Consumers and/or persons suffering peanut butter related illness or wrongful death still have personal injury claims despite the bankruptcy filing of the Peanut Corporation of America. Most companies like this have liability insurance to protect them from liability claims for food poisoning (or wrongful death from food contamination) such as peanut butter related Salmonella poisoning that is involved in the recent outbreak. Usually, a liability insurance policy applies to all claims that arise any time during which the policy was in effect. Therefore, since the policy was in effect well before the filing of the bankruptcy, when these claims arose the company’s liability insurance company will likely be required to defend the company against personal injury claims for food poisoning or wrongful death. How does the filing of a Chapter 7 bankruptcy by this company affect personal injury claims?
It is possible that the bankruptcy court where the company filed its Chapter 7 petition must approve personal injury claims to go forward in court. This is normally called a lifting of the bankruptcy stay. However, the bankruptcy filing should not have an adverse effect on a valid insurance policy that protected the company, prior to the filing of the chapter 7 petition.
Our Virginia- Carolina personal injury law firm is based in southeastern Virginia and the Peanut Corporation of America Chapter 7 bankruptcy filing was filed in Virginia’s federal bankruptcy court. The Peanut Corporation of America was based in Lynchburg, Virginia although it had plants in several other states including Georgia and Texas. The company is currently under criminal investigation by the United States government because inspectors found roaches, mold and other food contamination at the company’s Georgia plant. In addition, the company’s Texas plant was shut down because of potential contamination with salmonella also. According to news reports more than 600 people have suffered peanut butter salmonella food poisoning, and there are nine deaths as a result of the peanut butter contamination, much or all of it alleged to arise from the Peanut Corporation of America products.
Also, for consumers suffering food poisoning or death as a result of salmonella, there will be a determination of where to file any potential lawsuits. Normally, a company that distributes a dangerous product or food may be sued in the state in which it is has a registered agent, or a business headquarters such as in Virginia. Also, a, a company normally can be sued in a place where it knowingly distributes food products. With regard to the peanut butter salmonella poisoning situation, the peanut Corporation of America provided its peanut products to a number of other larger food distributors and sellers in the United States. Each party involved in the distribution or sale of a contaminated food product may have liability and be sued.
In Virginia, as well as many states, sellers of food products must provide a warranty, that is implied in the law, that it’s food products are safe for human consumption. This is called an implied warranty of wholesomeness. Any time a Virginia company breaches its warranty to provide food products that are safe for human consumption, it may be sued under this food warranty, and in addition, under negligence law. There also may be federal or state regulations that are breached if a company distributes contaminated food based on improper manufacturing practices, or known contamination that originates at its plant.
It is of obvious important that the United States food supply be safe and that consumers can rely on the general safety of food products sold in marketplaces and supermarkets. Food poisoning claims have some issues relating to proof, but in a case like the peanut butter Salmonella outbreak, there is already abundant evidence of knowing distribution of food products that may have been contaminated prior to distribution and that the company knew of the contamination at its plants.