An alleged salmonella outbreak sparked thousands of claims against J.M. Smucker - and a fight over how many insurance occurrences it created.
The Sixth Circuit Court of Appeals affirmed on July 1, 2026, that potential salmonella contamination tied to peanut butter made at Smucker's Lexington, Kentucky facility was a single "occurrence" under its commercial general liability policies with Ace American Insurance Company (ACE) - not the 225 separate occurrences ACE had argued for.
Smucker's policies, purchased for 2021 and 2022, carried a $250,000 retained limit per occurrence - the amount Smucker had to cover itself before ACE's coverage kicked in. Under ACE's interpretation, Smucker could have owed up to $56,250,000 per policy, or $112,500,000 combined, before ACE paid anything.
The dispute traced back to a 2022 recall. After the potential contamination surfaced, consumers
filed thousands of claims against Smucker alleging bodily injury and property damage. When Smucker sought coverage, ACE argued that each claimant's exposure to the peanut butter was its own occurrence. ACE then pointed to a "Lot Endorsement" in the policies, which it said grouped those thousands of exposures into 225 occurrences - one for every 24-hour production "lot."
That endorsement states that injuries or damage "included in the 'products-completed operations hazard,'" arising from "the substantially same general harmful condition, cause, defect, error or suspected deficiency," and arising from "any one 'lot'" of Smucker's product "shall be considered as a single 'occurrence.'"
A district court sided with Smucker on summary judgment, ruling that the alleged contamination itself was the one true occurrence and that the Lot Endorsement was too ambiguous to change that. ACE had the ruling certified for an immediate appeal, and the case was paused while the Sixth Circuit reviewed it.
The Sixth Circuit agreed with the district court on both points. The policies define an occurrence as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Applying Ohio law, the court said that question has to be viewed from Smucker's side, not the consumers'. Smucker's unintentional production of the potentially contaminated peanut butter - not each person's decision to eat it - was the "accident" that mattered, and one continuous event can only be one occurrence.
The court also found the Lot Endorsement ambiguous. It never states that it replaces the policy's own definition of occurrence, and its wording supports more than one reasonable reading. Under Ohio law, that kind of ambiguity is resolved against the insurer that drafted the contract. The court pointed to a Delaware case it called "a remarkably similar situation" - ConAgra Foods v. Lexington Insurance - which also involved salmonella-contaminated peanut butter and a comparable lot provision, and reached the same conclusion.
The ruling affirms the district court's decision on this certified question. Smucker owes one $250,000 retained limit per policy - not a separate limit for each of 225 production lots.
