Hunton Insurance Recovery Blog

Whether a loss counts as one “occurrence” or many can determine whether meaningful coverage is available. In J.M. Smucker Company v. Ace American Insurance Company, the Sixth Circuit held that thousands of claims tied to alleged salmonella contamination in peanut butter arose from a single occurrence—not hundreds of separate occurrences grouped by production lot. For manufacturers and other policyholders facing recall or mass-claim exposure, the decision is a useful reminder that courts applying a cause-based analysis should look to the common source of the alleged harm, not the number of claimants.

The Dispute
In 2022, Smucker recalled peanut butter made at its Lexington, Kentucky plant over potential salmonella contamination. Thousands of consumers then brought bodily-injury and property-damage claims.

Smucker had two commercial general liability policies issued by ACE. Each included a $250,000 retained limit “per occurrence,” requiring Smucker to absorb the first $250,000 of covered defense costs and liability for each occurrence before ACE’s payment obligation began. The policies defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” They also included a Lot Endorsement addressing injuries or damage arising from a single “lot,” which the parties treated as roughly a 24-hour production run.

That wording mattered. ACE contended that each claimant’s exposure was a separate occurrence and that the Lot Endorsement aggregated those exposures into 225 lot-based occurrences. Under that theory, Smucker would have had to satisfy a separate $250,000 retained limit for each lot—$56.25 million per policy, or $112.5 million across both policies—before ACE owed anything. Smucker argued that the alleged contamination was one event and therefore one occurrence subject to one retained limit.

The Decision: One Occurrence
The Sixth Circuit affirmed summary judgment for Smucker on de novo review.

The policy definition pointed to one accident. Applying Ohio law, the court considered the accident from the insured’s perspective. Smucker’s alleged accident was producing the potentially contaminated peanut butter. The consumers’ later decisions to eat the product were not Smucker’s conduct and did not supply separate occurrences. The court also treated the contamination as a single continuous exposure to the same general harmful condition.

Ohio’s cause test led to the same result. Ohio counts occurrences by looking to the cause of the damage or injury, not the number of claims. Where one proximate, uninterrupted, and continuous cause produces the alleged harm, the resulting claims arise from a single occurrence. ACE’s theory effectively counted claimants first and causes second, which the court rejected.

The Lot Endorsement did not change the answer. ACE argued that the endorsement converted the claims into 225 lot-based occurrences. The court found the endorsement ambiguous because it did not say that it replaced the policy’s occurrence definition, and its “arises out of any one ‘lot’” language could reasonably be read to limit occurrences rather than multiply them. Because ACE drafted the policy, the ambiguity was construed against ACE and in favor of coverage. The court also found support in ConAgra Foods, Inc. v. Lexington Insurance Co., which addressed similar salmonella-contamination facts and comparable lot-based language.

Takeaways for Policyholders
The single-versus-multiple occurrence issue can decide whether coverage has practical value. If an insurer can stack enough retained limits or deductibles against one widespread loss, coverage the policyholder reasonably expected may disappear. Smucker gives policyholders several useful points to press:

• Start with the common cause. A policyholder should identify the operational event that allegedly produced the claims, such as a contamination event, design defect, manufacturing error, or other common failure.
• Keep the focus on the insured’s conduct. Under Ohio law, the relevant accident is viewed from the insured’s perspective. Downstream claimant conduct should not be allowed to multiply occurrences where the insured’s alleged act or omission is singular.
• Do not assume aggregation language helps only the insurer. Lot, batch, and similar provisions may support aggregation into fewer occurrences. If the wording is reasonably susceptible to more than one reading, ordinary rules of insurance-policy interpretation should favor the policyholder.
• Test the retention math. When an insurer applies repeated retentions or deductibles to a mass-claim loss, policyholders should compare that position against the policy’s occurrence definition, any aggregation language, and the governing jurisdiction’s occurrence test before accepting the calculation.