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Peanut Corporation Faces Damage Suits, Class Actions

Company's bankruptcy won't necessarily derail litigation efforts

By Jon Hood
ConsumerAffairs.com

February 14, 2009

• Complete List of Recalled Products --- • Texas Fines Peanut Plant $14.6 Million For Violations • Lawmakers Chastise Food Executives Over Salmonella Outbreak • Source of Salmonella Contamination in Peanut Butter May Be Found • More Pet Foods Added to Salmonella Recall • Peanut Recall Expanded To "All Ingredients" • Peanut Corporation of America Files for Bankruptcy • PCA Shuts Second Peanut Plant In Salmonella Scare • Peanut Butter Recall Claims Still More Products • Ice Cream, Cookies, Donuts Join the Massive Peanut Butter Recall List • Peanut Recall Expands as Feds Release Findings • Congresswoman Demands Peanut Probe • Feds: Peanut Corporation Knew of Salmonella Problem • Dozens More Peanut Butter Products Recalled • NutriSystem Joins Peanut Butter Recall • Peanut Butter Dog Treats Recalled Due to Salmonella • Peanut Butter Health Bars Recalled • Peanut Butter Recall List Grows • Peanut Butter Recall Spreads To More Products • Kellogg Puts Peanut Butter Crackers "On Hold" Due to Salmonella Concerns • Peanut Butter Recalled Due to Possible Salmonella Contamination • King Nut Issues Peanut Butter Recall • Consumer Complaints about Peanut Butter --- Earlier stories • Judge Nixes Peanut Butter Class Action • FDA Failed to Follow Up on 2004 Peanut Butter Contamination • Peter Pan Returning To Store Shelves • Consumers Still Getting Sick From Tainted Peanut Butter • Fourth Peanut Butter Death Reported • Peanut Butter Recall Extended to Products Made as Early as 2004 • Peanut Butter Scare Stirs Congress • Consumers Left Holding the Peanut Butter Jar • Earlier Peanut Butter Contamination Kept Quiet • Peanut Butter Developed as a Health Food • Third Death Blamed on Peanut Butter • Peanut Butter Recalls Spread to Ice Cream & Desserts • FDA Says Peanut Butter Salmonella Outbreak Is "Ongoing" • Salmonella Confirmed in Peanut Butter • Second Death Linked To Tainted Peanut Butter • Death Linked To Tainted Peanut Butter • ConAgra Recalls Tainted Peanut Butter as Complaints Mount • FDA Widens Peanut Butter Warning • Reports of Peanut Butter-Borne Illness Increase • FDA Warns of Salmonella in Peanut Butter --- • Consumer Complaints about Peanut Butter --- • Salmonella: What It Is • More about Food Safety ...

The peanut butter salmonella outbreak has already had wide-ranging and, in some cases devastating, consequences. It is likely only a matter of time before a class-action lawsuit is filed against the Peanut Corporation of America (“PCA”), the company whose contaminated peanuts are believed to be the source of the outbreak.

Indeed, several firms are already laying the groundwork for a possible suit, gathering data and asking consumers who have been affected to contact their offices.

As the Pennsylvania firm of Pogust, Braslow & Millrood notes on its website, the FDA has already blamed PCA for “failure to manufacture foods under conditions and controls necessary to minimize the potential for growth of microorganisms and contamination.” The law firm of Parker Waichman Alonso is offering free consultations to those affected by the outbreak.

But while some aspects of the incident make a class action seem appealing, any suit will invariably face tough hurdles before it moves forward.

Smoking guns

At this point, there is little doubt as to PCA’s liability for the outbreak, which has so far caused nine deaths and around 600 illnesses. The bacteria are thought to have originated from PCA’s Georgia plant, and the evidence against the company is staggering. The FDA announced that PCA knowingly shipped contaminated peanut butter 12 times in the past two years.

Last Wednesday, PCA president Stuart Parnell refused to testify at Congressional hearings, eventually causing frustrated lawmakers to dismiss him from the session altogether. In mid-January, PCA issued a voluntary recall of certain products manufactured after July 1, 2008; Parnell insisted the recall was instituted “with the safety of our consumers as our first priority.”

In the weeks that followed, more products were added to the recall list, and on February 12, in a stunning development, Texas health officials ordered PCA to recall all products ever produced at a second plant, located in Plainview, Texas. The state’s report detailed rodent droppings, bird feathers, and dead rodents in a crawl space above the area where the peanut butter was manufactured. Further, officials found that the air flow system was pulling the debris into the processing area, posing enormous health risks.

Finally, PCA has a history of health-related allegations; it settled a lawsuit in 1992 after inspectors discovered toxic mold in their products, and in 2001 health officials found that PCA peanuts may have been exposed to pesticides.

Litigation difficult

Even with such seemingly unassailable evidence, any class action brought against the company will be difficult to litigate. In February 2007, a class action was filed on behalf of individuals who fell ill due to a salmonella outbreak affecting peanut butter manufactured by ConAgra. The suit, brought by lead plaintiffs James Daniels and Linda Oswald, was handled by Marler Clark, a firm that has for 15 years specialized in food contamination and resulting illnesses.

In spite of the number of potential class members who stepped forward — 2,200 families contacted Marler Clark — and the attorneys’ extensive experience in the field, in August 2008 a federal judge in Georgia refused to let the suit proceed. In his order, Judge Thomas Thrash said that, whether or not the class action was certified, each class member would have to prove individual issues such as injury, causation, and damages.

Essentially, the judge said, the suit would proceed in the same manner regardless of whether it was certified as a class — each class member would need a separate trial — negating the judicial efficiency that is usually achieved through class actions.

The judge also said that the variation in state laws would render the suit impossible to litigate, insisting that “class certification is impossible where the fifty states truly establish a large number of different legal standards governing a particular claim.” The judge went so far as to suggest that litigation might not even be the best way to resolve the controversy; in that case, class members were entitled to a full refund from ConAgra, which Judge Thrash said might be the best resolution for all parties involved.

While no two cases are identical, any class action brought against PCA will likely face similar factual and legal hurdles.

Individual suits

In any event, whatever form it takes, there will be plenty of litigation; there have already been at least a dozen individual suits filed against PCA. The Minnesota law firm of Pritzker Olsen has filed a wrongful death suit on behalf of a 72-year-old woman who died after eating King Nut peanut butter, which is manufactured by PCA.

Marler, the attorney who brought the class action against ConAgra, has already filed a number of individual lawsuits, including one on behalf of two children who were hospitalized after eating Kellogg’s peanut crackers containing PCA-manufactured peanuts. He is looking into at least two suits on behalf of families who lost loved ones to the contaminated products.

Marler says that the scope of illness is startling, even given his long background in the field. He went so far as to speculate that “the scope of the product recall may eventually prove to be the largest recall of food we’ve ever had in this country.”

PCA’s insurance company, anticipating the coming wave of litigation, isn’t taking any chances either. On February 3, Hartford Casualty Insurance filed suit against PCA, seeking a declaratory judgment that the company’s policy excludes claims for salmonella infection.

In any case, it looks like PCA likely won’t survive the scandal; the company filed for Chapter 7 bankruptcy on Friday. Undeterred, Marler says that if PCA doesn’t have enough assets and insurance to cover civil settlements, companies who used the peanuts in their products will have to “step up” and cover the costs.

Major brands OK

None of PCA's products were sold directly to consumers. They were distributed to long-term care facilities, universities, food service industries, and private label food companies in the United States, Canada, Haiti, Korea, and Trinidad.

U.S. food makers, however, used the company's peanut butter and paste to make various products, including cookies, crackers, ice cream, energy bars, and dog treats. That's why so many food manufacturers have recently recalled their products.

And the list of products pulled off store shelves continues to grow almost daily, making it one of the country's largest food-related recalls.

The massive recall, however, does not include any of the major brands of peanut butter sold on grocery stores shelves. That's a message the makers of Jif, Skippy, and Peanut Pan peanut butters have taken great pains to broadcast to consumers. Some have taken out ads in newspapers nationwide to reassure buyers their products are safe to eat.

The FDA now has a complete list of all products recalled in the salmonella outbreak on its Web site. Consumers can check that Web site daily to see if their favorite products are included in any recalls.

Salmonella is an organism that can cause serious and sometimes fatal infections in young children, frail or elderly people, and those with weakened immune systems. Symptoms include fever, diarrhea (which may be bloody), nausea, vomiting, and abdominal pain. In rare cases, it can cause more severe illnesses, including arterial infections (i.e., infected aneurysms), endocarditis, and arthritis.

Health officials say salmonella can also be transferred to humans who handle pet treats tainted with the organism. They advise pet owners to wash their hands after they come touch these pet treats.

Symptoms of salmonella infection in pets include lethargy, diarrhea, bloody diarrhea, fever, and vomiting. Some pets, however, may have a decreased appetite, fever and abdominal pain.

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