ALBANY, GA—Defense attorneys in the restitution phase of the Peanut Corporation of America (PCA) criminal prosecution focused in Wednesday on a 2009 claims adjustment agreement that a bankruptcy court used to disperse $12.75 million to 122 victims of the PCA-caused Salmonella outbreak. E. Scott Austin, representing former PCA owner and chief executive Stewart Parnell, suggested the bankruptcy court claims administrator should have done more at the time to challenge plaintiffs’ attorneys on “causation” in order to help his client, who is now facing jail time after being convicted by a jury last September. pcaSign_406x250“We’re talking about how long somebody might spend in prison,” Austin stressed. But Alan Maxwell, the Atlanta attorney best known as the leader in the defense of the food industry in foodborne illnesses cases, was having none of it. He dominated in six hours on the witness stand, which was broken up by a couple of recesses and a lunch break. Maxwell patiently explained how most foodborne illness claims are settled before trial through use of systems not unlike the one used in the PCA bankruptcy case. He said the reality is that most food companies do not want protracted citation that keeps their brand names in the news. Then, under additional questioning from defense attorney Thomas G. Ledford, Maxwell found himself defending his relationships with the plaintiffs’ attorneys, including Bill Marler of Marler Clark of Seattle, WA. (Marler Clark underwrites Food Safety News.) Together, Marler and two other plaintiffs’ attorney firms represented all but one of the eligible claims in the PCA bankruptcy.  And, for most outbreaks, Maxwell estimated that Marler represents between 50 to 95 percent of the victims who seek compensation. Of the three, Ledford zeroed in on Maxwell’s social relationship with Marler. He acknowledged that their respective families had dinner together last week when the Maxwells were vacationing in Seattle. The two lawyers are also well-known for presiding over defense-plaintiff bar seminars on foodborne illness issues, and Maxwell said they have opposed each other in “thousands of cases” since he took up industry defense on outbreak-related issues. But only one of those went to trial, for what Maxwell referred to as a full-blown “scorched earth” defense, and he suggested such cases only benefit the defense lawyers. When Alan Dasher, the assistant U.S. attorney, asked Maxwell if he had ever given Marler a break because of their relationship, Maxwell said no. As the claims adjuster for the bankruptcy trustee, Maxwell worked with all the lawyers to come up with a system that had victims submitting information, under threat of perjury action if they lied, and valuing the cases at about $15 million. But since the funds were limited to $12.75 million, everyone got 79 percent of what they were entitled to from the Hartford Insurance coverage PCA had for product liability.

Stewart Parnell
The victims were then free to pursue cases against other parties, such as Kellogg’s, which purchased peanut butter and peanut paste from PCA for use as ingredients in their products. In some states, Maxwell said the Hartford payments were credited against other settlement payments. Austin repeatedly questioned why the bankruptcy court accepted information from the victims, physicians and health officials as sufficient to show that the illnesses were caused by contaminated PCA product. “I was the judge of causation,” Maxwell responded. Restitution phase testimony continues today with a FBI agent who has tallied the economic losses of companies caught up in the PCA saga, including many that were involved in the largest ingredient-based recall in U.S history. Once these pre-sentence issues are resolved, the court plans to schedule sentencing after the date can be worked out with all the various attorneys’ schedules. The last week of July or the first week of August were candidates, although some conflicts could delay that. Last September, a jury in Albanay, GA, convicted Stewart Parnell and his brother Michael Parnell on 97 federal felony counts stemming from the fraud and conspiracy indictment unsealed in February 2010. Mary Wilkerson, whom Ledford represents, was convicted on one of two counts of obstruction of justice. Two other defendants escaped trial by pleading guilty to various counts in the indictment. In exchange for consideration at sentencing, both Daniel Kilgore, former operations manager of the PCA plant in Blakely, GA, and Samuel Lightsey, former manager of the Blakely plant, entered into plea agreements with the government.

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