The U.S. Court of Appeals for the Sixth Circuit ruled that The J.M. Smucker Company’s 2022 Jif peanut butter salmonella recall constituted a single occurrence under its commercial general liability insurance policies, significantly limiting the company’s retention obligations. The decision affirms a lower court ruling that Smucker must satisfy only one $250,000 retention under each applicable policy year instead of the $112.5 million that insurer Ace American Insurance argued should apply across 225 contaminated production lots.
The dispute arose after a salmonella outbreak linked to peanut butter produced at Smucker’s Lexington, Kentucky, facility led to thousands of consumer injury and property damage claims. Ace contended that each consumer’s exposure should be treated as a separate occurrence through a policy endorsement referencing production lots. The appeals court rejected that interpretation, finding that the policies defined an occurrence as an accident involving continuous or repeated exposure to substantially the same harmful conditions.
Applying Ohio’s "cause test," the court determined that the relevant cause was the alleged contamination during production, not each individual consumer’s decision to consume the product. The judges also concluded that the policy endorsement did not clearly redefine the meaning of "occurrence." Because the endorsement was ambiguous, Ohio law required the language to be interpreted against the insurer that drafted it.
For claims adjusters, the decision reinforces the importance of occurrence analysis in complex product liability claims. Whether a loss is treated as one occurrence or many can dramatically affect deductibles, self-insured retentions, excess policy attachment points, reserves, and settlement strategy. The ruling also serves as a reminder that courts may narrowly interpret insurer-drafted endorsements that do not clearly modify existing policy definitions, making precise policy wording critical when handling large-scale recall and contamination losses.
