Starbucks wants a Harrison, N.J., firm to pay almost $5 million in a legal dispute over ham sandwiches.
The Seattle-based chain of coffee shops is suing Wellshire Farms Inc. and a Maryland business, Hahn Bros. Inc.
In the suit, Starbucks contends Wellshire was supposed to provide Black Forest ham for use in breakfast and lunch sandwiches but instead supplied an inferior product from the Maryland firm. Wellshire rejects those claims and denies any wrongdoing.
A Starbucks attorney declined to comment Monday. A lawyer for Wellshire Farms could not be reached.
According to the suit, a Starbucks contractor chose Wellshire's product after holding a blind taste test for a warmed breakfast sandwich in January 2008. Other contractors followed a similar process in selecting Wellshire's ham for a chilled lunch sandwich in the fall of 2009.
The sandwiches, assembled by the contractors, were sold at Starbucks stores across the United States and Canada.
"Starbucks, however, did not know, and Wellshire failed to reveal, the fact that the ham with Wellshire's name on it was actually produced (by Hahn)," the lawsuit asserts.
Starbucks contends it learned of Hahn's role only after a rising number of consumer complaints prompted it to investigate the ham's source. The lawsuit says the complaints began in September 2010, with customers saying the ham was discolored, had an unusual taste and appeared spoiled.
A month later, Starbucks issued "Stop Sell and Discard" notices for its breakfast ham sandwiches. The company said a probe then revealed quality problems with ham shipped by Wellshire, and an executive at the firm "pleaded with Starbucks to maintain its supplier relationship, assured Starbucks that the September incident was not Wellshire's fault and asserted that the September 2010 incident was an isolated incident."
The lawsuit says Starbucks received more complaints within days, then learned Hahn was actually producing the ham.
"This revelation from Wellshire came several months after the complaint began," says the suit, which was transferred Monday to federal court in Camden after being filed in July in Washington state.
In a court filing, Wellshire denies Starbucks' claim, including an allegation that laboratory testing in December 2010 found "potentially harmful bacteria" in a sample of the ham.
That alleged finding resulted in a second "Stop Sell and Discard" notice for the breakfast sandwiches, Starbucks says.
According to the lawsuit, Starbucks issued a final "Stop Sell and Discard" notice for all ham sandwiches after a third-party audit reported "fundamental deficiencies in the way the ham was being cooked and processed by Hahn."
The coffeehouse chain then told its contractors to stop using Wellshire products and paid them an undisclosed amount "to minimize the financial impact of these actions." Starbucks asserts it lost more than $4.8 million "protecting its customers and Starbucks' reputation."
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