$12 million peanut settlement recommended

by Eric Schroeder
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RICHMOND, VA. — U.S. Magistrate Judge Michael F. Urbanski in Lynchburg, Va., on Aug. 25 recommended approval of a $12 million settlement in a case in which more than 120 people who were sickened or died as a result of the 2009 Salmonella outbreak linked to two plants owned by the Peanut Corporation of America, Lynchburg. The settlement now must be approved by a bankruptcy judge.

After the P.C.A. filed for Chapter 7 bankruptcy following the outbreak, Roy V. Creasy was appointed as trustee. Mr. Creasy, in an effort to seek a global resolution of the claims filed against the P.C.A., sold the P.C.A.’s insurance policies to Hartford Insurance for $12,750,000. The majority of the amount, $12 million, was set aside in a fund to be used to pay any claims for personal injuries. The remaining $750,000 was to be used for expenses incurred in connection with creating a claims resolution process.

Under terms of the settlement, payouts range from $2 million for a West Virginia man to less than $50,000 for some of the children sickened. Most of the claims are for less than $100,000.

In addition to the P.C.A. settlement, Kellogg Co., which recalled millions of its Austin and Keebler peanut butter sandwich crackers as part of the outbreak, has agreed to undisclosed settlement funds.

“All parties involved in the distribution of the BI fund and the settlement of the multitude of personal injury claims against P.C.A. and Kellogg were tasked with a complicated and difficult problem,” Judge Urbanski wrote in his decision. “They endeavored to reach an agreement between all parties that splits the available funds in a fair and equitable manner. After considering all of the evidence provided by the parties, and after a thorough hearing on the complex and inherently nebulous issues of valuation, the undersigned concludes that they have done so.”
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