Maple Leaf Agrees to Pay up to $27 million to Settle Listeria Class Actions

December 19, 2008 – Maple Leaf Foods has agreed to pay victims of a devastating listeriosis outbreak linked to its cold cuts as much as $27 million to settle a series of proposed class-action lawsuits, the company and lawyers announced today.

The outbreak claimed 20 lives nationwide and was linked to Listeria-contaminated machinery at one of the company’s plants in Toronto. Lawyers estimate about 5,000 people were affected, either directly or indirectly.
“Our goal throughout this legal process has been to negotiate a fair and early settlement,” CEO Michael McCain said in a statement.
“This was a tragic experience and I want to acknowledge the co-operation of all the parties involved to ensure that people affected receive timely restitution.”
The proposed settlement, in which Maple Leaf (TSX:MFI) admits no negligence, is still subject to court approvals in Ontario, Quebec and Saskatchewan, which would cover the entire country.
Approval in Ontario is slated for the end of February.
The compensation individuals receive would depend on how they were affected. At minimum, anyone who fell ill after eating the “recalled product” would receive $750.
The estate of someone who died would receive $120,000, while the spouse of a deceased would receive $35,000 and a child $30,000.
Word of the proposed settlement caught several plaintiffs off guard.
Dennis Schroh, who filed an affidavit that stated his 82-year-old mother Elizabeth Schroh died in August after eating contaminated Maple Leaf meat fed to her in a hospital, said he was relieved by the agreement.
“I’m pleased that it’s coming to a closure. That’s basically what we want: that it comes to an end and everybody can get on with their lives,” Schroh said from Swift Current, Sask.
The affidavits filed in support of the suits revealed disturbing accounts of death by Listeria poisoning.
In her statement, Elizabeth Schroh’s daughter Diane Weinkauf described her mother’s death.
“She was convulsing. My mother took three breaths of air, then passed away with her eyes shut,” the statement read.
Toronto lawyer, Colin Stevenson, who represented some of the plaintiffs, said the settlement would end all litigation against Maple Leaf resulting from the outbreak.
“This is a mutually agreeable settlement that everybody is happy with,” Stevenson said.
In August, Maple Leaf Foods (TSX:MFI) began a recall of tainted meat products linked to the listeriosis outbreak.
The Public Health Agency of Canada reported last week that 20 deaths had been linked to the outbreak.
Stevenson said he anticipated up to 5,000 people would be making a claim _ and pegged the death toll at about 25.
“We don’t know for sure because there might be others out there,” Stevenson said.
The lawyer noted McCain had previously apologized for the outbreak and said the company would take full responsibility for it and “do the right thing.”
“The fact that it settled so early shows that he clearly wanted to do that.”
Regina lawyer Tony Merchant, who represented Schroh and others, said the company “acted responsibly.”
“The (settlement) will save people the legal expense and the battle of trying to proceed individually,” Merchant said.
Companies that bought the recalled products for resale will also receive compensation under the proposed settlement.
Shares in Maple Leaf Foods, which plunged almost in half in the aftermath of the outbreak before recovering significantly, traded slightly lower on the Toronto Stock Exchange Thursday at $11, down 24 cents.
McCain has gone to great lengths to tout his company’s obsession with food safety, even taking to the television airwaves to drive home the message.