Ongoing Topps Meats class action suit still in US District Court in Buffalo

It’s been over a year since Elizabeth, New Jersey-based Topps Meat Company declared bankruptcy in the wake of one of the largest beef recalls in history. Nearly 22 million pounds of meat products were recalled when E. coli bacteria in the frozen burgers cranked out by Topps sickened at least 40 people around the country. Symptoms included, but were not limited to, severe abdominal cramps, severe bloody diarrhea, and fatigue, according to the first amended class action complaint. Some required hospitalization.

Let’s take just a minute to try and comprehend just how much 22 million pounds of meat really is. The average steer used for beef weighs around 1,100 pounds. Of that, we can estimate 500 pounds of meat. We’re talking about all the meat from 44,000 head of cattle. On average, these animals are about four and a half feet tall at the hip. If you were to stack all these cows one on top of the other, hoof to back, they would reach a height of more than 37 miles—seven times the height of Mt. Everest.

Topps was a privately owned family business founded in Manhattan in 1940. That changed 63 years later, in 2003, when Buffalo’s Strategic Investments & Holdings (SIHI) bought the company. Four years later, it was out of business. According to an October 1, 2007 Buffalo News article, one of the principals of SIHI was Robert Gioia. Gioia, current president of the Oishei Foundation and chairman of Great Lakes Health System of Western New York, had previously served as board chairman of Topps from 2003 until late 2006, when he accepted the position at Oishei.

An October 23, 2007 New York Times article begins this way: “Over the summer, as Americans fired up their grills, the Topps Meat factory scrambled to produce thousands of frozen hamburger patties for Wal-Mart and other customers, putting intense pressure on workers.”

“The whole time, the whole year, there was a lot more pressure,” a supervisor who’d worked there for 23 years was quoted as saying.

Strategic Investments declined to be interviewed for the story, and wouldn’t respond in detail to written questions posed by the Times.

In the end, Topps recalled at least 80 different products under brand names like Butcher’s Best, Kohler Foods, Pathmark, Rastelli’s, Roma-Topps, Sam’s Choice, Sand Castle, Shop Rite, West Side, and plain old Topps.

Who knew that right here in downtown Buffalo, a $5,000,000 lawsuit, filed on behalf of victims who ate the tainted meat, has been silently working its way through the courts since 2007?

But don’t worry. Nobody likes bad news tied to Buffalo, so I’m happy to report that back on September 30, 2008, Strategic Investments was dismissed as a defendant in the case. It was all a big misunderstanding. According to an affidavit from the secretary, treasurer, and vice chairman of Strategic Investments, David M. Zebro, who also served on the board of managers of Topps along with two other shareholders of Strategic Investments—Dennis C. Martin and James C. DelZoppo—and the sworn deposition of Gary M. Brost, chairman and CEO of Strategic Investments, it turns out that Strategic Investments “does not invest into or purchase” businesses.

Rather, “Strategic identifies a particular business that may be for sale, then creates a separate, transaction-specific, stand-alone entity to purchase the existing business.” Thus, an entity known as TM Cyclorama is the majority member of Topps. Further, TM Cyclorama is a single-purpose investment entity and has no employees. TM Cyclorama has two members, Burger Ventures LLC, and SIHI/TM LLC. The fact that the entity known as Strategic Investments and Holdings is located at 369 Franklin Street in a distinctive structure known as the Cyclorama Building means nothing in the land of limited liability corporations. It doesn’t even matter that TM Cyclorama has the same address as Strategic Investments. What does matter to the courts is that they say they didn’t play a role in the day-to-day operation of Topps.

Here’s how the actual capital contributions and membership interests in the Topps Meat Company, LLC are listed: TM Cyclorama LLC, $5,250,000 under preferred capital; Rand Capital SBIC, L.P., $583,000 under preferred capital. Rand Capital was founded in 1969 in Buffalo with “the mission to invest in and assist entrepreneurs.”

Some may see this complex series of deals as a way to avoid liability and hide actual ownership of a company that appears to have changed operations to the point that they were buying meat from overseas and cutting back on testing beef to three times a year from 12. Indeed, Topps may not have had to recall nearly so much meat if their own record-keeping had not been so lax. Because they couldn’t prove at what point the E. coli had been introduced, they were ordered to recall much more.

Maryland attorney Hal J. Kleinman, representing the plaintiffs, explained that Strategic Investments was dropped from the case because it was clear that the legal shenanigans could stretch indefinitely into the future, and his job is to try to gain some financial restitution for all the people who got seriously ill from eating the contaminated food. Even though Topps went bankrupt, they did have insurance. That insurance is the most likely route if he is to get the victims anything for their misfortune. Kleinman was in town Wednesday to attend a status conference on the case.

In light of the way Robert Gioia and David M. Zebro’s Strategic Investments and Holdings brokered the deal that led to the closing of a 67-year-old business, sickening many innocent people in the process, it’s not too comforting to know that they are both intimately involved in Great Lakes Health—formerly NEWCO—the entity that proclaims it is “unveiling a bold, new model of healthcare delivery for Western New York.” Gioia is the chairman, while Zebro is on the board. They are overseeing the consolidation of public benefit corporation ECMC into private healthcare entity Kaleida Health.

—buck quigley