperoni, but it
`
`provided no proof of that allegation.
`
`32.
`
`Subsequent investigation indicated that the blue belting was found resting on top
`
`of the pepperoni and was not embedded, as Palermo initially claimed.
`
`33.
`
`On information and belief, Palermo did not undertake a good faith investigation to
`
`determine if Palermo was the source of the contamination.
`
`34.
`
`Palermo’s lack of investigation is underscored by the fact that it took less than
`
`twenty-four hours to notify Liguria Foods that it concluded Liguria Foods was the sole and
`
`exclusive source of the contamination.
`
`35.
`
`In making this accusation, Palermo did not offer Liguria Foods any evidence that
`
`Palermo had undertaken its own investigation.
`
`36.
`
`Palermo also did not offer any evidence that it had taken any steps to disqualify
`
`Palermo’s own systems or other ingredients utilized in the contaminated pizzas as the source of
`
`the contamination.
`
`IV.
`
`Palermo Ordered and Accepted Additional Liguria Foods Product Without Paying.
`
`37.
`
`At the same time that Palermo was accusing Liguria Foods of selling contaminated
`
`product, Palermo continued ordering product from Liguria Foods.
`
`38.
`
`From February 12, 2019 through approximately May 1, 2019, Palermo submitted
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`separate purchase orders for pepperoni to Liguria Foods.
`
`39.
`
`Of the purchase orders, five were issued and nine were fulfilled after Palermo
`
`accused Liguria Foods of selling contaminated product.
`
`40.
`
`Liguria Foods shipped pepperoni product to Palermo between April 15, 2019 and
`
`May 28, 2019.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 5 of 18 Document 1
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`5
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`41.
`
`Liguria Foods invoiced Palermo for the pepperoni on the date the product was
`
`shipped. Copies of Liguria Foods’ invoices are attached as Exhibit A.
`
`42.
`
`In total, Palermo was invoiced $528,485.76 for product shipped by Liguria Foods
`
`to Palermo.
`
`43.
`
`Liguria Foods satisfied the purchase orders by delivering pepperoni product
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`to Palermo.
`
`44.
`
`After receiving the pepperoni it ordered and despite Liguria Foods demand for
`
`payment, Palermo failed and refused to pay the invoiced amounts.
`
`45.
`
`On information and belief, Palermo retained the pepperoni, used the pepperoni in
`
`manufacturing its pizzas, and received profits on the pepperoni from its customers.
`
`46.
`
`47.
`
`Liguria Foods has never waived payment of the invoiced amounts.
`
`As of the date of this filing, Palermo still has not paid the invoiced amounts due or
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`any of the interest accrued on those amounts.
`
`V.
`
`Liguria Foods Immediately and Exhaustively Investigated Palermo’s Allegations.
`
`48.
`
`Liguria Foods did not allow Palermo’s lack of evidence to interfere with its
`
`commitment to conduct a prompt and complete investigation into all customer complaints.
`
`49.
`
`Liguria Foods immediately commenced a comprehensive investigation of the
`
`production runs that produced the allegedly contaminated product.
`
`50.
`
`On April 20, 2019, the day after learning of the alleged contamination, Liguria
`
`Foods assembled a team and began gathering all quality documentation, production records,
`
`inspection records, and belt check information for the production runs at issue. This review, which
`
`included a cross reference against each of the suspect production runs, did not reveal any possible
`
`sources of contamination within the Liguria Foods facility.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 6 of 18 Document 1
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`6
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`

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`51.
`
`Liguria Foods further confirmed that it did not receive any other reports of blue belt
`
`contamination from other customers or from its own quality assurance process.
`
`52.
`
`Liguria Foods pressed forward beyond this initial review to make sure it was not
`
`the source of the contamination.
`
`53.
`
`Liguria Foods engaged Micro Materials Research, Inc. (“MMR”), a third-party
`
`materials expert, to examine the sample of foreign material provided by Palermo against a sample
`
`of the blue belting used by Liguria Foods for the production runs at issue.
`
`54. MMR conducted a forensic examination of both samples.
`
`55. MMR’s forensic microscopic analysis found that the blue belting from Liguria
`
`Foods bore a pattern (diamonds) that did not match the pattern on Palermo’s sample (hexagons).
`
`56.
`
`On April 24, 2019, the USDA Food Safety Inspection Service visited Liguria Foods
`
`to investigate Palermo’s allegations.
`
`57.
`
`58.
`
`Liguria Foods cooperated in the USDA investigation.
`
`The USDA investigation did not identify any sources of contamination at the
`
`Liguria Foods facility.
`
`59.
`
`The USDA inspector responsible for the Palermo investigation reported to Liguria
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`Foods that, among other things, the blue belting identified by Palermo did not appear to be
`
`embedded in the allegedly contaminated product. Instead, the blue belting appeared to be sitting
`
`on the surface of the product.
`
`60.
`
`61.
`
`Palermo requested access to Liguria Foods’ facility.
`
`In response, Liguria Foods agreed to give Palermo broad access to its facility, while
`
`Palermo agreed to allow Liguria Foods to access Palermo’s facility, if the contamination could not
`
`be located on Liguria Foods’ production line.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 7 of 18 Document 1
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`7
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`

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`62.
`
`On or about April 25 and 26, 2019, Palermo’s director of quality assurance visited
`
`the Liguria Foods facility.
`
`63.
`
`64.
`
`Palermo’s representative was given full access to the facility.
`
`After the visit, Palermo’s representative did not report any potential sources of
`
`contamination to Liguria Foods, despite being permitted to engage in a thorough inspection.
`
`65.
`
`Faced with mounting evidence that Liguria Foods was not responsible for the blue
`
`belting contamination, Palermo next claimed that Liguria Foods’ product had been contaminated
`
`by metal.
`
`66.
`
`Liguria Foods performed an inspection and did not find any possible sources of
`
`metal contamination on its line or in its records.
`
`67.
`
`Liguria Foods further investigated whether the metal samples provided by Palermo
`
`originated at the Liguria Foods facility.
`
`68.
`
`In May 2019, metal was sent to Dr. Mark Germani, a third-party metallurgy expert
`
`with MMR, for comparison and composition testing against numerous metal samples taken from
`
`the full length of Liguria Foods’ production line.
`
`69.
`
`Dr. Germani found that Palermo’s sample did not match any of the metal samples
`
`taken from the Liguria Foods facility.
`
`VI.
`
`
`Palermo Denies Liguria Foods the Opportunity to Inspect Palermo’s Facility.
`
`70.
`
`Liguria Foods kept Palermo apprised of every development in its ongoing effort to
`
`investigate the alleged contamination.
`
`71.
`
`Liguria Foods provided Palermo with a substantial volume of documents
`
`memorializing the production processes implicated by the suspect production runs.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 8 of 18 Document 1
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`8
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`

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`72.
`
`After exhausting all the avenues described above, Liguria Foods requested
`
`permission to inspect Palermo’s facility for other possible sources of contamination.
`
`73.
`
`74.
`
`Palermo denied Liguria Foods’ request for an inspection.
`
`Liguria Foods was denied the opportunity to investigate Palermo’s facility, which
`
`was the same opportunity that Liguria Foods readily granted to Palermo.
`
`75.
`
`On information and belief, Palermo had actual or constructive knowledge of the
`
`source of the contamination at this time, and it knew that Liguria Foods was not the source.
`
`76.
`
`On information and belief, Palermo refused to allow Liguria Foods access to the
`
`Palermo facility in order to hide defects in its own processes, which would have demonstrated that
`
`Liguria Foods was not responsible for the contamination.
`
`77.
`
`Despite these setbacks, Liguria Foods continued its dialogue with Palermo through
`
`September 2019.
`
`78.
`
`During this time, Palermo never allowed Liguria Foods access to Palermo’s facility
`
`and it failed to produce any evidence showing that Liguria Foods was the source of
`
`the contamination.
`
`79.
`
`The parties discussed—but Palermo consistently refused to assent to—testing of
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`the remaining pepperoni to determine if any contaminants could be found embedded in the product.
`
`80.
`
`Liguria Foods made clear that it intended to abide by the results of such testing on
`
`the question of contamination if testing was conducted by mutual agreement.
`
`81.
`
`On information and belief, Palermo declined to agree to such testing because it had
`
`reason to believe that the results would exonerate Liguria Foods and, thereby, implicate Palermo’s
`
`own manufacturing process as the real source of the contamination.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 9 of 18 Document 1
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`9
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`82.
`
`Instead of completing the required investigation, Palermo stopped communicating
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`with Liguria Foods in September 2019.
`
`83.
`
`Palermo then did nothing to advance its purported contamination claim until
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`May 2020.
`
`84.
`
`On information and belief, Palermo neglected its purported claim during this time
`
`period because it did not believe that Liguria Foods was responsible for the contamination.
`
`VII. Palermo Continued Making False Accusations While Letting Its Claim Languish for
`Two More Years.
`
`85.
`
`On or about May 6, 2020, after no communication for nearly nine months, Palermo
`
`
`
`sent Liguria Foods a demand letter seeking more than $4 million in alleged damages.
`
`86.
`
`Palermo’s demand letter claimed everything from the value of the purchased
`
`product, to the costs of Palermo’s already existing coupon promotion, to the cost of attending one
`
`of their customer’s golf tournaments.
`
`87.
`
`The reason for this timing raised significant questions about the validity of
`
`Palermo’s demand. Indeed, it appeared that in the midst of the COVID-19 pandemic, Palermo
`
`thought it could offset the costs of its poor business practices by attempting to revive its baseless
`
`claims against Liguria Foods.
`
`88.
`
`On information and belief, Palermo’s own shoddy business practices and history of
`
`falsely blaming suppliers for Palermo’s own contamination problems had harmed its major
`
`customer relationships.
`
`89.
`
`90.
`
`As a result, Palermo sought to use Liguria Foods as a scapegoat.
`
`Despite its suspicions regarding the timing of Palermo’s demand, Liguria Foods
`
`again raised the prospect of conducting testing of the preserved product to determine if
`
`contaminants could be found embedded in the individual pepperoni sticks.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 10 of 18 Document 1
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`10
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`91.
`
`92.
`
`93.
`
`Once again, Palermo refused to commit to engage in such testing.
`
`Palermo then stopped communicating with Liguria Foods.
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`Palermo did not resurface until March 5, 2021. This time, Palermo reached out with
`
`an “updated” demand reducing its claim from $4 million to $2.85 million.
`
`94.
`
`95.
`
`96.
`
`As it did in 2020, Liguria Foods requested testing. Yet again, Palermo demurred.
`
`On June 8, 2021, Palermo adjusted its demand further downward to $2.6 million.
`
`Liguria Foods refused to take action on any of Palermo’s demands until the product
`
`was tested and Palermo adduced proof that Liguria Foods was responsible.
`
`97.
`
`Palermo was never able to produce such proof.
`
`VIII. Palermo Attempted to Surprise Liguria Foods With Unilateral Testing.
`
`98.
`
`For more than two years, Liguria Foods asked Palermo to test the preserved lots of
`
`product allegedly containing the contaminants underlying this entire dispute. For more two years,
`
`those requests were ignored.
`
`99.
`
`On July 1, 2021, Palermo notified Liguria Foods that it would conduct destructive
`
`testing of the product on July 8, 2021.
`
`100. Palermo made no effort to include Liguria Foods in the process of developing an
`
`experimental protocol. Instead, Palermo selected the experts to conduct the testing, the method of
`
`sampling, the method of testing, and the date of testing without any input from Liguria Foods.
`
`101. Liguria Foods immediately responded by informing Palermo that it must, at a
`
`minimum, be permitted to observe the destructive testing and be provided with a copy of the
`
`resulting report.
`
`102. Palermo ultimately allowed Liguria Foods’ expert to attend the testing.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 11 of 18 Document 1
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`11
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`103. Tellingly, Palermo would not agree to provide a copy of the report and it reserved
`
`the right to withhold the report.
`
`104. When the testing revealed no contamination, Palermo did not provide a copy of the
`
`report to Liguria Foods.
`
`IX.
`
`
`
`Palermo’s Own Testing Revealed No Evidence of Contamination of the Liguria
`Foods Products.
`
`105. Testing of the Liguria Foods product started on August 2, 2021.
`
`106. First, Palermo’s outside experts utilized a statistical sampling methodology to pull
`
`sample pepperoni sticks from throughout the preserved product.
`
`107. Palermo unilaterally decided upon the sampling methodology.
`
`108. Second, the same experts then took uniform cuttings of each of the sample
`
`pepperoni sticks under laboratory conditions according to Palermo’s specifications.
`
`109. Liguria Foods’ expert, Gale Prince, observed the cutting process. He observed that
`
`the resulting cuttings were taken consistent with Palermo’s unilaterally determined methodology.
`
`He further confirmed that the resulting samples conformed to Palermo’s sizing specifications.
`
`110. Mr. Prince reported that the cuttings did not reveal any visible contaminants,
`
`including blue plastic or metal fragments. Mr. Prince also reported that the cutting process did not
`
`yield any other indications of contamination during the cutting process, such as sparks that could
`
`be caused by a cutting blade hitting metal in a product.
`
`111. Mr. Prince’s observations accurately reflected the condition of the pepperoni.
`
`112. Palermo next subjected the individual cuttings to microscopic review. This expert
`
`analysis failed to find any evidence of contaminants, including, but not limited, to blue belting or
`
`metal fragments.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 12 of 18 Document 1
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`12
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`113. Following completion of the testing, Palermo stopped communicating with
`
`Liguria Foods.
`
`114. On information and belief, Palermo held the test results and did not share them with
`
`Liguria Foods for over a week.
`
`115. Liguria Foods only learned of the results of the testing after numerous calls and
`
`letters to Palermo went unanswered and Liguria’s counsel happened to reach Palermo’s counsel.
`
`X.
`
`
`
`Palermo Persisted With False Allegations and Failed to Make Payment to
`Liguria Foods.
`
`116. After more than two years, all investigative efforts showed that Liguria Foods had
`
`no responsibility for the contamination.
`
`117. The contaminants did not match Liguria Foods’ equipment, no issues were found
`
`when Liguria Foods’ equipment was inspected, and scientific analysis could not link the alleged
`
`contaminants to Liguria Foods in any way.
`
`118. Palermo’s self-tailored sampling and testing not only failed to confirm
`
`contamination, it provided proof that Palermo falsely accused Liguria Foods from the outset.
`
`119. Faced with this mountain of evidence, Palermo refused to backdown from its now-
`
`disproven allegations.
`
`120. Without providing any meaningful evidence, Palermo continues to falsely state that
`
`Liguria Foods provided contaminated product.
`
`121. Palermo continues to withhold more than $500,000 in payments owed to
`
`Liguria Foods—an amount nearly identical to the amounts Palermo paid to Liguria Foods for the
`
`allegedly contaminated product.
`
`122. On information and belief, Palermo has engaged in an outright fraud to retain the
`
`benefits of Liguria Foods’ product shipments without paying for them.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 13 of 18 Document 1
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`13
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`123. At the same time, on information and belief, Palermo kept up its charade to attempt
`
`to avoid the negative consequences of its own failures and to secure insurance coverage by blaming
`
`Liguria Foods rather than taking responsibility for its failure to deliver safe and unadulterated
`
`product to its customers.
`
`COUNT I – BREACH OF CONTRACT
`
`124. Liguria Foods realleges paragraphs 1 through 123 as if fully set forth herein.
`
`125. Liguria Foods entered into the Master Supply Agreement with Palermo.
`
`126. Pursuant to that Master Supply Agreement, Palermo submitted a series of separate
`
`purchase orders to Liguria Foods for purposes of obtaining pepperoni.
`
`127. Liguria Foods delivered pepperoni to Palermo consistent with those purchase
`
`orders and invoiced Palermo for those shipments.
`
`128. Palermo never paid the amounts due and owing.
`
`129. Palermo breached the Master Supply Agreement and the purchase orders by
`
`accepting delivery of the pepperoni and failing to pay Liguria Foods for the product.
`
`130. As a result of Palermo’s multiple breaches of contract, Liguria Foods has incurred
`
`damages totaling $528,485.76, as well as interest on the unpaid amounts.
`
`131. Palermo is liable to Liguria Foods for breach of contract in the amount $528,485.76,
`
`not including interest and other recoverable costs.
`
`COUNT II – UNJUST ENRICHMENT
`
`132. Liguria Foods realleges paragraphs 1 through 131 as if fully set forth herein.
`
`133. By accepting Liguria Foods’ pepperoni product and refusing to pay for it, Palermo
`
`received a benefit to which it was not entitled.
`
`134. Palermo appreciated the fact of the benefit it received by obtaining the pepperoni.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 14 of 18 Document 1
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`135. Palermo’s acceptance and retention of the benefit conferred by Liguria Foods is
`
`inequitable such that it is improper and wrongful for Palermo to retain the benefit of Liguria Foods’
`
`product without payment of the value thereof.
`
`136. Palermo has been unjustly enriched based on its failure to pay Liguria Foods for
`
`the pepperoni product it ordered and Liguria Foods delivered.
`
`137. Liguria Foods has suffered damages in an amount totaling $528,485.76, exclusive
`
`of interest and costs.
`
`COUNT III – ACCOUNT STATED
`
`138. Liguria Foods realleges paragraphs 1 through 137 as if fully set forth herein.
`
`139. By not requiring payment for the product in advance and by not requiring Palermo
`
`immediately to pay for the product delivered under the Master Supply Agreement and the purchase
`
`orders, Liguria Foods was expecting payment on credit.
`
`140. Palermo established an account with Liguria Foods after receiving regular invoices
`
`and statements from Liguria Foods.
`
`141. Palermo received the invoices and statements from Liguria Foods related to the
`
`pepperoni product delivered and failed to object to the invoices within a reasonable time period.
`
`142. The time to object to Liguria Foods’ invoices and statements has passed, and there
`
`is currently an unpaid balance on the account, due and owing to Liguria Foods, in the amount of
`
`$528,485.76, plus interest.
`
`COUNT IV – NEGLIGENT MISREPRESENTATION
`
`143. Liguria Foods realleges paragraphs 1 through 142 as if fully set forth herein.
`
`144. Palermo made misrepresentations of fact by claiming that Liguria Foods’ pepperoni
`
`was contaminated.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 15 of 18 Document 1
`
`15
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`

`

`145. At the time Palermo claimed Liguria Foods’ pepperoni was contaminated, those
`
`representations were untrue.
`
`146. Palermo was negligent in making said misrepresentations.
`
`147. Palermo continued making misrepresentations related to the inspection of
`
`the product.
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`148. Liguria Foods believed Palermo’s representation were true and relied on them, all
`
`the while incurring costs to investigate Palermo’s allegations.
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`149. Liguria Foods has suffered damages resulting from Palermo’s negligent
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`misrepresentation, including, but not limited to, the loss of salable product, inventory costs, loss
`
`of margin, and storage costs incurred in an amount totaling in excess of $528,485.76, exclusive of
`
`interest and costs.
`
`COUNT V – FRAUD
`
`150. Liguria Foods realleges paragraphs 1 through 149 as if fully set forth herein.
`
`151. Palermo made misrepresentations by claiming that Liguria Foods’ pepperoni
`
`was contaminated.
`
`152. At the time Palermo claimed Liguria Foods’ pepperoni was contaminated, those
`
`representations were untrue.
`
`153. Palermo either knew its representations were untrue or made them recklessly
`
`without caring whether they were true or false.
`
`154. Palermo’s misrepresentations were made with intent to defraud and to induce
`
`Liguria Foods to pay for damages it did not cause.
`
`155. Palermo continued making intentional and fraudulent misrepresentations related to
`
`the inspection of the product.
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 16 of 18 Document 1
`
`16
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`

`

`156. Liguria Foods believed Palermo’s statements to be true and relied upon them to its
`
`detriment, all the while incurring costs to investigate Palermo’s allegations.
`
`157.
`
`In addition to the misrepresentations detailed above, Palermo submitted purchase
`
`orders to Liguria Foods for pepperoni product in the approximate amount of the product it alleged
`
`was contaminated.
`
`158. As part of those purchase orders, Palermo represented it would pay for the
`
`delivered product.
`
`159. At the time of its representations, Palermo knew that it would not pay for
`
`the pepperoni.
`
`160. Palermo intended Liguria Foods to rely on its misrepresentations and deliver more
`
`than $500,000 in pepperoni.
`
`161. Liguria Foods reasonably relied on Palermo’s fraudulent representations and
`
`delivered the pepperoni to Palermo.
`
`162. Contrary to its representations, and consistent with its plan to defraud Liguria Foods
`
`out of more than $500,000 in pepperoni, Palermo failed and refused to pay for the pepperoni.
`
`163. Liguria Foods has suffered damages, including, but not limited to, the loss of
`
`salable product, inventory costs, loss of margin, and storage costs incurred in an amount totaling
`
`in excess of $528,485.76, exclusive of interest and costs.
`
`
`
`
`
`
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 17 of 18 Document 1
`
`17
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`

`

`WHEREFORE, Liguria Foods, LLC, requests the entry of judgment in its favor and
`
`against Palermo Villa, Inc. as follows:
`
`A. Awarding damages in favor of Liguria Foods in an amount in excess
`
`of $528,485.76;
`
`B. Granting Liguria Foods its attorneys’ fees, costs, pre- and post-judgment interest,
`
`interest, and disbursements incurred herein; and
`
`C.
`
`Such other and further relief as the Court deems just and proper.
`
`Dated: September 29, 2021
`
`
`
`
`
`
`
`FOX ROTHSCHILD LLP
`
`
`
`
`
`
`
`
`
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`
`
`
`
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`
`
`By: John C. Ekman
`John C. Ekman, ID No. 1031034
`Michael T. Burke, ID No. 1116925
`
`
`
`Two22 Building, Suite 2000
`222 South Ninth Street
`Minneapolis, Minnesota 55402
`Telephone: (612) 607-7000
`Facsimile: (612) 607-7100
`jekman@foxrothschild.com
`mtburke@foxrothschild.com
`
`Attorneys for Liguria Foods, LLC
`
`Case 2:21-cv-01127-NJ Filed 09/29/21 Page 18 of 18 Document 1
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`18
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`

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