Human Resource Selection 9th Edition by Marianne Jennings

Exercise 24

The Peanut Corporation of America was a supplier of processed peanuts to some of the largest food production companies in the United States. The company was founded by Hugh Parnell, Sr. when he was selling ice cream vending machines in the 1960s. When he was restocking a machine, he noticed that the peanuts on the Nutty Buddy ice cream cones came from a plant in the North. He decided to begin a company that processed peanuts in the South, where they were grown. The company grew and had plants in Virginia, Georgia, and Texas. Hugh's son Stewart Parnell entered the business in the 1970s after complaining to his father that graduates in his major, oceanography, often ended up working on oil rigs. His father offered him a job, and Stewart left college to begin work in the Virginia facilities. The major food producers were customers of Peanut Corp. ConAgra, a major peanut butter producer, was a large customer of Peanut Corp. Peanut Corp.'s peanut product base was used in peanut butter, ice cream, cookies, and crackers. Peanut Corporation was known for its cost cutting. When a customer came back with a bid from another peanut product base that was lower, Stewart Parnell, who became the CEO of Peanut Corp., would always cut the price by a few cents in order to win over the potential customer. E-mails reflect Parnell's concerns about costs. When a salmonella test at the factory was positive, Peanut Corp. was required to hold off shipment for a retest. Parnell wrote in an e-mail, "We need to discuss this. Beside the cost, this time lapse is costing us $$$$ and causing us obviously a huge lapse from the time when we pick up the peanuts until the time we can invoice."11 He also wrote, about products he was informed had tested positive for salmonella, "Turn them loose."12 When the FDA made the connection between Peanut Corp. and salmonella poisonings that sickened 644 people in 44 states, which resulted in eight deaths. Mr. Parnell wrote to his managers, "Obviously we are not shipping any peanut butter products affected by the recall but desperately at least need to turn the raw peanuts on the floor into money."13 Congress held hearings into Peanut Corp.'s operations. Stewart Parnell took the Fifth Amendment when members of the Commerce Committee in the House of Representatives asked him questions about his company. The company declared Chapter 7 bankruptcy on February 13, 2009.
a Discuss whether Mr. Parnell could be held criminally liable.
b. Are Mr. Parnell's e-mails admissible as evidence?
c. Mr. Parnell's father said, "He's being railroaded. Why would anybody send something out that would ruin his own company? It's like an auto dealer sending a car out with no brakes."14 What defense is he raising for his son?