Salmonella Outbreak Reaches the Courts; Dozens of Lawsuits, Bankruptcy Liquidation to Follow

The nationwide outbreak of deadly salmonella-contaminated peanut products blamed for nine deaths, more than 600 illnesses, and one of the largest food recalls in U.S. history has now spread to the courtroom.

The Peanut Corp. of America, the Virginia company accused of shipping contaminated peanut butter, peanut paste, and other products from its Georgia and Texas facilities, has filed for bankruptcy protection. The company also has been named in dozens of personal-injury lawsuits seeking financial damages from people sickened or killed by the company’s tainted food.

Peanut Corp. was a major supplier of peanut products for some of the largest food-makers in the nation. Thousands of products, including cookies, ice cream, dog biscuits, and nutritional bars, were made from the company’s products, forcing the recall of about 2,000 items over concerns about salmonella contamination.

A criminal investigation into the company is underway and could lead to charges being filed against owner Stuart Parnell and other company officials.

Bankruptcy Liquidation

Peanut Corp. filed for Chapter 7 bankruptcy in February 2009 and a court-appointed trustee is now overseeing liquidation of the company’s assets in an effort to pay off creditors and satisfy any judgments entered against the family-owned company. The process of calculating those assets is just beginning, said Roy Creasy, the man appointed as trustee over the bankruptcy.

The process of evaluating lawsuits and damages claims against the company also is just beginning, Creasy said.

Dozens of Lawsuits Filed

People who claim they or their loved ones were injured or killed as the result of eating food contaminated by salmonella have been suing Peanut Corp. for weeks. There are now dozens of similar suits filed across the country alleging the company was negligent for maintaining unsanitary conditions at two of its food-processing plants and for knowingly shipping tainted peanut products to food companies.

One such suit was recently filed by David and Sarah Kirchner of Minnesota. The couple sued Peanut Corp. on behalf of their two children—Michael, 3, and Lily, 6 months —who became ill after eating peanut butter crackers.

The couple is seeking unspecified financial damages after their children became sick over the Christmas 2008 holiday. Michael had to be hospitalized for three days and both children suffered from diarrhea that caused significant weight loss and lingering fatigue, according to the suit.

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