JUDGE RULES BLUE BELL ON THE HOOK FOR $60 MILLION SETTLEMENT
Federal Judge Robert Pitman of the Western District of Texas has issued a summary judgment in another case involving Blue Bell Creameries.
Insurance companies, Discovery Property & Casualty Company and the Travelers Indemnity Company of Connecticut, filed a lawsuit against Blue Bell Creameries USA Inc., Blue Bell Creameries LP, Blue Bell Creameries Inc., as well as officers and directors from the company.
The lawsuit stems from the 2015 lysteria outbreak, which resulted in three deaths and at least ten people having serious illnesses. The outbreak resulted in the temporary shutdown of plants in Texas, Oklahoma, and Alabama, and all of their products being pulled from store shelves.
In 2020, a Delaware court ruled that Blue Bell had to pay a $60 million settlement to shareholders.
On April 1, 2021, Blue Bell notified the insurance companies and claimed that they were entitled to coverage under their policies.
The two companies filed a suit on June 3, 2021 saying that they have no duty to defend or indemnify any defendant for the shareholder suit under the insurance policies.
Blue Bell filed a lawsuit for breach of contract on August 6, 2021.
That was followed on December 10, 2021 with the plaintiffs filing for a summary judgment and the defendants filing a cross motion. In the cross motion, attorneys for Blue Bell claimed that “the oversight and failures did not rise to the level of misconduct necessary to preclude them from coverage as insureds.”
Judge Pitman, who also oversaw last month’s mis-trial against former Blue Bell President Paul Kruse, found that Blue Bell’s insurance coverage was no good. The ruling also means that Blue Bell is on its own for paying off the $60 million settlement.
Pitman said his judgment was appropriate because, “no genuine dispute exists regarding any material fact.”
He added, “Blue Bell officers and directors knowingly and willfully breached their fiduciary duties and therefore cannot be considered insured under the policy.”