Blue Bell Creameries Pleads Guilty to 2015 Listeria Outbreak, Former CEO Charged

May 5, 2020 | Marc S. Ullman | Commercial Litigation | Compliance, Investigations & White Collar

The United States Department of Justice (DOJ) announced that it had reached an agreement with Blue Bell Creameries of Brenham, Texas, to permit the company to plead guilty to two misdemeanor counts of distributing adulterated ice cream in violation of the federal Food Drug and Cosmetic Act and pay a criminal fine and forfeiture amount totaling $17.25 million. The agreement also requires Blue Bell to pay an additional $2.1 million to settle civil False Claims Act allegations.

According to the DOJ, the $19.35 million total payment constitutes the second largest-ever amount paid in resolution of a food-safety matter. (Last month, Chipotle Mexican Grill agreed to pay a $25 million civil penalty related to charges stemming from more than 1,100 cases of food-borne illnesses.) At the same time as it announced the agreement with the company, the DOJ revealed that Blue Bell’s former president, Paul Kruse, also was charged with seven felony counts related to his alleged efforts to conceal from customers what the company knew about the listeria contamination.

The plea agreement and charging document against Kruse describe a chain of events including efforts to cover up the company’s knowledge of it contaminated products. Specifically, it is alleged that Texas state and FDA officials advised Kruse that at least seven samples of two Blue Bell ice cream products had tested positive for Listeria contamination.

The DOJ press release states:

Blue Bell directed its delivery route drivers to remove remaining stock of the two products from store shelves, but the company did not recall the products or issue any formal communication to inform customers about the potential isteria contamination. Two weeks after receiving notification of the first positive listeria tests, Texas state officials informed Blue Bell that additional testing confirmed listeria in a third product. Blue Bell again chose not to issue any formal notification to customers regarding the positive tests.

The information filed against Kruse also alleges that he advised FDA officials that Blue Bell would start a recall at the same time as he was directing employees to attribute the product removals to an equipment malfunction. Thereafter, he allegedly rejected a draft press release about two products that tested positive for Listeria, the withdrawal of those products and a warning to consumers about the potential health consequences, claiming it was unnecessary.

According to the Centers for Disease Control and Prevention, three deaths and 10 hospitalizations across four states were tied to Blue Bell’s products.

The charges against Kruse should serve as an important reminder that executives of companies regulated under the Food, Drug and Cosmetic Act are not protected by the corporate shield and are subject to personal liability for violations of the Act.

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