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BlueBell Legal Woes

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By: Pooja Sharma

Just when we thought that Blue Bell Laboratories has had enough over its outbreak around 3 years ago, two of their shareholders sued the company for the financial losses they have faced throughout these years. Most people have gotten over the company’s lack of safety and commitment to its quality standards. But, the two shareholders – Mary Giddings Wenske and Jack Marchand II were still upset enough to sue the company for its deeds.

A little Blue Bell History….

Blue Bell started off in 1907 when it used to sell butter in Brenham, Texas. They started selling their first ice cream batches in 1911. By 1919, the company was about to go bankrupt, when E.F. Kruse, led the company to the roads of success and named it Blue Bell Creameries. By 1936, the company was producing 80 US gallons of ice cream per hour. It eventually expanded to most of Texas. By 1990’s Bluebell has started selling its ice cream in Oklahoma, New Orleans, Atlanta, Miami, Alabama, etc. They were successfully running their operations in most of the South central and Southern United States. From 2010-2014, Blue Bell expanded its operations to Colorado, Richmond and Hampton areas of Virginia and Las Vegas until it’s biggest ever recall in the history.

Recall and Downfall –

In its 108 years of history, Bluebell issued its first recall in early 2015 after cases of listeriosis were reported in Kansas. Out of 5 cases that came out, 3 people died. All of these 5 people became sick at the hospital after they consumed a milkshake made of Blue Bell Creameries product. After a series of subsequent recalls in the period of a month or two, they completely shut down their facility in Oklahoma.

The recall expanded so widely to other states such as Arizona, Texas etc. that Blue Bell recalled all of its products – a recall of eight million gallons of products. The company shut down all of its operations around the same time and stopped its production completely.

However, the company resumed its distribution in August the same year and has been expanding slowly. Not all the flavors are back till now though. Blue Bell recently announced a good news for its fans for Christmas. They have launched their Christmas Cookie, and it will now be available in their selected stores. Their Peppermint flavors are also back. A big Christmas gift for Blue Bell supporters!

What actually happened…

Federal Health investigators found out that the Blue Bell officials weren’t actually testing the ice cream for listeria but they were actually testing the non-food contact areas like the equipment that was used to make ice cream and other such surfaces. Apparently, Blue Bell has discovered listeria in its operations since 2013. Since 2013, there have been several cases of company finding strains of Listeria on its surfaces but never really took action. In Feb 2015, the FDA did find Listeria contamination in a batch of ice cream that was randomly picked in North Carolina for testing. Ice cream tested positive for Listeria and the authorities traced the contamination back to Blue Bell laboratories.

Listeria is a very dangerous food related infection that can affect humans. It has a fatality rate of 20%. Sometimes it may be as high as 25%. Listeria mainly lives inside animals such as poultry and cattle. It can also be find inside soil. The bacteria can easily transfer from these sources to milk, meats and sometimes in vegetables. It can contaminate the plant based sources at the time of processing. Listeria shows symptoms such as stiff neck, diarrhea, confusion, weakness, vomiting etc. Antibiotics are used to treat Listeria and might prevent its worsening if given promptly.

What the shareholders have to say….

Both the shareholders have alleged that mismanagement and misconduct of safety operations has caused such a massive outbreak. An outbreak that was followed by a massive decrease in the stock value of Bluebell’s shares and close down of its operations. Both shareholder agree that the company’s huge letdown has affected both the brand value and company’s finances.

Mary’s lawsuit alleges that the company’s board of directors and those in-charge “willfully disregarded their obligation to run Blue Bell’s plants to sound industry standards”. Her lawsuit clearly states the company was negligent towards the unsanitary practices and conditions that was rampant within the company’s facilities. She also points out towards to the company for having testing and monitoring procedures that were ‘woefully deficient’. Mary Giddings Wenske who owns a Blue Bell Class A Limited Partnership share and is a trustee of the trust that holds an unnamed number of shares.

The other lawsuit shareholder, Jack Marchand II owns 29 shares of Blue Bell’s common stock. He alleged in his lawsuit that BlueBell along with its various members holding the leadership positions breached their fiduciary duty by failing at maintaining the safe and secure environment and standards to produce and distribute ice cream products in a sanitary way. He claimed that the manufacturing conditions were so sloppy that one man with autoimmune disease was hospitalized and suffered from Listeria-related meningitis. Even though he survived, his health will suffer forever. Marchand filed the lawsuit in August.

Many people stood by their favorite ice cream brand throughout its downfall. With some people going as far as rallying to support this Texas based company. After it’s opening of operations in later 2015, people were happy to buy the ice cream again. And since then, the company has successfully re-established itself. Their operations are not yet on the same scale as before but they have been moving forward to create the same trust among people. And yes, people have been more than happy to forgive them. But, these 2 people are certainly not having any more of it. They lost their money as opposed to health and their lives. It’s not yet clear on how much they are seeking in damages.

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