ConAgra to pay $11.2M to settle tainted peanut butter case

AP News
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Posted: Dec 13, 2016 5:21 PM

ALBANY, Ga. (AP) — A ConAgra subsidiary pleaded guilty Tuesday and agreed to pay $11.2 million — including the largest criminal fine ever imposed for a foodborne illness in the United States — to resolve a decade-long criminal investigation into a nationwide salmonella outbreak blamed on tainted peanut butter.

ConAgra admitted to a single misdemeanor count of shipping adulterated food. No individuals at the leading food conglomerate faced any charges in the 2006 outbreak, which sickened at least 625 people in 47 states.

Disease detectives traced the salmonella to a plant in rural Sylvester, Georgia, that produced peanut butter for ConAgra under the Peter Pan label and the Great Value brand sold at Wal-Mart. In 2007 the company recalled all the peanut butter it had sold since 2004.

Leo Knowles, president of ConAgra Grocery Products, offered no testimony as he entered the misdemeanor plea Tuesday on behalf of the Chicago-based corporation's subsidiary.

"It made a lot of people sick," federal prosecutor Graham Thorpe said Tuesday as he described ConAgra's decision to continue shipments from the Georgia plant in late 2006, before corrective actions were completed, despite lab tests that had twice detected salmonella in samples.

"The industry has taken notice of this prosecution," Thorpe added.

Though the Justice Department called $8 million the heftiest criminal fine ever imposed in a U.S. food safety case, it represents just one-tenth of one percent of ConAgra's current $8 billion market capitalization. The company also will pay $3.2 million in cash forfeitures to the federal government.

U.S. District Court Judge W. Louis Sands waited more than 18 months after ConAgra agreed to the plea deal with prosecutors, so that victims could be contacted before he approved the settlement.

The case began in 2006, as doctors around the country reported severe gastrointestinal illnesses caused by salmonella. The Centers for Disease Control and state health officials traced the common factor — peanut butter — to the plant in rural Georgia.

In February 2007, ConAgra recalled its previous three years of peanut butter production, and Peter Pan vanished from store shelves for about six months. Despite the widespread illnesses, no deaths were ever confirmed to be caused by the salmonella outbreak.

"The company has behaved in a model way, as a model corporate citizen, ever since that time," Douglas Fellman, an attorney for ConAgra, told the judge. "Since that time, we have an unblemished record. Peter Pan peanut butter is wholesome and it's safe."

ConAgra said it didn't know peanut butter was contaminated with salmonella before it was shipped. However, the plea agreement documents noted that ConAgra knew peanut butter made in Georgia had twice tested positive for salmonella in 2004. Problems weren't all fixed by the time of the outbreak.

ConAgra officials blamed moisture from a leaky roof and a malfunctioning sprinkler system at the Georgia plant for helping salmonella bacteria grow on raw peanuts. The company spent $275 million on upgrades at the Georgia plant and adopted new testing procedures to screen for contaminants.

The $3.2 million in forfeitures relates to the tainted products, which by federal law must be surrendered to the government. Since ConAgra dispensed with the recalled peanut butter nearly a decade ago, prosecutors asked for cash instead.

None of the criminal penalties goes to victims. The judge said Tuesday more than 150 people had filed paperwork seeking financial restitution, but none could prove they were sickened by salmonella caused by eating the recalled peanut butter.

Three women made their case to the judge in person Tuesday, testifying they suffered severe gastrointestinal illness after eating from jars of Peter Pan in late 2006, and suffered from lingering health problems a decade later. The judge said he was sympathetic, but awarded them no money.

"This to me is an injustice done all over again, especially after 10 years of waiting for justice," said Mona McCombs of Bloomington, Indiana.

McCombs testified that she and several relatives, including her elderly mother, became extremely sick after eating Peter Pan just before Christmas in 2006. She blames ConAgra for her mother's death three months later. But none of the sickened family got tested for salmonella to prove it.

The judge noted that others had already received cash from ConAgra in civil settlements, which he said totaled $36 million to 6,810 people.

About 2,000 of them were represented by Bill Marler, a Seattle-based attorney who specializes in food-safety cases. He said the case shows corporations can be prosecuted even when there's no evidence of intentional criminality. The misdemeanor charge, he said, required only that ConAgra shipped the contaminated food.

"Companies are very concerned, they're very worried," Marler said. "They're very interested in knowing: How can they charge us with a crime even if we don't mean to do it? People are paying attention to that and hopefully it's going to drive positive food behavior."