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A federal appeals court has upheld dismissal of a case filed by a Starr Indemnity & Liability Co. unit that sought to be reimbursed for $10 million it paid a policyholder in connection with salmonella-contaminated raw chicken.
In 2015, Millsboro, Delaware-based Mountaire Farms Inc. delivered 120,000 pounds of salmonella-contaminated fresh boneless chicken breasts to the Portland, Maine, facility of Cincinnati-based AdvancePierre Foods Inc., which is a unit of Tyson Foods Inc., according to Wednesday’s ruling by the 1st U.S. Circuit Court of Appeals in Boston in Starr Surplus Insurance Co., as subrogee to AdvancePierre Foods Inc. v. Mountaire Farms Inc.
AdvancePierre used the chicken to produce “value-added” raw chicken products, such as frozen raw stuffed chicken breast, which led to a recall of 1,707,494 pounds of chicken by the federal Food Safety Inspection Service after people became ill.
AdvancePierre sustained losses of more than $10 million, including damages resulting from the return and destruction of the recalled chicken products, lost sales opportunities and loss of business and customers, according to the district court ruling.
Starr paid the $10 million policy limit to AdvancePierre, then filed suit in U.S. District Court in Portland, Maine, in a subrogation action, charging breach of warranty and strict product liability and seeking reimbursement.
The district court dismissed the charges. It concluded that under Maine law, salmonella “is an inherent, unavoidable, and recognized component of raw chicken that is eliminated by proper cooking methods and that the complaint failed plausibly to allege that the chicken from Mountaire was contaminated with any pathogen other than such salmonella,” said the appeals court ruling.
A three-judge appeals court panel unanimously upheld the ruling. “Starr’s challenge to the dismissal of its claims may succeed only if the complaint plausibly alleges that the raw chicken that Mountaire sold to AdvancePierre was contaminated with a type of salmonella that would persist despite proper cooking.” There, said the ruling, the complaint “comes up short.”
The complaint “makes no allegation – directly – that the type of salmonella found in the chicken linked to the infected persons could not have been eliminated by proper cooking,” said the ruling, in upholding the district court’s decision to dismiss the case.
A Mountaire attorney said in a statement, “Mountaire is gratified by the ruling.” A Starr spokesman had no comment.
Two former egg company executives have been sentenced to three months in jail, and the company fined $8.8 million, in connection with a 2010 salmonella outbreak that lead to the recall of millions of eggs.