The Journal. - Listeria, Liverwurst and the Family Feud at Boar's Head

Episode Date: October 15, 2024

Over the summer, an outbreak of listeria in Boar’s Head products killed 10 people and sickened dozens more. In the months after the crisis, the family that runs the company has said little. WSJ’s Sarah Nassauer dug through court documents to piece together a decades-long story of a family fighting over ownership of a deli meat empire. Further Reading: - Inside the Half-Century Feud Dividing the Boar’s Head Family  - Boar’s Head Closing Virginia Factory Tied to Deadly Listeria Outbreak  Further Listening: - Farm-to-Table Pioneer on Why We Still Need Better Food  - Food Fight: PepsiCo vs. Carrefour  Learn more about your ad choices. Visit megaphone.fm/adchoices

For decades, Boar's Head has worked to build a reputation for premium quality in its deli meats and cheeses. This commercial is pure baloney. Boar's Head baloney. Boar's Head. Pure baloney. Not phony baloney. But more recently, the company has made headlines for something else.

All right, now to a consumer alert tonight in a major deli meat recall. Boar's Head has recalled more than 200,000 pounds of its deli meat. And a massive recall is expanding that company Boar's Head is recalling an additional 7 million pounds of its ready-to-eat products over possible listeria contamination. Bugs, mold, and mildew? That is what inspectors say they've found at a boar's head plant that's been linked to a nationwide listeria outbreak that's being blamed for at least nine deaths. Over the summer, we saw reports of people getting sick and dying from Listeria and foods

that were traced back to a boar's head factory in Virginia. Really their oldest production facility outside of their original Brooklyn locations. That's our colleague Sarah Nassauer. Listeria is a bacteria that can linger on deli slicers and other equipment, making it easy to spread. The Centers for Disease Control and Prevention says 59 people have been hospitalized and 10 have died in connection with the outbreak. Boar's Head has apologized and has shut down the production plant where the outbreak started. The company also says it's implementing enhanced food safety measures. In the wake of the crisis, Sarah was curious to learn more about Boar's Head as a business.

The first thing I found out is that there hasn't been much written about the company because they barely communicate about what they do and how they do it. So they're pretty secretive. They're very, very secretive. So my first impression was, wow, this is a really secretive company. It's a privately held company. They don't have to talk about anything. But this was extreme.

But after weeks of digging, Sarah uncovered more about the company, including a tale of family grudges that have stretched for decades. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Tuesday, October 15th. Coming up on the show, liverwurst, lawsuits, and the 50-year family feud at Boar's Head.

You let him try violin because you love him. And if you love him that much, love him enough to make sure he's buckled up and in the back seat. Find out more at NHTSA.gov slash the right seat. Brought to you by the National Highway Traffic Safety Administration and the Ad Council. Talk to me about how you approached reporting on a company like this. I didn't want to talk to you basically at all. Well, you know, it was a real lesson in if you don't want the Wall Street Journal digging into your business, don't sue each other.

Over the course of her reporting, Sarah dug up reams of court documents filed by members of the two clans behind Boar's Head, the Brunkhorsts and the Bischofs. Sarah was able to piece together the story of a family fighting over ownership of their deli meat empire. Those lawsuits were, you know, a trove of information. They also contain many depositions of family members and executives and former executives and advisors and letters between lawyers and all these other documents that helped me piece together the relationships between the people involved, which is the part I was actually interested in, to understand, well, what kind of conflict was happening behind the scenes at this company?

So what we wanted to know is what led to these lawsuits, what's going on, how might that affect things operationally? So what did you find out about this family and how they run their business? What's clear is that key family members are actively involved in the business in many ways. And they are the ultimate decision makers when it comes to big decisions, like how to spend capital, right? Or, you know, the core direction the company should take. But it's really non-family members, executives that are running the day-to-day. It is a unique company to work for, that are running the day-to-day.

and a few finance executives. Even, you know, fairly high level executives don't have that information. They don't know what total revenue is for the year or total profits, for example. Wait, the executives don't know how much the company is making? They are not being told that, correct. Wow, okay. They're tracking like something that's approximate to sales through tonnage. How many tons, right? What's the tonnage that we sell through this retailer or that? The owners and finance executives meet once a month to discuss these things in a meeting

that's called the owner's meeting, right? Which tells you exactly who's going to be there and who's not. And who's not. At the top of the company's hierarchy is the family, and it's been that way from the beginning. Boar's Head was founded in 1905 in Brooklyn by Frank Brunkhorst and his wife, Alvina Pape. Back then, it was a meat delivery service on a horse and buggy. When Frank died in 1931, his son, Frank Jr., and son-in-law, Bruno Bischoff, took control of the company, hence the brunckhorst Bischoff clans in the family.

The two expanded the business into production, selling their own branded meats. As Boar's head grew, so did the family. I'm actually going to grab my chart with the family tree, just so I don't misspeak, as we're talking about the dynamics of the family. Can we see it? I know. I actually had two of them, but this was my main one. You can see it's quite heavily annotated with rant-like... Oh, my gosh.

Because I would learn little tidbits, you know, like, well, this person died in this year or got divorced, or, you know, this was the root of their anger against each other. I would discover these things and then have to kind of add it here so I could visualize the dynamics. Over the years, control of the company was handed down to each generation. And as more relatives got involved, conflicts started to bubble up over how Boar's head was divided or sliced, as you might say. When did the tensions first start to emerge

in this family business? I got the sense that, you know, there's been various points of tension over the years, but the sort of modern dispute really dates back to the 1970s, because that's when sort of a new generation of the family, the great grandchildren of the founder, were graduating from college and in some cases getting jobs at Warshead.

What had happened is that one of this newer generation, Eric, his father had passed away the previous year before he started. And he was young at the time. And for reasons that I don't fully understand, his father's share in the company, a 25% stake in the company, did not go to him, but went to other members of his father's generation. Eric is Eric Bischoff. According to court documents, there was an understanding within the family that if you wanted to have a share of the company and its profits, you had to work for it. Eric hoped that if he worked his way up the ranks at Boar's Head,

he would earn back his father's 25% stake. According to one of his lawsuits, he would earn back his father's 25% stake. According to one of his lawsuits, literally one of the main opening paragraphs of the claim is, I can read it to you, it says, Eric began working as a full-time employee of Boar's Head with the promise and expectation that he would receive the same 25% of family-owned Boar's Head shares that his father had held.

Wow. So that was clearly what he expected. And so Eric goes on to work for Boar's Head. What did he do for the company? So he started at Boar's Head after graduating from Boston University, literally Monday after he graduated college. And at first he worked sort of on the manufacturing side of the company, which was sort of typical of younger generation family members when they came to the company. That, you know, was the theory that you should learn how to do lots of different things at this company, not just, you know, immediately become an executive.

Sure. So for years, he actually worked sort of on the manufacturing side of the company. Eric started moving up the ranks. He said in one deposition that he moved to Virginia in the 80s to help operate the company's first production facility outside of Brooklyn. Over time, his shares in the 80s to help operate the company's first production facility outside of Brooklyn.

Over time, his shares in the company increased. But meanwhile, there were other family members whose shares in the company were also growing. Those people included Eric's second cousin Frank Brunkhorst, who eventually gained a 25% stake. And there was also Eric's cousin Robert Martin, known as Bob. Bob would go on to run Boar's Head. Eric owned fewer shares than either of them, according to court documents. Some family members said Eric wasn't working hard enough.

By the early 2000s, Bob Martin and other family members said that they were not that happy with his performance, with Eric's performance. And, you know, there's some moments in some of these depositions where Bob Martin is saying that he asked him what was wrong, like, what's going on? Is it about the shares? You know, in 2005, they had a conversation about these shares, and it seemed like it was a warm conversation, and they hugged. And then two weeks later, while Eric was still working at the company, he filed a lawsuit against some of his family members and the company at that point

saying that they weren't splitting profits evenly among shareholders at the time. It took three years to resolve the lawsuit. In 2008, the parties reached a settlement. As part of that settlement, Eric did get some more shares. years to resolve the lawsuit. In 2008, the parties reached a settlement. As part of that settlement, Eric did get some more shares. So his stake in the company went up to about 14%. So not 25%, 14%. And he stopped working at the company. And that's the amount that he has owned in the company ever since. Okay, so there was a settlement, he gets more shares, he quits.

Is that the end of the story? No, then there's many other rounds of dispute. Often what was happening is that people, different people in the family, wanted to pass shares to their children. But other members of the family didn't agree that that was the right thing to do. Because again, they're a family that believes you should be working at the company to get shares. And they wanted it to be equitable. And it's clear from these documents they have tried and considered selling the company many times. And so that also creates tension over, you know,

how shares are going to be valued and who has what. Those disputes were fought in court for years, with the most recent lawsuit being filed in 2021. For the most part, the litigation didn't attract much attention from the public. But this summer, Boar's head and the family were dragged out into the light. — U.S. health officials are investigating a larger listeria outbreak that has sickened nearly three dozen people and caused two deaths. — That's next.

So there's this family drama over the ownership of Boar's Head that's been playing out in court. What did that say to you about the company? To me, it showed that they hadn't figured out how to handle these situations. They didn't have any system in place. Even though you could tell the older generations were trying to make it equitable, that they didn't have an equitable system that everyone could agree on. And that bled into a big distraction for a lot of that, for the family running the company, as well as for the executives who were running the day to day that were not family members,

you know, they're being called in for depositions. This is kind of all brewing behind the scenes. Meanwhile, a different kind of crisis was also brewing at a Boar's Head plant in Virginia. The company made liverwurst there, and it turned out that the plant was also the site of nearly 100 food safety violations over the past two years, according to inspectors from the state of Virginia and the U.S. Department of Agriculture. That came to light this summer,

after dozens of people contracted listeria from Boar's Head products. In response, the company announced that it will close down its Virginia plant and permanently stop making liverwurst. Boar's Head also recalled dozens of its products, totaling seven million pounds of meat. The family behind the company has still not made a statement.

We have not heard anything publicly from the family. Wow. They've posted some statements to their website with no name on them, sort of apologizing and also talking about, you know, things that they're doing to improve their food safety standards. But really, there's been no names involved with any of their statements. Sarah, you've covered companies of all kinds for years.

Have you ever seen anything quite like this? Like did Boar's Head deal with this scandal the way a company would? Is it any different? I don't think I've ever seen a company in a crisis, right? This would be a crisis moment. Be so quiet about who and what they're doing behind the scenes. I mean, it definitely stands out to me that there's no name on any of the statements that they've released and that there is no person that anyone can identify without doing what I did, looking through hundreds of legal documents associated with the company.

But now Boar's Head is in the spotlight. Already the company is facing more lawsuits, this time from beyond its ranks. There are several lawsuits that have been brought by victims. Right. Either the family members of folks who have died or folks who have become ill and spent time in the hospital and are now suing the company. And there's several lawyers that are collecting some of those suits into larger lawsuits. They're claiming that Boar's Head is at fault for killing their family members or making

them sick. And that, you know, what they're going to try to argue their lawyers is, you know, that it reaches a level of negligence that means that they need to pay these families a lot of money. Boars Head has already said, sorry, there's no question here, no legal question that, you know, some Boars had products made people sick and killed almost a dozen people. But with these civil lawsuits, it will be mostly about the dollar amounts involved. Separately, you also have signs that the DOJ and the USDA are considering criminal charges and other types of legal entanglements that go beyond civil

suits from victims. Sarah, having done all this research, having followed the story through, what is your takeaway? It's one of these stories where again, I am just reminded about how tricky it is for families to run a successful business over generations. It's really not something that we as humans are that good at naturally. something that we as humans are that good at naturally. And if a family isn't really, really precise about the boundaries of how that happens, it can so easily pass into a pretty chaotic situation. But I think that it will be an interesting example

that perhaps we'll look back on of how leadership and family situations that pop up at a company, the human drama, how it does have an operational impact, right? And that that can have real world consequences. That's all for today, Tuesday, October 15th. The Journal is a co-production of Spotify and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening.

See you tomorrow.