The Sixth Circuit’s ruling sharply narrows the insurance dispute tied to J.M. Smucker’s 2022 Jif peanut butter recall. Smucker must satisfy a $250,000 retention under each of its 2021 and 2022 commercial general liability policies, rather than the $112.5 million Ace American Insurance Company sought. The difference turns on how the policies count occurrences: as one harmful condition tied to the alleged production errors, or as separate events tied to individual claims or production lots.
The Chubb unit argued that claims tied to 225 production lots should count as separate occurrences, increasing Smucker’s costs before insurance coverage applied. The court affirmed a district court decision rejecting that approach in The J.M. Smucker Company v. Ace American Insurance Company, issued Wednesday by the U.S. Court of Appeals for the Sixth Circuit in Cincinnati. The ruling settles the application of the two retentions in this dispute; it doesn’t establish the amount of Smucker’s total recall-related losses or resolve how much it may have recovered under the policies.
One contamination source, one occurrence
The case followed a recall of Jif peanut butter produced at Smucker’s Lexington, Kentucky, plant. The recall led to thousands of consumer injury and property damage claims, according to the ruling. Ace treated each consumer’s exposure as a separate occurrence and relied on policy language that grouped claims by production lot. That approach would have made the number of occurrences—and therefore the amount Smucker had to pay before coverage applied—central to the dispute.
The panel instead focused on the policies’ definition of an occurrence, which includes an accident and “continuous or repeated exposure to substantially the same general harmful conditions.” Writing for the court, Circuit Judge Eugene Siler said Ohio law evaluates the accident from the insured’s perspective. Smucker’s alleged production errors exposed claimants to “the same general harmful condition”—salmonella contamination—not separate conditions created by each consumer’s decision to eat the product.
That distinction separates the alleged cause of the harm from the number of people who experienced it. A large group of claims can arise from one underlying event, while several claims alone don’t establish that several occurrences took place under a policy. Here, the court treated the production errors and resulting contamination as the relevant cause. Each consumer’s exposure mattered to the individual claim, but the panel didn’t consider it a new harmful condition for counting occurrences.
Under Ohio’s “cause test,” Siler wrote, the number of occurrences follows the cause of the injury or damage, rather than the number of claims. The test matters because insurance policies often use occurrence limits or retentions to determine when coverage begins and how much may be available. The same underlying facts can therefore have very different financial consequences depending on whether a court counts the harm by its cause, its victims, or another policy-defined unit. In this dispute, the cause test favored a single occurrence.
Why the lot language didn’t control
The court also found the lot-based endorsement ambiguous because it didn’t expressly redefine “occurrence” and allowed more than one reasonable interpretation. Ohio law construes ambiguous policy language against the insurer that drafted it. The panel also cited a 2011 Delaware Supreme Court decision involving ConAgra Foods and contaminated peanut butter.
The lot provision was central to Ace’s argument, but its presence didn’t settle how the policy’s occurrence definition applied. The panel found that the endorsement could be read in more than one reasonable way and didn’t clearly replace the policy’s existing definition. That left the court to apply Ohio’s rule for ambiguous language. For insurers and policyholders, the dispute illustrates why endorsements need to state plainly whether they change how occurrences are counted—and how that language interacts with the rest of the policy.
There’s a practical point here for anyone reading a liability policy: a provision that groups claims by product lot may not answer every question about coverage. The wording has to work alongside the policy’s definitions and applicable state law. (And this is the part most people overlook.) A policy can contain language aimed at organizing claims without clearly changing the threshold question of what counts as an occurrence.
Recall costs and claims
The U.S. Centers for Disease Control reported that the outbreak sickened 21 people across 17 states; four were hospitalized. Smucker, based in Orrville, Ohio, reported $120 million in direct recall costs in 2023, but hasn’t publicly disclosed losses from recall-related legal claims. Those figures describe different parts of the financial picture: direct recall costs are public, while the cost of resolving injury and property damage claims isn’t disclosed in the information available here.
Chubb didn’t immediately respond to a request for comment. The ruling settles how the two policy retentions apply to the dispute, while the company’s publicly reported direct recall costs remain the clearest measure of its financial impact. It doesn’t, by itself, show the final net cost of the recall after any insurance payments or claim resolutions.
What the ruling means for the dispute
This is more significant than it looks. The court rejected a method that would have tied the number of occurrences to production lots and individual consumer exposure, and it applied the policies’ cause-based framework instead. That makes the ruling consequential for the parties’ coverage dispute, even though the public record described here doesn’t give a complete accounting of the claims or the final insurance recovery.
If you’re working in this space, the case is a reminder that the number of claims and the number of policy occurrences aren’t necessarily the same. A contamination event can produce many claims while still being treated as one occurrence, depending on the policy language and governing law. Here, Ohio’s cause test and the ambiguity in the lot-based endorsement shaped the result.
The next useful measure of the financial impact would be clearer information about the recall-related claims and any resulting insurance payments. That said, the ruling already resolves the specific retention question identified in the case: Smucker must satisfy one $250,000 retention under each of the two policies. The broader cost picture remains incomplete. For now, the reported $120 million in direct recall costs is the clearest public figure, while the litigation ruling defines how the disputed retentions apply.