XL Foods recall lawsuit reaches tentative deal for refunding beef customers

Lawyers have brokered a tentative deal to settle part of a class-action lawsuit filed over an E. coli outbreak that prompted the largest beef recall in Canadian history.

Lawsuit affects customers who threw out beef during the XL food recall, not those who got sick

Cattle graze beside the former XL Foods' Lakeside Packers plant located in Brooks, Alta. The majority of the $4 million settlement is to go to those who became ill after eating the meat. (Larry MacDougal/Canadian Press)

Lawyers have brokered a tentative deal to settle part of a class-action lawsuit filed over an E. coli outbreak that prompted the largest beef recall in Canadian history.

The lawsuit is against XL Foods Inc., which operated a meat-packing plant in southern Alberta during the tainted beef recall in 2012. The facility in Brooks, Alta., has since been sold to JBS Canada.

Rick Mallett, a lawyer for the Edmonton law firm behind the class action, said the settlement is to cover refunds to consumers for products that were recalled.

He said the proposed $1-million settlement, plus other costs, is to go before a judge early next year for approval.

"The parties have reached a settlement on beef refund claims subject to approval of the court," Mallett said Tuesday following a hearing in Court of Queen's Bench.

1.8M kilograms of beef recalled

"It applies to anyone who purchased recalled beef — XL beef — and disposed of it and didn't get a refund."

XL Foods recalled more than 1.8 million kilograms of beef in Canada and the United States.

If the court approves the settlement, a public notice will be published in newspapers in Canada and some U.S. states to let people know how to submit claims.

Mallett said the agreement applies to anyone who threw beef away in response to recall notices, even if they can't identify whether it was XL beef.

18 tested positive for E. coli

During the outbreak, health officials confirmed that 18 people in Canada tested positive for a specific strain of E. coli bacteria linked to meat from the XL plant.

The proposed deal does not affect the main part of the class-action lawsuit that involves people who claim they became ill.

Mallett said negotiations on that aspect could continue for up to two years.

He said the number of people who say they became ill is much higher than the 18 cases documented in reports on the XL Foods recall.

"We have been contacted by, at this point, over 200 people indicating that they suffered illness or injury in various degree of severity."

Injury damages vs. beef refunds

At Tuesday's hearing, associate chief Justice John Rooke said any public notice about the proposed settlement must make it clear that claims are separate from, and would not affect, any possible future claims for injury damages.

The statement of claim — which contains allegations not proven in court — says XL Foods knew it had poor quality control and put its profits above the safety of consumers.

Last fall, the court ruled that the Canadian Food Inspection Agency is a third-party defendant in the national class action.

Mallett said the federal food safety watchdog is not part of the proposed settlement on beef refunds, but remains part of the injury lawsuit.

"They remain in terms of the liability issues and any other quantum issues that relate to the bodily injury claims," he said. "They continue to be a part of the litigation."

With files from CBC News