Bankruptcy court grants $11.25M to soy nut butter E. coli victims
- On Thursday, an Illinois bankruptcy court released remaining insurance coverage to victims of the 2017 E. coli outbreak linked to I.M. Healthy SoyNut Butter and manufacturer Dixie Dew, according to Food Safety News. A total of $11.25 million was awarded to 26 plaintiffs.
- The outbreak investigation in the spring of 2017 revealed that 32 people from 12 states had been sickened by E. coli O156:H7 linked to the product, according to the Centers for Disease Control and Prevention. Twelve people were hospitalized, nine developed hemolytic-uremic syndrome and there were no deaths. Most of the victims were children.
- Soy nut butter made by Dixie Dew under the I.M. Healthy brand and sold by the SoyNut Butter Co. of Glenview, Illinois, was recalled by the latter company on March 4, 2017. The recalls were expanded twice to include more products, like granola. The Food and Drug Administration suspended Dixie Dew's food facility registration on March 28 for a number of violations, and SoyNut Butter filed for bankruptcy on May 27. I.M. Healthy and Dixie Dew also filed for bankruptcy.
Not all of those sickened by this outbreak filed legal complaints with the bankruptcy court, according to Food Safety News, noting that 26 of the 32 did. The court appointed a trustee to evaluate the claims, and they were assessed at nearly $70 million total — ranging from $25,000 to $25 million, depending on how severe the illnesses were. After the court paid out $6 million this past October, the balance of $5.25 million covered by insurance was expected to be paid out on Jan. 10, the site reported.
While the settlement seems like a lot of money, it is barely covering some expenses. According to the Miami Herald, a teenage victim in Florida was in the hospital for 23 days and developed hemolytic-uremic syndrome. She was awarded $470,026 from the bankruptcy court — amounting to about 16 cents on the dollar for an assessed $2.9 million in gross damages. Court documents showed $507,000 for medical expenses.
The 26 plaintiffs plan to pursue separate legal complaints against others in the supply chain, as well as against retailers who sold the tainted products, Food Safety News reported. The retailers could include Amazon, which reportedly sold the recalled soy nut butter for several months after the recall. According to the online news site Cambridge Day in Massachusetts, I.M. Healthy SoyNut Butter was also available about a week after the first product recall announcement at local Whole Foods stores as well as a food cooperative and was also used in one local public school.
At the time, the Food and Drug Administration would not release the names of the retailers, day-care centers and schools selling or serving the recalled soy nut butter and granola products because it was deemed "confidential commercial information" exempt from disclosure. But since then, the FDA has shown more flexibility on the matter and indicated a willingness to make retailer information available during recalls. No doubt the agency has heard from plenty of irritated consumers wondering why this information is not routinely provided to help protect public health.
It's hard to tell at this point how much money would amount to a fair settlement in this case, but these recent payouts were limited by insurance coverage. Any subsequent court judgments could be a very different matter, depending on whether there is a sympathetic jury and the individual circumstances serious enough to warrant large awards. When there are children involved — particularly ones who may have developed hemolytic-uremic syndrome, a severe and potentially life-threatening type of kidney failure — damage awards can be even more significant, unless there are legally imposed limits.
Some companies linked to foodborne illness outbreaks have settled cases without going to trial, since the publicity could prove to be a double whammy for their reputation. Chipotle settled with more than 100 customers who became ill from E. coli after dining at the chain's restaurants in 2015. Taking that route helps to remove a firm's name from ongoing media coverage and could be a likely result for these victims too.
Since there will be additional legal cases involving the recalled soy nut butter and granola products, other companies still in business may decide to settle rather than have the circumstances publicized. Amazon and Whole Foods have an extremely deep pocket, so they could be among the first targets — and the first to choose to resolve any such cases out of court. But regardless of what comes next, there's no doubt this particular foodborne outbreak is far from resolved.