In Wisconsin Pharmacal Co. v. Nebraska Cultures of California, No. 13AP613 (Wis. Ct. App. Oct. 29, 2014), the Wisconsin Court of Appeals analyzed the circumstances under which a supplier’s negligent provision of an incorrect ingredient to a manufacturer, where the ingredient renders the other ingredients and the final product unusable, constitutes an “occurrence” under a commercial general liability (CGL) policy.
The dispute arose when a supplier mistakenly supplied the wrong ingredient to Wisconsin Pharmacal, which manufactured a “feminine health probiotic supplement” for a major retailer. The probiotic supplement was sold as a chewable tablet under the retailer’s label. Wisconsin Pharmacal made the chewable tablets through what the court called a “tableting process”—that is, by combining a number of raw ingredients and pressing the resulting mixture into tablets.
One of the necessary ingredients of the tablet was Lactobacillus rhamnosus A, a bacterium used as a probiotic. Wisconsin Pharmacal contracted with a series of suppliers to obtain a “substantial quantity” of the bacteria. However, instead of supplying Lactobacillus rhamnosus A, the suppliers mistakenly supplied Lactobacillus acidophilus. That bacterium, once incorporated into the finished product, could not be extracted from the tablets, which became unusable. The retailer was forced to recall the supplement. Continue reading this entry