A California slaughterhouse where videotaped mistreatment of cows prompted the largest meat recall in U.S. history has reached a symbolic $500 million settlement with an animal welfare group and the federal government.
The record penalty for the animal abuse case is not expected to be paid because Riverside County-based Hallmark Meat Co. is bankrupt.
The tentative settlement of the civil lawsuit was announced Friday by the Humane Society of the United States, which filed the case and later was joined by the U.S. Department of Justice.
"It's a deterrence judgment," HSUS attorney Jonathan R. Lovvorn said. "It informs other federal government contractors that when your contract says you provide humane handling, if you don't do that you're likely to end up bankrupt as well."
The case marked the first time federal fraud statutes were used in an animal abuse case, the HSUS said. As a supplier of meats for the national school lunch program, the company had signed federal contracts certifying that it would provide humane treatment of animals sent to the company for slaughter.
The widely circulated video shot by an undercover operative in 2007 showed "downer cows" — those too weak or sick to walk — being dragged by chains, rammed by forklifts and sprayed with high-pressure water by employees who wanted them to stand and walk to slaughter.
The video sparked the largest beef recall in U.S. history in 2008. Nearly 37 million pounds of the 143 million pounds recalled had gone to school lunch programs, and most had been eaten by the time of the recall. The recall cost taxpayers $150 million.
The settlement announced Friday is with the two main defendants in the case.
Under the terms, father and son Donald Hallmark Sr. and Donald Hallmark Jr., general partners of Hallmark Meat Co., have five years to pay a separate settlement of $316,802, or the bulk of their remaining personal assets. The Hallmarks have agreed to cooperate with the Justice Department and the animal welfare group in settling the litigation against the remaining seven defendants, who were said to be peripheral to the company's operation.
The Humane Society of the United States filed a civil complaint in U.S. District Court in Riverside in 2009, and the U.S. Justice Department intervened after research showed that one of the packing plant partners, the late Aaron Magidow, had two felony convictions related to illegal industry practices.
Downed cows, like those shown in the video, can pose an increased risk for mad cow and other diseases. No mad cow cases have been linked to the recalled meat from Hallmark Meat Co.
The video was played heavily in California's 2008 campaign for Proposition 2, a ballot initiative sponsored by the HSUS that improved conditions for farm animals, most notably requiring larger cages for chickens. The initiative passed with 63.5 percent of the vote.
The fraud lawsuit against Hallmark alleged the government paid the company money it was not entitled to because the company lied about meeting the conditions of its contracts regarding humane treatment of cows.
"When you look at the video, it's about as far from humane treatment as you can get," Lovvorn said.
C. Tucker Cheadle, an attorney for the Hallmarks, did not immediately return calls seeking comment. Assistant U.S. Attorney David K. Barrett declined to comment. The settlement must be approved by a judge.
The $497 million agreement with the bankrupt company will go unpaid, Lovvorn said. The amount was determined under the treble damages provision of the federal False Claims Act.
In court papers, the plaintiffs alleged that the meatpacking plant slaughtered and processed downer cows from January 2004 to September 2007 at the average rate of one every six weeks.
The settlement agreement followed another slaughterhouse abuse investigation in August in Central California.
In that case, the federal government suspended its purchases from Central Valley Meat Co. of Hanford after a video by an undercover operative from Compassion Over Killing showed downed animals being repeatedly kicked, shocked and pulled by the tails by workers trying to get them to stand. That cruelty investigation is ongoing.