Hunton Insurance Recovery Blog

As discussed in a February 1, 2016 posting, the court in Foster Poultry Farms v. Certain Underwriters at Lloyd’s, London, No. 14-cv-953, 2015 WL 5920289 (E.D. Cal. Oct. 9, 2015) held that losses associated with alleged noncompliance with federal sanitation regulations were covered by the “accidental contamination” and “government recall” provisions of a food contamination insurance policy. After a four-day bench trial, the court issued a decision awarding the insured, Foster Poultry Farms, $2.7 million for lost profits related to destroyed chicken, the loss of business from certain supermarket relationships, the cost associated with public relations work necessitated by the recall as well as other recall-related expenses and the loss of Foster’s customers. The court found, however, that loss associated with Foster’s voluntary shutdown, which occurred independent of the government-mandated shutdown, was not within the scope of coverage.