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U.S. court approves Menu Foods settlement

Beleaguered pet food manufacturer Menu Foods has picked up approval from a U.S. district court for a US$24 million settlement of over 100 class action suits coming out of its major pet food recall last year.

With approval from a U.S. District Court judge in New Jersey, the Toronto income trust now must wait for final approval in Canadian courts, for which a motion is scheduled to be heard Nov. 3.

Menu Foods’ settlement, if approved, would be binding on all members of the settlement class, including those involved in over 100 class actions filed in various U.S. and Canadian courts relating to the pet food recall, except for those who opt out of this settlement. Anyone who opts out of the settlement is then theoretically free to file a single claim against Menu Foods on his or her own.

The company’s US$24 million settlement fund would allow a “potential recovery of up to 100 per cent of all economic damages incurred by pet owners, subject to certain limitations,” it said, with funds available to those in the U.S. and Canada who bought or obtained, or whose pets used or ate, recalled pet food made by Menu Foods.

People with potential claims against the settlement fund are asked not to contact Menu Foods directly but to visit the claims administrator’s website.

The company said in a release Wednesday that its contribution to the settlement keeps it within its previously published estimate of C$55 million for total costs associated with the product recall.

“The U.S. court approval is a significant milestone,” Menu Foods CEO Paul Henderson said in the company’s release. “If the Canadian courts approve the settlement, pet owners affected by the 2007 pet food recalls will receive compensation for their losses. Menu Foods looks forward to final resolution of this matter, which will enable us to focus on continuing the significant progress that has been made in rebuilding our business, namely delivering quality products to existing and new customers across North America.”

The company was among several pet food makers that recalled product starting in the spring of 2007. In Menu Foods’ case, the recall began in March that year following indications that some cuts-and-gravy dog and cat foods, made by Menu Foods for in-store brands and other companies, may have been affecting the renal health of some animals in the U.S.

Menu Foods said a Chinese supplier of wheat gluten, a protein ingredient used in many pet foods, had spiked its gluten with melamine and other compounds to “artificially inflate” the ingredient’s protein levels. The compounds were able to slip past standard industry testing, the firm said.

The recall and subsequent loss of sales led the Menu Foods Income Fund to a C$62 million loss in fiscal 2007.

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