JUDGE CHALLENGES BLUE BELL’S DEFENSE IN SHAREHOLDER LAWSUIT

  

A judge is questioning Blue Bell’s defense in a shareholder lawsuit connected to the deadly 2015 listeria outbreak. 

According to a report from Bloomberg Law, during a hearing for the case Discover Property & Casualty Insurance et al versus Blue Bell Creameries USA Inc., a judge in the Delaware Chancery Court challenged arguments by Blue Bell that there was not a connection between high levels of coliform bacteria found in its facilities and listeria contamination.  The presence of coliform bacteria is usually harmless, but can be an indicator of sanitation problems. 

Per the report, Blue Bell began testing for pathogens after the U.S. Army, an important customer for the company, repeatedly flagged high coliform levels as a concern.  Vice Chancellor Nathan Cook said the testing implemented by Blue Bell “seems to be extraordinarily difficult to reconcile with the assertion that management believed there was zero connection between the coliform and the presence of pathogens,” adding, “That’s extraordinary tension in the evidence.” 

Shareholder attorneys claimed managers for Blue Bell did not inform the board about the food safety risks that led to the listeria outbreak, and they argued the managers had too much authority to decide what was important to share about company operations.  However, current and former officials from Blue Bell previously testified that they met more often than most boards, and that important food safety information was available before the outbreak.

The original plaintiff, Jack Marchand, died in 2022.  His estate, which is now leading the lawsuit, estimates Blue Bell suffered $346 million in damages stemming from the outbreak.  Should the court determine that Blue Bell’s management failed in its oversight, directors and officers at the time could be found personally liable for damages.