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Business Associations Keyed to Diamond, 6th Ed.
Marchand v. Barnhill
Citation:
212 A.3d 805 (2019)Facts
Blue Bell Creameries, founded in 1907, is a Delaware corporation that produces and distributes ice cream products. The Kruse family has controlled the company since 1919. As a food manufacturer, Blue Bell operates in a heavily regulated industry with FDA requirements for food safety. From 2009 to 2013, regulators found numerous food safety compliance failures at Blue Bell’s facilities, including condensation dripping into product containers and inadequate cleaning procedures. In 2013 and 2014, Blue Bell received multiple positive tests for listeria contamination. Despite these warning signs, the board allegedly never discussed food safety issues and had no committee or reporting system to monitor food safety. In early 2015, a listeria outbreak in Blue Bell’s products resulted in three deaths, a complete product recall, and a liquidity crisis requiring a dilutive private equity investment. FDA inspections after the outbreak revealed systematic deficiencies in all Blue Bell plants that had persisted for years.
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