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Judge recommends $12m settlement in peanut salmonella case

By Caroline Scott-Thomas , 27-Aug-2010

A federal magistrate judge has recommended approval of a $12m settlement for those who became ill or died after eating salmonella-tainted peanut products from the Peanut Corporation of America last year.

The salmonella outbreak originating at the Peanut Corporation of America’s Georgia and Texas plants was linked to more than 700 illnesses and nine deaths across the country. The outbreak also led to the recall of more than 3,900 peanut-containing products from more than 200 companies – one of the largest product recalls in US history.

US Magistrate Judge Michael Urbanski made the recommendation late on Wednesday to give 122 claimants a share of the $12m payout.

According to court documents, recommendations for individual settlements to be paid in the 45 children’s cases range from $19,750 to $395,008, and settlements in the nine wrongful death cases range from $98,752 to $987,520.

Hartford Casualty Insurance, the firm to which the Peanut Corporation of America (PCA) paid premiums to protect it from foodborne illness claims, agreed to the settlement in the fall.

In addition, the Kellogg Company has agreed to pay $1.5m to the families of children who fell ill and $580,000 between the families of two people who died as a result of the outbreak. The company sold Austin and Keebler brand crackers that contained peanut paste supplied by the Peanut Corporation of America (PCA). Kellogg’s was among the first companies to issue voluntary product recalls in connection with the salmonella contamination at PCA’s Georgia plant.

The $12m settlement must now be approved by a bankruptcy court judge, as the Peanut Corporation of America filed for Chapter 7 bankruptcy in February 2009, after salmonella was linked to peanut products from the company in January.

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