Scudder’s Pays $250,000 in Contamination Case : Civil Penalty Is Largest Ever Received by Orange County District Attorney

Laura Scudder’s Inc., one of the West’s leading makers of snack foods and peanut butter, has paid a $250,000 civil penalty after the Orange County district attorney accused the firm of selling products contaminated with machine parts and, in one instance, a dead rodent.

Deputy Dist. Atty. Wendy Brough said the penalty paid by Scudder’s is one of the largest ever received by the district attorney’s office. As part of the agreement, Scudder’s did not admit to any wrongdoing.

Brough said state inspections of Scudder’s plants in Anaheim and Tracy, in Northern California, revealed that the facilities were in a state of mechanical disrepair.

Scudder’s was acquired in September, 1987, by New York-based Borden Inc. in an estimated $100-million transaction. In late October, Borden announced plans to close the Anaheim plant because other production facilities were “better able to retain a more consistently high quality level.”

Although the state inspected the Anaheim plant after the acquisition, Borden spokeswoman Chris Tilton said Tuesday that Borden had not yet implemented its quality assurance standards at the Anaheim facility when the inspection took place.

Tilton said Borden agreed to the payment because “we had no interest in protracted litigation.”

The food and drug branch of the state Department of Health Services first notified Scudder’s in April, 1987, that the Anaheim plant was poorly maintained and had faulty machinery, according to Ozzie Schmidt, a supervising investigator for the department.

Schmidt said Scudder’s replied that the problems had been resolved. But subsequent inspections in September and October showed that “either they hadn’t made the repairs, or conditions had deteriorated again,” he said.

Schmidt said problems were found at the Tracy plant in an October inspection, but they weren’t as severe as those in Anaheim.

The state agency began its investigation after receiving numerous consumer complaints involving Scudder’s products. In addition to complaining to government agencies, at least one consumer filed a product contamination lawsuit against the company, Brough said.

Brough said consumers turned over to investigators more than a dozen samples of contaminated products. She said the samples include a 5-inch metal bolt contained in a see-through bag of potato chips, a dead mouse found in a bag of peanuts, and a number of rusty washers, rodent droppings and “grease balls” in other products.

Several of the complaints were investigated by the district attorney’s office and others by the state health department.

“We have held and seen the machinery pieces and found a source for them at the (Anaheim) plant,” Schmidt said.

Firm ‘Cooperative’

Brough described Scudder’s officials as “pretty cooperative.” She said Borden officials appeared to be surprised at the apparent extent of the problem.

The $250,000 payment was “very high” because of the size of the company, the duration of the problem, the potential harm to the public and the volume of complaints, Brough said.

“Just looking at the condition of the plant showed where the problems came from,” Brough said. “When you have metal parts the same size as food, I’d say you have severe problems.”

In addition to the payment, Scudder’s has agreed to improve metal detection equipment used to screen food products at the Tracy plant. The company also has agreed to maintain complaint logs and disclose the logs to state officials for the next five years.