FIVE years after an undercover video investigation forced their company out of business, the owners of and investors in the Hallmark/Westland Meat Co. have agreed to a final settlement in a lawsuit filed by The Humane Society of the United States (HSUS) under the False Claims Act (FCA).
According to the U.S. Department of Justice, HSUS will receive roughly $600,000 of the more than $3.1 million settlement announced Nov. 27.
The Westland case was predicated on a February 2008 video released by HSUS showing abuse of non-ambulatory cattle in the Chino, Cal., packing facility, which was a major supplier to the U.S. Department of Agriculture's National School Lunch Program at the time.
The nature of the abuse depicted in the video, coupled with the public outrage over the plant's involvement with the school lunch program, led to the largest recall of ground beef in USDA's history (Feedstuffs, Feb. 4 and Feb. 25, 2008) and ultimately forced the company to close its doors.
HSUS sued the company and its owners under FCA, which permits private citizens and entities to bring a lawsuit on behalf of the government and share in any proceeds from the suit. In a small percentage of cases, the government intervenes, as DOJ opted to do with the HSUS suit in 2009.
"The government later joined the lawsuit and brought additional claims that the defendants concealed their ineligibility to process beef because a convicted felon, Aaron 'Arnie' Magidow, was a partner in and otherwise responsibly connected with the facility's operations," DOJ said in its announcement. "USDA regulations applicable to suppliers of the National School Lunch Program prohibit the inhumane handling of cattle, require the proper inspection and disposition of downer (non-ambulatory) cattle and require suppliers to identify convicted felons who are responsibly connected to the suppliers' operations."
The suit alleged that the owners and investors of the Westland facility defrauded USDA by violating the terms of its federal school lunch program contracts, namely humane handling and slaughter regulations.
HSUS called the settlement the largest monetary judgment ever entered in the U.S. based on animal abuse and said it would serve as a deterrent that might prevent future instances of animal cruelty in the nation's processing industry.
"This judgment sends a strong message to those who profit from the abuse of farm animals," said Paul Petersan, HSUS director for animal protection litigation. "Although numerous line workers have been prosecuted for farm animal cruelty over the past decade, this is the first time the consequences of animal cruelty have been felt by those sitting in the corner office as well."
According to the DOJ announcement, several parties have agreed to settle the case. Under the settlements:
* Westland Meat Co., based in Corona Del Mar, Cal., and owner Steve Mendell will pay $240,000, and the company will enter into a consent judgment for $155.68 million.
* M&M Management, also based in Corona Del Mar, along with Cattleman's Choice based in Commerce, Cal., and the estate of its deceased owner, Arnie Magidow, and Magidow's surviving spouse, will pay a total of approximately $2.45 million. Magidow's surviving spouse was named in the lawsuit as a successor in interest to Magidow and is not alleged to have engaged in any wrongdoing.
* In October 2012, defendants Donald R. Hallmark and Donald W. Hallmark settled allegations for $304,130.
In addition to HSUS staff attorneys, the suit was handled for the animal rights group by Milbank, Tweed, Hadley & McCloy. Aside from paying its legal costs in prosecuting the suit, the HSUS announcement did not say how the group intends to use the $600,000 it will garner from the settlement.