Live

Watch CBSN Live

Heinz hit with a "stinky" lawsuit in New Jersey

A group of U.S. and Israeli real estate investors are crying foul -- as in odors -- with H.J. Heinz. They claim that a New Jersey industrial property they rented to the world's largest ketchup maker now reeks of the anchovies Heinz used to make its Lea & Perrins Worcestershire Sauce at a facility on that property.

In its 17-page complaint filed last month in a New Jersey federal court, plaintiff Fairlawn Industrial Properties (FIP) said its representatives found the odors in November 2014 after they inspected the property in Fairlawn, New Jersey, when Pittsburgh-based Heinz terminated its lease early. The smell came from an amine-based compound found in the fish, according to an outside firm FIP hired. It has seeped into the 40,000-square foot property's "porous materials such as the concrete flooring, drywall, ceiling tiles and HVAC ducts rendering the premises unfit for occupancy by a commercial tenant," according to the suit.

"The smell is pretty bad," said Michael Endrei, the managing partner at FIP, in an interview with CBS MoneyWatch, adding that "you cannot do whatever you want and destroy the property of the landlord."

The two parties then agreed to hire outside firms to asses the situation. Remediating the smell would cost more than $122,000 according to ServPro, which Heinz hired. The suit noted that ServPro couldn't guarantee that the odor "would be completely or permanently removed."

However, anchovy odors were just one of many problems at the property that G. Williams Group, which FIP hired, found. It tallied about $1 million dollars in damages to the building's exterior and interior as well as problems in the HVAC, plumbing and electrical systems.

Around Nov. 30, Heinz removed its equipment from the interior of the space, but it left a "massive" steel support structure on the roof and water filtration shed and subterranean tank in the yard of the property. FIP said the move caught it by surprise.

Heinz "then severed contact with FIP, ignored the ServPro report and failed to engage ServPro or any other professional odor remediation company to clean the premises or take any steps to remove the odor as promised. Further, Heinz failed to remove its remaining equipment from the common areas," according to the suit.

On Feb. 5, FIP made a formal demand to Heinz that it fix all the damages it caused or compensate FIP for its troubles. The packaged food company hasn't done either.

Michael Mullin, a spokesman for Heinz, told CBS MoneyWatch the company believes the claims in the suit to be "groundless." He declined to elaborate further.

Heinz, which is controlled by investor Warren Buffett and Brazil's 3G Capital, recently announced plans for a $46 billion merger with Kraft Foods (KFT), a deal that would create North America's third-largest food and beverage company. In addition to Lea & Perrins, the combined company would also be home to other well-known brands such Jell-O, Maxwell House coffee, Planters Peanuts and, of course, Heinz Tomato Ketchup.

Lea & Perrins describes itself as the oldest commercially bottled condiment in the U.S. and was first imported into the U.S. from Great Britain by businessman John Duncan in 1839.

"To this day, the recipe remains a closely guarded secret and only a privileged few know the exact ingredients," the company says on its website.

Besides anchovies, the sauce also lists distilled white vinegar, molasses, water, sugar and onions as its other ingredients.