Blue Bell Creameries Pleads Guilty to Federal Charges, and Justice Department Charges Former Company President, Over Ice Cream Listeria Contamination

On May 1, the U.S. Department of Justice announced that it had obtained a guilty plea from ice cream manufacturer Blue Bell Creameries L.P. (Blue Bell) to misdemeanor charges under the federal Food, Drug and Cosmetic Act that it had shipped contaminated ice cream products that were linked to a 2015 listeriosis outbreak.  It also stated that Blue Bell’s former president, Paul Kruse, was separately charged in connection with the outbreak, in an information charging seven felony counts of conspiracy and attempted wire fraud relating to Kruse’s alleged efforts to conceal from customers what Blue Bell knew about the listeria contamination.

Under the terms of the plea agreement, Blue Bell agreed to pay a criminal fine and forfeiture totaling $17.25 million.  Under a separate resolution with the Justice Department, it also “agreed to pay an additional $2.1 million to resolve civil False Claims Act allegations regarding ice cream products manufactured under insanitary conditions and sold to federal facilities.”  The $19.35 million total, the Department stated, constitutes “the second largest-ever amount paid in resolution of a food-safety matter.”

The charges against Blue Bell stemmed from a series of actions that Blue Bell took after Texas state officials notified it in February 2015 that two ice cream products from the company’s Texas factory tested positive for Listeria monocytogenes. This bacteria, according to the Mayo Clinic, can causes listeriosis, an illness that “can be fatal to unborn babies, newborns and people with weakened immune systems.”

The plea agreement with Blue Bell stated that Blue Bell “directed its delivery route drivers to remove remaining stock of the two products from store shelves, but . . . did not recall the products or issue any formal communication to inform customers about the potential listeria contamination.”  Two weeks after they were notified 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.”

In March 2015, the Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) conducted tests that “linked the strain of listeria in one of the Blue Bell ice cream products to a strain that sickened five patients at a Kansas hospital with listeriosis.”  On March 13, 2015, the FDA, CDC, and Blue Bell all issued public recall notifications.  On March 23, 2015, a second recall announcement was made after “[s]ubsequent tests confirmed listeria contamination in a product made at another Blue Bell facility in Broken Arrow, Oklahoma.”

FDA inspections in March and April 2015 found sanitation issues at Blue Bell’s Texas and Oklahoma facilities, “including problems with the hot water supply needed to properly clean equipment and deteriorating factory conditions that could lead to insanitary circumstances.”  After temporarily closing all of its plants in April 2015 to clean and update the facilities, Blue Bell reopened its facilities in late 2015.  The Justice Department credited the company with “tak[ing] significant steps to enhance sanitation processes and enact[ing] a program to test products for listeria prior to shipment.”

The Justice Department’s civil False Claims Act settlement with Blue Bell resolves allegations that the company

shipped ice cream products manufactured in insanitary conditions to U.S. facilities, and later failed to abide by contractually required recall procedures when its employees removed products from federal purchasers’ freezers without properly disclosing details about the potentially contaminated ice cream to the appropriate federal officials.

The Justice Department also stated that the information against Kruse alleges that he “orchestrated a scheme to deceive certain Blue Bell customers after he learned that products from the company’s Texas factory tested positive for Listeria monocytogenes.”  In particular, Kruse allegedly “directed other Blue Bell employees to remove potentially contaminated products from store freezers without notifying retailers or consumers about the real reason for the withdrawal,” and “directed employees to tell customers who asked why products were removed that there had been an unspecified issue with a manufacturing machine instead of that samples of the products had tested positive for listeria.”

In a public statement issued on May 1, Blue Bell said that in 2015, it was “heartbroken” about the events that led to its voluntary recall of all of its ice cream from the market, and apologized “to everyone who was impacted.”  It acknowledged that the May 1 agreement with the Justice Department “reflects that we should have handled many things differently and better.”  Since it resumed production in 2015, the company noted, it tests its ice cream “and deliver[s] it to stores only after independent tests confirm it is safe.”

Note:  Coming only ten days after the $25 million fine against Chipotle Mexican Grill for criminal charges stemming from food adulteration that sickened more than 1,100 people, this resolution with Blue Bell provides a strong indication that the Justice Department is treating food safety as a significant consumer-protection and criminal-enforcement issue.  That commitment to food-safety enforcement may become more evident in the coming months, as law enforcement and regulatory agencies monitor food manufacturers’ and chain restaurants’ efforts to reopen in the midst of the coronavirus pandemic.

The Kruse information also provides a strong reminder to all corporate executives that when confronted with potentially damaging information about their companies’ products or services, it is never an acceptable option to limit the damage by concealing that information from, or lying outright to, their customers or the public.  (P.S.: The fact that Kruse was charged by information is noteworthy, as the Justice Department routinely charges by information only when it expects the charged defendant to plead guilty to those charges.)