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Business Associations Keyed to Hwang, 3rd Ed.
Marchand v. Barnhill
Citation:
212 A.3d 805 (2019)Facts
Blue Bell Creameries, founded in 1907 and controlled by the Kruse family for generations, operates as a monoline ice cream manufacturer in a heavily regulated industry. From 2009 to 2015, management received numerous regulatory inspection reports citing food safety violations including condensation drips, unsanitary conditions, and equipment failures at all three manufacturing plants in Texas, Oklahoma, and Alabama. Between 2013 and 2015, the company received at least fifteen positive tests for listeria contamination. Despite these red flags presented to CEO Paul Kruse and Vice President Greg Bridges, board meeting minutes reflected no discussion of food safety issues until after the outbreak became public in February 2015. The board had no committee overseeing food safety, no protocol requiring management to report food safety compliance to the board, and no regular schedule for discussing food safety risks. The listeria outbreak ultimately caused three deaths, forced a complete product recall, shut down all operations, resulted in layoffs of over one-third of the workforce, and necessitated a dilutive private equity investment to address the resulting liquidity crisis.
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