A federal judge in Georgia has handed the former CEO of Peanut Corp. of America (PCA) the stiffest penalty on record for a company executive in a food-poisoning outbreak. The sentence came down nearly a year after a jury convicted Stewart Parnell of 72 counts of fraud, conspiracy, and the introduction of adulterated food into interstate commerce. In a further development, the same judge determined two days after the sentencing that Parnell was a flight risk and denied his request for release from prison pending his appeal.

The long road to Parnell’s conviction and sentencing began in 2008 with a salmonella outbreak that killed nine and sickened over 700 others. The outbreak was traced to peanut butter paste manufactured and distributed from PCA processing plants. Raids by federal inspectors on the plants found evidence of mold, dirt, bird droppings, roaches, and rats. Employees later testified at trial as to the filthy conditions under which PCA manufactured the peanut butter paste that was later distributed to institutions, food service providers, food manufacturers and distributors across the U.S. Peanut butter and peanut paste is commonly used as an ingredient in many products, including cookies, crackers, cereal, candy, ice cream, pet treats, and other foods. The salmonella outbreak ultimately led to the largest food recall in U.S. history, and affected at least 361 companies and 3,913 different products manufactured using PCA ingredients. By February of 2009, the New York Times reported that peanut butter sales had dropped nearly 25% as consumers shunned all brands of peanut butter, whether they were affected by the recall or not.

Evidence produced at Parnell’s trial showed that despite multiple tests that indicated salmonella contamination in the company’s products, Parnell ordered those products shipped. In one infamous email revealed during a Congressional hearing on the outbreak, Parnell, referring to products that had tested positive for salmonella, wrote, “Let’s turn them loose.” In addition, former PCA operations managers testified at the trial that Parnell had forged false certificates of analysis indicating that products had tested negative for salmonella when they had in fact tested positive or, in other instances, had not been tested at all. Ironically, Parnell served on the U.S. Department of Agriculture’s Peanut Standards Board, which is tasked with setting quality and handling standards for peanuts. He was removed from that position by the Secretary of Agriculture in early 2009.

Parnell’s trial, conviction and sentencing have broken new legal ground – never before has a food company executive been prosecuted, let alone convicted, in a felony case related to a food contamination outbreak. While Parnell’s behavior was certainly egregious and the evidence of wrongdoing mountainous, the message for executives in the food industry is clear – federal prosecutors will now aggressively pursue, even to the point of filing criminal charges, individuals at the highest levels in a company in food contamination outbreaks. As stated by U.S. Attorney Michael J. Moore of the Middle District of Georgia on the day of Parnell’s sentencing, “The sentence that was handed down today means that executives will no longer be able to hide behind the corporate veil…This case…was about making sure individual wrong doers were held accountable and the losses suffered by the victims and their families are never forgotten.”

For further information on the subject matter of this alert, please contact the following FisherBroyles attorneys for more information.

Brian E. Dickerson

Nicole Hughes Waid