UPDATE: Sept. 18, 2020: At the sentencing hearing, Judge Robert Pitman ordered the company to pay $17.25 million in fines and forfeitures. It is the largest-ever criminal penalty following a conviction in a food safety case, according to the U.S. Justice Department.
The charges against CEO Paul Kruse were dismissed in July because they had not gone through a grand jury.
- Blue Bell Creameries agreed to pay a total of $19.25 million in criminal and civil forfeitures in connection with a 2015 listeria outbreak that sickened 10, killed three and resulted in all of the company's products being recalled. The company is pleading guilty to two misdemeanor counts of introducing adulterated food products into interstate commerce, which were filed in federal court in Texas on Friday. This is the second-highest fine to resolve a food safety matter, according to the Justice Department.
- In a separate case, former Blue Bell CEO Paul Kruse was charged with seven felony counts that all stem from an attempt to cover up the contamination. According to the criminal information, Kruse knew of contamination at Blue Bell plants since at least 2010. He refused to make facility repairs, ordered a halt in testing and tried to keep the widespread listeria contamination in 2015 quiet. The filing said he asked delivery drivers to remove products he knew could be contaminated from freezers at grocery stores and cafeterias, telling those customers there were manufacturing irregularities instead of the real reason. He refused to recall products or even send out a press release disclosing the listeria, issuing gradual recalls only after state and federal officials got involved. If convicted, Kruse could face more than 20 years in prison.
- Blue Bell sent out a formal apology to customers on Friday. "We learned hard lessons and turned them into determination to make the safest, most delicious ice cream available," the statement said. "We believe we are a leader in ice cream safety, with upgraded production facilities, training, safety procedures, and environmental and product testing programs. We have worked closely with federal and state regulators as we implemented comprehensive food safety measures."
These charges involving the Texas-based ice cream company have been a long time coming.
Aside from the obvious damages to Blue Bell's finances and reputation from such a massive recall, the only other criminal penalty the company has faced for the massive outbreak was an $850,000 fine from the Texas Department of Health Services levied in 2016. And of that fine, Blue Bell only ended up paying $175,000. The rest was forgiven because the Texas-based ice cream company made the improvements it was directed to and did not violate the terms of its agreement with the state.
Kruse retired from Blue Bell in 2017, though at the time he remained a member of the company's board. He left the board last year, according to KWHI. At the time of his retirement, Kruse had been at Blue Bell 31 years, starting to work there in 1986. He'd been CEO since 2004, and was the third generation of his family to work at the ice cream company.
Until the last few weeks, it may have seemed this outbreak was in Blue Bell's past. However, almost at the same time of this massive criminal settlement with the U.S. Justice Department, directors of Blue Bell also settled a shareholder lawsuit filed in the Delaware Court of Chancery. Members of partnerships that own the privately held ice cream company agreed to pay $15 million to a company shareholder who claimed the board of directors didn't do enough to ensure the cleanliness of its plants. Under settlement terms, the money will go back to the company, Bloomberg reported.
Now that these charges have been filed, Blue Bell appears to have finally left the listeria outbreak in the past. Its loyal consumers have remained fans, and since the outbreak, the company has expanded its distribution area to Virginia, the Kansas City area, Indiana, New Mexico and Kentucky. According to Statista, Blue Bell was the third best selling branded ice cream brand last year, with sales totaling $567.8 million. The statistics powerhouse calculated that 10.37 million Americans consumed four or more quarts of Blue Bell ice cream in 2019. With sales figures like these, the civil forfeiture will surely hurt, but it seems the company is well on its way to recovery.
Blue Bell's massive fine is second only to one levied by the Justice Department in the previous week. Chipotle agreed to pay $25 million for sickening more than 1,100 during the course of three years, the largest food safety fine ever.
Kruse, on the other hand, may not be so lucky. Executives that are charged separately in food safety cases may find themselves serving long prison sentences. Former Peanut Corporation of America CEO Stewart Parnell is serving a 28-year prison term after a jury found him guilty of knowingly shipping salmonella-tainted peanut butter to manufacturers and stores in 2008 and 2009. The outbreak killed nine and sickened more than 700. His brother, Michael Parnell, was a broker who provided Kellogg with the tainted peanut paste and is serving a 20-year sentence.
A long sentence is not a guarantee, though. After pleading guilty to misdemeanor counts, egg moguls Jack and Peter DeCoster were each sentenced to just three months in prison for selling tainted eggs that may have sickened 56,000 in 2010.
However, the charges make one thing clear. The federal government is not letting food safety violations go, and will prosecute anyone it deems responsible. With federal laws like FSMA now requiring more comprehensive and frequent food safety tests and remediation, massive cases like this one may be a thing of history — or those who get caught may face even steeper consequences.