LIGURIA FOODS, LLC,
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`v.
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`PALERMO VILLA, INC.,
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`Plaintiff,
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`Defendant.
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`UNITED STATES DISTRICT COURT FOR THE
`EASTERN DISTRICT OF WISCONSIN
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`Case No. 2:21-cv-01127-JPS
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`PALERMO VILLA, INC.’S ANSWER TO COMPLAINT,
`AFFIRMATIVE DEFENSES, AND COUNTERCLAIMS
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`
`
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`Defendant, Palermo Villa, Inc., by its attorneys, Hennessy & Roach, P.C. and Hansen
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`Reynolds LLC, as and for its Answer to the Plaintiff’s Complaint, admits, denies, and affirmatively
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`alleges unto the Court as follows:
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`PRELIMINARY STATEMENT
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`1.
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`This lawsuit concerns Palermo Villa, Inc.’s (“Palermo”) failure to pay Liguria
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`Foods, LLC’s (“Liguria Foods”) for agreed-upon deliveries of more than $500,000 of pepperoni
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`that it received from Liguria Foods in 2019.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 1 and therefore denies the same.
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`2.
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`Specifically, Liguria Foods seeks to recover $528,485.76 arising from separate
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`purchase orders issued by Palermo for which it never paid, plus interest and any costs allowable
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`by contract or other applicable law.
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`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 1 of 39 Document 14
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`
`
`v.
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`PALERMO VILLA, INC.,
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`
`
`
`
`Plaintiff,
`
`Defendant.
`
`UNITED STATES DISTRICT COURT FOR THE
`EASTERN DISTRICT OF WISCONSIN
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`
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`Case No. 2:21-cv-01127-JPS
`
`PALERMO VILLA, INC.’S ANSWER TO COMPLAINT,
`AFFIRMATIVE DEFENSES, AND COUNTERCLAIMS
`
`
`
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`Defendant, Palermo Villa, Inc., by its attorneys, Hennessy & Roach, P.C. and Hansen
`
`Reynolds LLC, as and for its Answer to the Plaintiff’s Complaint, admits, denies, and affirmatively
`
`alleges unto the Court as follows:
`
`PRELIMINARY STATEMENT
`
`1.
`
`This lawsuit concerns Palermo Villa, Inc.’s (“Palermo”) failure to pay Liguria
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`Foods, LLC’s (“Liguria Foods”) for agreed-upon deliveries of more than $500,000 of pepperoni
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`that it received from Liguria Foods in 2019.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 1 and therefore denies the same.
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`2.
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`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.
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`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 1 of 39 Document 14
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 2 and therefore denies the same.
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`3.
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`Additionally, Liguria Foods seeks to recover damages associated with Palermo’s
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`fraudulent misrepresentations related to Liguria Foods product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 3 and therefore denies the same.
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`4.
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`On information and belief, in early-2019, Palermo lost control of its own
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`operations and began producing contaminated frozen pizzas.
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`ANSWER: Defendant denies the allegations contained in Paragraph 4.
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`5.
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`Rather than remedy its own food-safety failure, Palermo embarked on a nearly
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`three-year fraudulent quest to wrongfully assign responsibility to Liguria Foods.
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`ANSWER: Defendant denies the allegations contained in Paragraph 5.
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`6.
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`On information and belief, Palermo knew Liguria Foods was not the source of the
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`contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 6.
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`7.
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`Now, after an exhaustive examination, which included testing by Palermo of the
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`pepperoni, Liguria Foods and Palermo have adduced irrefutable proof that Liguria Foods is not—
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`and never was—the source of any of the contamination alleged by Palermo.
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`ANSWER: Defendant denies the allegations contained in Paragraph 7.
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`8.
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`Despite this confirmation, Palermo persists in its efforts to assign blame to Liguria
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`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.
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`ANSWER: Defendant denies the allegations contained in Paragraph 8.
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`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 2 of 39 Document 14
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`JURISDICTION
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`9.
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`This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1), in that this is a
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`civil action between citizens of Iowa and Wisconsin, and the amount in controversy exceeds
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`$75,000, exclusive of interest and costs.
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`ANSWER: To the extent that the allegations contained in Paragraph 9 are not pure
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`conclusions of law to which no answer is required, Defendant lacks knowledge or information
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`sufficient to form a belief as to the truthfulness of the allegations contained in Paragraph 9 and
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`therefore denies the same.
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`VENUE
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`10.
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`Venue is proper in this district under 28 U.S.C. § 1391(b)(1) and 28 U.S.C. §
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`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.
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`ANSWER: To the extent that the allegations contained in Paragraph 10 are not pure
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`conclusions of law to which no answer is required, Defendant lacks knowledge or information
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`sufficient to form a belief as to the truthfulness of the allegations contained in Paragraph 10 and
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`therefore denies the same.
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`PARTIES
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`11.
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`Liguria Foods is a limited liability company formed under the laws of Delaware and
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`does business in Humboldt, Iowa.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 11 and therefore denies the same.
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`12. None of Liguria Foods’ members, up to and including its ultimate parent
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`corporation, Chef Holdings, Inc., are citizens of Wisconsin.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 12 and therefore denies the same.
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`13. Upon information and belief, Palermo is a Wisconsin corporation, with its
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`principal place of business in Milwaukee, Wisconsin.
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`ANSWER: Admit.
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`FACTS
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`I.
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`Background on Liguria Foods.
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`14.
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`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.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 14 and therefore denies the same.
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`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-
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`minded pizzerias and sandwich shops that seek authentic Italian pepperoni and Italian-specialty
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`meats.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 15 and therefore denies the same.
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`16.
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`In 2016, Liguria Foods began its next chapter when it was acquired by its current
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`parent company, CTI Foods, LLC, a leading provider of custom food solutions to America’s top
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`restaurant chains.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 16 and therefore denies the same.
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`17.
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`Today, Liguria Foods continues to operate out of its Humboldt, Iowa facility,
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`supplying more than twenty million pounds of pepperoni and other Italian-specialty meats per
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`year to dozens of customers across the United States.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 17 and therefore denies the same.
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`II.
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`Liguria Foods’ Overarching and Consistent Commitment to Food Safety.
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`18.
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`Food safety is of the utmost priority to Liguria Foods.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 18 and therefore denies the same.
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`19.
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`Liguria Foods maintains a robust system of daily top-to-bottom sanitation,
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`microbiology testing, equipment inspection, facility inspection, and general quality protocols to
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`guarantee that its products are safe for human consumption.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 19 and therefore denies the same.
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`20.
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`Liguria Foods undergoes routine inspections and audits.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 20 and therefore denies the same.
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`21. As a United States Department of Agriculture (“USDA”) regulated entity, Liguria
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`Foods is subject to regular governmental inspection, and USDA officials even maintain offices
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`onsite to access Liguria Foods’ production areas.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 21 and therefore denies the same.
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`22.
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`Liguria Foods conducts a Good Manufacturing Processes audit once each month,
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`and it is subject to a third-party Global Foods Safety Initiative audit annually.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 22 and therefore denies the same.
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`23. With respect to foreign material contamination, Liguria Foods maintains
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`numerous mechanisms to prevent contamination.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 23 and therefore denies the same.
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`24.
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`Everything from Liguria Foods’ employee dress code, to its materials-handling
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`guidelines, to its daily preoperational inspection of the facility is designed to make sure that
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`foreign material never ends up inside Liguria Foods’ product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 24 and therefore denies the same.
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`25.
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`Blue belting and other means of conveying product are inspected daily, and the
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`results of the inspection are recorded. If a blue belt shows any signs of wear, it will be cut down to
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`create a food-safe surface that cannot tear or crumble into the product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 25 and therefore denies the same.
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`26.
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`Liguria Foods maintains metal detectors at various critical intercept points along
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`the production line. If the metal detector detects metal in the product, the product is
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`automatically rejected.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 26 and therefore denies the same.
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`27.
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`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.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 27 and therefore denies the same.
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`III.
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`Palermo Falsely Accuses Liguria Foods of Selling Contaminated Product.
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`28.
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`Liguria Foods has done business with Palermo since 2016, pursuant to a Master
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`Supply Agreement.
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`ANSWER: After a diligent search, Defendant was unable to locate a Master Supply
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`Agreement between Palermo and Liguria Foods. Thus, Defendant lacks knowledge or information
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`to form a belief as to the truthfulness of the allegations contained in paragraph 28 and therefore
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`denies the same. Defendant alleges that the sale of Liguria’s product to Palermo is governed by
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`Palermo Villa, Inc.’s Terms and Conditions of Purchase (a true and correct copy of Palermo Villa,
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`Inc.’s Terms and Conditions of Purchase is attached as Exhibit 2 to the Counterclaims).
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`29. On or about April 19, 2019, Palermo notified Liguria Foods that it discovered what
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`was described as “blue plastic” on pepperoni provided to Palermo by Liguria Foods. The discovery
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`allegedly was made while slicing pepperoni for use on frozen pizzas.
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`ANSWER: Defendant admits that it notified Liguria Foods that it discovered “blue
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`plastic” on pepperoni provided to Palermo by Liguria Foods on or around April 17, 2019.
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`Defendant denies that the discovery was made while slicing pepperoni.
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`30.
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`Palermo alleged, but provided no evidence, that blue belting was discovered during
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`slicing of the pepperoni sticks provided by Liguria Foods.
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`ANSWER: Defendant denies the allegations contained in Paragraph 30.
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`31.
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`Palermo claimed that the blue belting was embedded in the pepperoni, but it
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`provided no proof of that allegation.
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`ANSWER: Defendant denies the allegations contained in Paragraph 31.
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`32.
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`Subsequent investigation indicated that the blue belting was found resting on top
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`of the pepperoni and was not embedded, as Palermo initially claimed.
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`ANSWER: Defendant denies the allegations contained in Paragraph 32.
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`33. On information and belief, Palermo did not undertake a good faith investigation
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`to determine if Palermo was the source of the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 33.
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`34.
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`Palermo’s lack of investigation is underscored by the fact that it took less than
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`twenty-four hours to notify Liguria Foods that it concluded Liguria Foods was the sole and
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`exclusive source of the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 34.
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`35.
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`In making this accusation, Palermo did not offer Liguria Foods any evidence that
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`Palermo had undertaken its own investigation.
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`ANSWER: Defendant denies the allegations contained in Paragraph 35.
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`36.
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`Palermo also did not offer any evidence that it had taken any steps to disqualify
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`Palermo’s own systems or other ingredients utilized in the contaminated pizzas as the source of
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`the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 36.
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`IV.
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`Palermo Ordered and Accepted Additional Liguria Foods Product Without Paying.
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`37. At the same time that Palermo was accusing Liguria Foods of selling contaminated
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`product, Palermo continued ordering product from Liguria Foods.
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`ANSWER: Admit.
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`38.
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`From February 12, 2019 through approximately May 1, 2019, Palermo submitted
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`separate purchase orders for pepperoni to Liguria Foods.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 38 and therefore denies the same.
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`39. Of the purchase orders, five were issued and nine were fulfilled after Palermo
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`accused Liguria Foods of selling contaminated product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 39 and therefore denies the same.
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`40.
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`Liguria Foods shipped pepperoni product to Palermo between April 15, 2019 and
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`May 28, 2019.
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`ANSWER: Defendant admits that Liguria Foods shipped pepperoni product to Palermo
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`around the time period between April 15, 2019 and May 28, 2019 but lacks knowledge or
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`information sufficient to form a belief as to the exact dates and therefore denies the allegation in
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`Paragraph 40 as related to the identified dates.
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`41.
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`Liguria Foods invoiced Palermo for the pepperoni on the date the product was
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`shipped. Copies of Liguria Foods’ invoices are attached as Exhibit A.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 41 and therefore denies the same.
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`42.
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`In total, Palermo was invoiced $528,485.76 for product shipped by Liguria Foods
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`to Palermo.
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`ANSWER: Defendant denies the allegations contained in Paragraph 42.
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`43.
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`Liguria Foods satisfied the purchase orders by delivering pepperoni product to
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`Palermo.
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`ANSWER: Defendant denies the allegations contained in Paragraph 43.
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`44. After receiving the pepperoni it ordered and despite Liguria Foods demand for
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`payment, Palermo failed and refused to pay the invoiced amounts.
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`ANSWER: Defendant denies the allegations contained in Paragraph 44.
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`45. On information and belief, Palermo retained the pepperoni, used the pepperoni in
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`manufacturing its pizzas, and received profits on the pepperoni from its customers.
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`ANSWER: Defendant denies the allegations contained in Paragraph 45.
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`46.
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`Liguria Foods has never waived payment of the invoiced amounts.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 46 and therefore denies the same.
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`47. As of the date of this filing, Palermo still has not paid the invoiced amounts due
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`or any of the interest accrued on those amounts.
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`ANSWER: Defendant denies the allegations contained in Paragraph 47.
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`V.
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`Liguria Foods Immediately and Exhaustively Investigated Palermo’s Allegations.
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`48.
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`Liguria Foods did not allow Palermo’s lack of evidence to interfere with its
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`commitment to conduct a prompt and complete investigation into all customer complaints.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 48 and therefore denies the same.
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`49.
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`Liguria Foods immediately commenced a comprehensive investigation of the
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`production runs that produced the allegedly contaminated product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 49 and therefore denies the same.
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`50. On April 20, 2019, the day after learning of the alleged contamination, Liguria
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`Foods assembled a team and began gathering all quality documentation, production records,
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`inspection records, and belt check information for the production runs at issue. This review,
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`which included a cross reference against each of the suspect production runs, did not reveal any
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`possible sources of contamination within the Liguria Foods facility.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 50 and therefore denies the same.
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`51.
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`Liguria Foods further confirmed that it did not receive any other reports of blue
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`belt contamination from other customers or from its own quality assurance process.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 51 and therefore denies the same.
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`52.
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`Liguria Foods pressed forward beyond this initial review to make sure it was not the
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`source of the contamination.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 52 and therefore denies the same.
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`53.
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`Liguria Foods engaged Micro Materials Research, Inc. (“MMR”), a third-party
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`materials expert, to examine the sample of foreign material provided by Palermo against a sample
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`of the blue belting used by Liguria Foods for the production runs at issue.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 53 and therefore denies the same.
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`54. MMR conducted a forensic examination of both samples.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 54 and therefore denies the same.
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`55. MMR’s forensic microscopic analysis found that the blue belting from Liguria
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`Foods bore a pattern (diamonds) that did not match the pattern on Palermo’s sample (hexagons).
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 55 and therefore denies the same.
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`56. On April 24, 2019, the USDA Food Safety Inspection Service visited Liguria
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`Foods to investigate Palermo’s allegations.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 56 and therefore denies the same.
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`57.
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`Liguria Foods cooperated in the USDA investigation.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 57 and therefore denies the same.
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`58.
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`The USDA investigation did not identify any sources of contamination at the
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`Liguria Foods facility.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 58 and therefore denies the same.
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`59.
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`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
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`embedded in the allegedly contaminated product. Instead, the blue belting appeared to be sitting
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`on the surface of the product.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 59 and therefore denies the same.
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`60.
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`Palermo requested access to Liguria Foods’ facility.
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`ANSWER: Admit.
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`61.
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`In response, Liguria Foods agreed to give Palermo broad access to its facility, while
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`Palermo agreed to allow Liguria Foods to access Palermo’s facility, if the contamination could not
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`be located on Liguria Foods’ production line.
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`ANSWER: Defendant admits that Liguria Foods agreed to give Palermo certain access to
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`its facility and Palermo agreed to allow Liguria certain access to Palermo’s facility, but Defendant
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`denies the remaining balance of the allegations contained in Paragraph 61.
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`62. On or about April 25 and 26, 2019, Palermo’s director of quality assurance visited
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`the Liguria Foods facility.
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`ANSWER: Admit.
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`63.
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`Palermo’s representative was given full access to the facility.
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`ANSWER: Defendant denies the allegations contained in Paragraph 63.
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`64. After the visit, Palermo’s representative did not report any potential sources of
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`contamination to Liguria Foods, despite being permitted to engage in a thorough inspection.
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`ANSWER: Defendant denies the allegations contained in Paragraph 64.
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`65.
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`Faced with mounting evidence that Liguria Foods was not responsible for the blue
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`belting contamination, Palermo next claimed that Liguria Foods’ product had been contaminated
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`by metal.
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`ANSWER: Defendant denies the allegations contained in Paragraph 65.
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`66.
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`Liguria Foods performed an inspection and did not find any possible sources of
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`metal contamination on its line or in its records.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 66 and therefore denies the same.
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`67.
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`Liguria Foods further investigated whether the metal samples provided by Palermo
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`originated at the Liguria Foods facility.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 67 and therefore denies the same.
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`68.
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`In May 2019, metal was sent to Dr. Mark Germani, a third-party metallurgy expert
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`with MMR, for comparison and composition testing against numerous metal samples taken from
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`the full length of Liguria Foods’ production line.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 68 and therefore denies the same.
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`69.
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`Dr. Germani found that Palermo’s sample did not match any of the metal samples
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`taken from the Liguria Foods facility.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 69 and therefore denies the same.
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`VI.
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`Palermo Denies Liguria Foods the Opportunity to Inspect Palermo’s Facility.
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`70.
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`Liguria Foods kept Palermo apprised of every development in its ongoing effort to
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`investigate the alleged contamination.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 70 and therefore denies the same.
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`71.
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`Liguria Foods provided Palermo with a substantial volume of documents
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`memorializing the production processes implicated by the suspect production runs.
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`14
`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 14 of 39 Document 14
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`
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 71 and therefore denies the same.
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`72. After exhausting all the avenues described above, Liguria Foods requested
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`permission to inspect Palermo’s facility for other possible sources of contamination.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 72 and therefore denies the same.
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`73.
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`Palermo denied Liguria Foods’ request for an inspection.
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`ANSWER: Defendant denies the allegations contained in Paragraph 73.
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`74.
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`Liguria Foods was denied the opportunity to investigate Palermo’s facility, which
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`was the same opportunity that Liguria Foods readily granted to Palermo.
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`ANSWER: Defendant denies the allegations contained in Paragraph 74.
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`75. On information and belief, Palermo had actual or constructive knowledge of the
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`source of the contamination at this time, and it knew that Liguria Foods was not the source.
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`ANSWER: Defendant denies the allegations contained in Paragraph 75.
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`76. On information and belief, Palermo refused to allow Liguria Foods access to the
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`Palermo facility in order to hide defects in its own processes, which would have demonstrated that
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`Liguria Foods was not responsible for the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 76.
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`77.
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`Despite these setbacks, Liguria Foods continued its dialogue with Palermo through
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`September 2019.
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`ANSWER: Defendant denies the allegations contained in Paragraph 77.
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`15
`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 15 of 39 Document 14
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`
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`78.
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`During this time, Palermo never allowed Liguria Foods access to Palermo’s facility
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`and it failed to produce any evidence showing that Liguria Foods was the source of the
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`contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 78.
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`79.
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`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
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`product.
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`ANSWER: Defendant denies the allegations contained in Paragraph 79.
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`80.
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`Liguria Foods made clear that it intended to abide by the results of such testing on
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`the question of contamination if testing was conducted by mutual agreement.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 80 and therefore denies the same.
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`81. On information and belief, Palermo declined to agree to such testing because it
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`had reason to believe that the results would exonerate Liguria Foods and, thereby, implicate
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`Palermo’s own manufacturing process as the real source of the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 81.
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`82.
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`Instead of completing the required investigation, Palermo stopped communicating
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`with Liguria Foods in September 2019.
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`ANSWER: Defendant denies the allegations contained in Paragraph 82
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`83.
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`Palermo then did nothing to advance its purported contamination claim until May
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`2020.
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`ANSWER: Defendant denies the allegations contained in Paragraph 83.
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`16
`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 16 of 39 Document 14
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`
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`84. On information and belief, Palermo neglected its purported claim during this time
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`period because it did not believe that Liguria Foods was responsible for the contamination.
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`ANSWER: Defendant denies the allegations contained in Paragraph 84.
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`VII. Palermo Continued Making False Accusations While Letting Its Claim Languish for
`Two More Years.
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`85. On or about May 6, 2020, after no communication for nearly nine months,
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`Palermo sent Liguria Foods a demand letter seeking more than $4 million in alleged damages.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 85 and therefore denies the same.
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`86.
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`Palermo’s demand letter claimed everything from the value of the purchased
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`product, to the costs of Palermo’s already existing coupon promotion, to the cost of attending one
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`of their customer’s golf tournaments.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 86 and therefore denies the same.
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`87.
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`The reason for this timing raised significant questions about the validity of
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`Palermo’s demand. Indeed, it appeared that in the midst of the COVID-19 pandemic, Palermo
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`thought it could offset the costs of its poor business practices by attempting to revive its baseless
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`claims against Liguria Foods.
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`ANSWER: Defendant denies the allegations contained in Paragraph 87.
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`88. On information and belief, Palermo’s own shoddy business practices and history of
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`falsely blaming suppliers for Palermo’s own contamination problems had harmed its major
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`customer relationships.
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`ANSWER: Defendant denies the allegations contained in Paragraph 88.
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`17
`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 17 of 39 Document 14
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`
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`89. As a result, Palermo sought to use Liguria Foods as a scapegoat.
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`ANSWER: Defendant denies the allegations contained in Paragraph 89.
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`90.
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`Despite its suspicions regarding the timing of Palermo’s demand, Liguria Foods
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`again raised the prospect of conducting testing of the preserved product to determine if
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`contaminants could be found embedded in the individual pepperoni sticks.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 90 and therefore denies the same.
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`91. Once again, Palermo refused to commit to engage in such testing.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 91 and therefore denies the same.
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`92.
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`Palermo then stopped communicating with Liguria Foods.
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`ANSWER: Defendant denies the allegations contained in Paragraph 92.
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`93.
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`Palermo did not resurface until March 5, 2021. This time, Palermo reached out
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`with an “updated” demand reducing its claim from $4 million to $2.85 million.
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`ANSWER: Defendant denies the allegations contained in Paragraph 93.
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`94. As it did in 2020, Liguria Foods requested testing. Yet again, Palermo demurred.
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`ANSWER: Defendant denies the allegations contained in Paragraph 94.
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`95. On June 8, 2021, Palermo adjusted its demand further downward to $2.6 million.
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 95 and therefore denies the same.
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`96.
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`Liguria Foods refused to take action on any of Palermo’s demands until the product
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`was tested and Palermo adduced proof that Liguria Foods was responsible.
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`18
`Case 2:21-cv-01127-JPS Filed 01/03/22 Page 18 of 39 Document 14
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`
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`ANSWER: Defendant lacks knowledge or information sufficient to form a belief as to the
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`truthfulness of the allegations contained in Paragraph 96 and therefore denies the same.
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`97.
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`Palermo was never able to produce such proof.
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`ANSWER: Defendant denies the allegations contained in Paragraph 97.
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`VIII. Palermo Attempted to Surprise Liguria Foods With Unilateral Testing.
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`98.
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`For more than two years, Liguria Foods asked Palermo to test the preserved lots of
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`product allegedly containing the contaminants underlying this entire dispute. For more two years,
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`those requests were ignored.
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`ANSWER: Defendant denies the allegations contained in Paragraph 98.
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`99. On July 1, 2021, Palermo notified Liguria Foods that it would conduct destructive
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`testing of the product on July 8, 2021.
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`ANSWER: Defendant denies the allegations
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