Posted by Jessica Page.
In 2008 and 2009, there was a huge salmonella outbreak traced to peanut butter produced by the Peanut Corporation of America. Nine people died from this incident and 700 were reported ill. The $30 million company was shut down and liquidated after the incident and the CEO, Stewart Parnell, was indicted and prosecuted. In late September, he was sentenced 28 years in prison.
What’s intriguing about this article is the comparison to the GM faulty ignition case. In this particular incident, the defect caused 124 deaths and over 200 injuries. GM has recently settled for $900 million and a three year prosecution agreement. The major difference between the two cases though – indictment of employees. Preet Bharara, one of the best federal prosecutors in Manhattan, explained, “it is unusually difficult to prosecute auto industry executives” and because of the national auto safety laws, there is a call for punishing the corporation as a whole, rather than any one individual.
The main conviction in the salmonella case is the fact that Parnell committed fraud by “knowingly introducing tainted peanut butter paste into interstate commerce.” The fact of the matter is though, there were GM executives who knew about the faulty ignition but failed to report it within the five-day span. The company itself was fined as a corporation for this matter, but there was not specific indictment of GM executives. The real issue at hand is how much harder it is to prosecute auto executives when it comes to cases of product liability. There is currently a bill that many senators are working to pass that would make this process easier and hold executives accountable, if they were knowledgeable of the faulty auto product or provided false statements to consumers, as GM did. This could change future product liability cases within the auto industry and as Senator Blumenthal stated, “one sentence like Parnell’s [within the automotive industry] would change auto safety dramatically and enduringly.”
Jessica is a finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2016.