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by Alexander Masotto

The summer of 2026 has become, for the food industry and the insurers who underwrite it, the Cyclospora Summer. As of mid-July, a multistate cyclosporiasis outbreak has sickened consumers across approximately 34 states, including Texas, with the microscopic parasite proving as elusive to trace as it is unpleasant to contract. Cyclospora’s notoriously long incubation period, about a week from ingestion to symptom onset, makes traceback to a specific food product or production lot extraordinarily difficult, a reality that compounds the uncertainty facing food manufacturers and their liability carriers alike.

On July 17, 2026, Taylor Fresh Foods voluntarily recalled iceberg lettuce sourced from central Mexico “out of an abundance of caution,” even though the FDA’s traceback pointed to a single independent farm representing less than one percent of the U.S. iceberg lettuce supply. The following day, the FDA reported that a sample of shredded iceberg lettuce supplied by Taylor Farms de Mexico had tested positive for Cyclospora. However, FDA laboratory experts have just concluded that the positive finding was a false positive: “As of July 19, 2026, there are no confirmed positive sample results for product testing for Cyclospora.” Taylor Fresh Foods echoed this in its newsroom statement: “To be clear, at this moment, FDA has not identified a single positive product test result for Cyclospora.” The episode underscores how quickly contamination allegations, even unconfirmed ones, can trigger costly recalls and set the stage for coverage disputes between food manufacturers and their insurers. Against this backdrop, the Sixth Circuit’s recent decision in J.M. Smucker Co. v. ACE American Insurance Co., No. 25-3799, 2026 WL 1893804 (6th Cir. July 1, 2026), arrives with particular timeliness for insurers grappling with contamination-driven occurrence questions.

Relevant Facts

Smucker manufactures food products including peanut butter. It purchased year-long commercial general liability policies from the insurer for 2021 and 2022, each carrying a self-insured retained limit of $250,000 “per occurrence,” meaning Smucker bore defense costs and liabilities up to that threshold before the insurer’s indemnity obligation attached. The policies defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” In 2022, Smucker recalled peanut butter produced at its Lexington, Kentucky facility due to potential salmonella contamination. Thousands of consumer claims followed, alleging bodily injury and property damage.

The insurer denied coverage, advancing the position that each claimant’s exposure to salmonella-contaminated peanut butter was a separate occurrence. The insurer further argued that a “Lot Endorsement” aggregated these thousands of individual occurrences into 225 lot-based occurrences organized by “lot,” defined as a 24-hour period of production at a single facility. Under the insurer’s reading, the Lot Endorsement provided that bodily injury or property damage (a) included in the products-completed operations hazard, (b) arising from substantially the same general harmful condition, and (c) arising out of any one “lot” of the insured’s product, constituted a single occurrence deemed to occur when the first claim from that lot was made. The financial stakes were enormous: the insurer’s interpretation could have required Smucker to satisfy up to $56,250,000 in retained limits per policy ($112,500,000 total) before any payment obligation attached. Smucker sued for breach of contract and a declaratory judgment that the Salmonella contamination constituted a single occurrence with a single $250,000 retained limit. The Northern District of Ohio granted Smucker’s motion for summary judgment, and the insurer appealed.

Court Analysis

The Sixth Circuit ultimately affirmed. The court first addressed the meaning of “occurrence” under the policies and then turned to whether the Lot Endorsement altered that determination.

Ohio courts employ the “cause test” for number-of-occurrences questions. Under that test, “the number of occurrences is determined by reference to the cause or causes of the damage or injury, rather than by the number of individual claims.” Cincinnati Ins. Co. v. ACE INA Holdings, Inc., 886 N.E.2d 876, 885 (Ohio Ct. App. 2007). Moreover, “where there is but one proximate, uninterrupted and continuous cause, all injuries and damages are included within the scope of that single proximate cause.” Progressive Preferred Ins. Co. v. Derby, No. F-01-002, 2001 WL 672177, at *3 (Ohio Ct. App. 2001). Critically, the court relied on Scott Fetzer Co. v. Zurich American Insurance Co., 769 F. App’x 322, 328 (6th Cir. 2019), to confirm that “accident” is assessed from the insured’s point of view, examining what the insured did unintentionally to expose itself to liability, not the intentional or independent acts of third parties.

Applying these principles, the court found that Smucker’s only identifiable “accident” was its unintentional production of salmonella-contaminated peanut butter (i.e., a single, continuous event). Each claimant’s independent act of consuming the product was not Smucker’s conduct, was not accidental from Smucker’s perspective, and therefore could not multiply the number of occurrences. To hold otherwise would collapse the number of occurrences into the number of claims, precisely what the cause test prohibits.

The Sixth Circuit held that the Salmonella contamination was a single, continuous accident constituting one occurrence, not one occurrence per claimant and not one occurrence per production lot. Turning to the Lot Endorsement, the court found it ambiguous. The endorsement never expressly stated that it replaced the base policy definition of “occurrence.” Its operative phrase, bodily injury or property damage that “arises out of any one ‘lot,’” was reasonably susceptible to two interpretations: a limiting reading (multiple injuries from the same harmful condition within one lot remain one occurrence) and an aggregating reading (the insurer’s view, converting per-claimant exposures into per-lot occurrences and thereby multiplying the retained limits).

The analysis would arguably look different under Texas law. The Texas Supreme Court has defined “accident,” the operative term within most CGL definitions of “occurrence,” as “a fortuitous, unexpected, and unintended event.” Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1, 8 (Tex. 2007). But the Fifth Circuit implements the cause theory through a distinct “liability-triggering event” lens: rather than asking only what the insured did that was unintentional, courts focus “on the events that cause the injuries and give rise to the insured’s liability, rather than on the number of injurious effects.” H.E. Butt Grocery Co. v. National Union Fire Insurance Co., 150 F.3d 526, 530 (5th Cir. 1998); see also Evanston Ins. Co. v. Mid-Continent Cas. Co., 909 F.3d 143, 147–48 (5th Cir. 2018). Applied to facts like Smucker’s or the Cyclospora outbreak, the liability-triggering-event framework could point toward a materially different result than the Sixth Circuit. Of course, the underlying policies will help determine how coverage responds when applying the relevant provisions to the underlying contamination loss.

Significance

This decision underscores that precise “occurrence” and “loss” definitions are critical to how a liability policy reacts to contamination claims. When contamination losses are reported, insurers should carefully and promptly analyze: (a) the main coverages and endorsements implicated, including whether any lot, batch, or aggregation endorsement clearly and unambiguously states whether and how it redefines “occurrence”; (b) potential government-mandated recall costs; (c) recall costs tied to both affected and unaffected product (product recalled out of an abundance of caution even absent confirmed contamination), a dynamic on vivid display in the Taylor Farms Cyclospora situation; and (d) accounting costs associated with tracking and allocating claims across production lots and policy periods. Contamination claims can carry significant financial consequences, and carefully understanding how a policy’s occurrence language applies, together with the governing jurisdiction’s law, is paramount to making an ultimate coverage determination.

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.