Smucker v. ACE: Under Ohio’s “Cause” Test, a Product-Contamination Event Is One Occurrence; Ambiguous Lot Endorsements Do Not Multiply Retained Limits

1. Introduction

This interlocutory appeal concerns a familiar but high-stakes issue in commercial general liability (CGL) insurance: how to count the number of “occurrences” when a single product-safety event (here, an alleged salmonella contamination) produces thousands of claims. The answer determines how many times the insured must satisfy its per-occurrence retained limit (a self-insured layer akin to a deductible) before the insurer’s payment obligations begin.

Parties. The insured, The J.M. Smucker Company (“Smucker”), purchased year-long CGL policies from Ace American Insurance Company (“ACE”) for 2021 and 2022.

Background event. Smucker recalled certain peanut butter products made at its Lexington, Kentucky facility due to potential salmonella contamination. Consumers brought “thousands of claims” alleging bodily injury and property damage.

Key issue. Do the claims arise from one “occurrence” (one retained limit), or from many occurrences (many retained limits), potentially multiplied further by a “Lot Endorsement” that references “lots” (24-hour production periods)? ACE’s position would have required Smucker to satisfy retained limits across 225 lots—exposing it to tens of millions in retained limits before ACE would pay.

2. Summary of the Opinion

The Sixth Circuit affirmed summary judgment for Smucker. Applying the policies’ definition of “occurrence” and Ohio’s “cause” test, the court held that the alleged salmonella contamination constitutes a single occurrence from Smucker’s perspective. The court further held that the Lot Endorsement is ambiguous as to whether it converts that single occurrence into multiple occurrences (e.g., one per lot). Under Ohio law, that ambiguity is construed against the insurer, so the endorsement does not override the base occurrence definition on these facts.

3. Analysis

3.1 Precedents Cited

The court’s decision is driven by a set of Ohio insurance-interpretation rules and number-of-occurrences cases, plus persuasive authority addressing near-identical “lot/batch” endorsements in contamination settings.

• Nash v. Bryce, 157 F.4th 436 (6th Cir. 2025) — Cited for the standard of review: summary judgment is reviewed de novo. While procedural, it matters because the Sixth Circuit independently assessed policy language and Ohio law.
• Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 652 N.E.2d 684 (Ohio 1995) — Used for the interpretive move that when a policy does not define a term (here, “accident”), courts may apply its ordinary meaning. This enabled the panel to define “accident” without importing ACE’s claimant-by-claimant framing.
• Scott Fetzer Co. v. Zurich Am. Ins. Co., 769 F. App'x 322 (6th Cir. 2019) — The opinion’s central analog. Scott Fetzer treated the insured’s negligent supervision (an “accident” from the insured’s standpoint) as the operative occurrence, not the third party’s intentional acts. The Smucker panel relied on Scott Fetzer for two key propositions: (i) “accident” is assessed from the insured’s point of view, and (ii) the “occurrence” is the insured’s accidental conduct giving rise to liability, not each claimant’s experience of harm.
• Parker Hannifin Corp. v. Steadfast Ins. Co., 445 F. Supp. 2d 827 (N.D. Ohio 2006) — Cited to reinforce the “insured’s perspective” framing and to illustrate how a single defect (malfunctioning gaskets) can be treated as one occurrence even when many end users suffer damage. It supported Smucker’s contention that one production defect can be the single occurrence.
• Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256 (Ohio 2003) — The core Ohio contra proferentem rule: ambiguous insurance provisions are construed in favor of the insured. The court invoked Galatis both to neutralize ACE’s attempt to leverage any ambiguity in “occurrence” and, more importantly, to resolve ambiguity in the Lot Endorsement.
• Cincinnati Ins. Co. v. ACE INA Holdings, Inc., 886 N.E.2d 876 (Ohio Ct. App. 2007) — Cited for the Ohio “cause” test: the number of occurrences is determined by the cause(s) of injury/damage, not the number of claims. This case directly undermined ACE’s effort to equate each claimant exposure with a separate occurrence.
• Progressive Preferred Ins. Co. v. Derby, No. F-01-002, 2001 WL 672177 (Ohio Ct. App. 2001) — Provides the “one proximate, uninterrupted and continuous cause” formulation that collapses many injuries into one occurrence when they flow from a single continuous cause. The court used Derby to support characterizing the contamination event as one continuous cause.
• LuK Clutch Sys., LLC v. Century Indem. Co., 805 F. Supp. 2d 370 (N.D. Ohio 2011) — ACE’s primary authority, but distinguished. LuK Clutch involved asbestos and a coverage-trigger problem tied to policy periods and a business decision made outside the period. The panel found it insufficiently analogous: here, the dispute was about retained limits and the parties agreed the relevant event was accidental within the policy period.
• Westfield Ins. Co. v. Cont'l Ins. Co., No. 1:13CV02367, 2015 WL 1549277 (N.D. Ohio Apr. 7, 2015) and William Powell Co. v. OneBeacon Ins. Co., 75 N.E.3d 909 (Ohio Ct. App. 2016) — Additional asbestos-related disputes invoked by ACE, similarly discounted because they centered on coverage issues arising from a business decision to distribute asbestos-containing products, rather than counting occurrences for retained limits in an accidental contamination scenario.
• Lager v. Miller-Gonzalez, 896 N.E.2d 666 (Ohio 2008) — Supplies Ohio’s definition of ambiguity: a provision is ambiguous only if susceptible to more than one reasonable interpretation. This standard governed the Lot Endorsement analysis.
• ConAgra Foods, Inc. v. Lexington Ins. Co., 21 A.3d 62 (Del. 2011) — Persuasive and factually “remarkably similar”: salmonella-contaminated peanut butter, a similar occurrence definition, and a lot/batch provision potentially changing the number of occurrences/retentions. ConAgra held that competing interpretations of the lot/batch provision were both reasonable, rendering it ambiguous. The Sixth Circuit adopted the same ambiguity logic for ACE’s Lot Endorsement.
• Am. Eagle Invs., Inc. v. Marco's Franchising, LLC, 250 N.E.3d 677 (Ohio Ct. App. 2024) — Cited for the canon against surplusage: courts should avoid interpretations that render contract terms meaningless. ACE used this canon to argue that Smucker’s reading would make the Lot Endorsement redundant.
• Sullivan-White v. Aukland, 205 N.E.3d 1147 (Ohio Ct. App. 2023) — Tightens the surplusage argument: contract language should not be treated as superfluous “unless that is manifestly required.” The panel used this to reject ACE’s “redundancy” attack because Smucker identified at least one plausible, non-redundant function for the endorsement.
• Kungys v. United States, 485 U.S. 759 (1988) — Quoted for the proposition that a term need not do a great deal to avoid surplusage; it is enough that it is not “entirely redundant.” This supported the court’s conclusion that the Lot Endorsement can have a “timing function” even if it does not multiply occurrences here.
• London Market Insurers v. Superior Ct., 53 Cal. Rptr. 3d 154 (Cal. Ct. App. 2007) — ACE relied on this to push a per-lot aggregation reading. The Sixth Circuit noted that London Market itself stated (in a footnote) that it believed the clause was ambiguous as applied; ambiguity was decisive in Smucker, so London Market did not advance ACE’s position.

3.2 Legal Reasoning

(a) The base “occurrence” definition: the “accident” is the insured’s accidental contamination event

The policies define “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The court’s first step was to identify the operative “accident.” Using Guman Bros. Farm and the ordinary meaning of “accident” (as described in Scott Fetzer), the panel asked what happened “by chance or without expectation” from Smucker’s viewpoint.

On that framing, Smucker’s “only identifiable accident” was the alleged salmonella outbreak that resulted in potentially contaminated peanut butter. Individual consumers’ acts of eating peanut butter were not “accidents,” and (critically) were not Smucker’s conduct. Therefore, those acts could not drive the counting of occurrences.

The “continuous or repeated exposure” clause reinforced the conclusion: the claimants were exposed to “the same general harmful condition[]”— salmonella contamination—stemming from one continuous accidental condition attributable to Smucker’s production.

(b) Ohio’s “cause test”: occurrences are counted by cause, not by headcount or claim count

Ohio uses the “cause” test for number-of-occurrences questions (Scott Fetzer), as summarized in Cincinnati Ins. Co.: count occurrences by the cause(s) of injury/damage, “rather than by the number of individual claims.” Derby further instructs that a single “proximate, uninterrupted and continuous cause” yields one occurrence.

The panel found ACE’s approach incompatible with this doctrine because it effectively made occurrences equal to claims: each claimant’s exposure would be an occurrence, producing the very claim-counting the cause test rejects. By contrast, the alleged contamination event was treated as the single continuous cause from which the claims flowed.

(c) The Lot Endorsement: ambiguous as to whether it replaces the occurrence definition or merely aggregates within a lot

ACE’s central fallback was the Lot Endorsement, which provides that bodily injury or property damage meeting certain criteria and arising out of “any one ‘lot’” “shall be considered as a single ‘occurrence’,” deemed to occur at the first claim from such “lot.”

Applying Lager, the court held the endorsement was susceptible to more than one reasonable reading:

• Limiting/expanding reading (insured-friendly): if multiple claims arise within one lot from the same harmful condition, they remain a single occurrence—i.e., the endorsement prevents fragmentation of a lot into many occurrences.
• Segmentation reading (insurer-friendly): when the same harmful condition spans multiple lots, the endorsement turns the event into multiple occurrences (one per lot), multiplying retained limits.

The endorsement did not clearly state it “replaces” the policy definition of “occurrence,” and the phrase “[a]rises out of any one ‘lot’” did not unambiguously address what happens when the same condition implicates multiple lots. That was enough to create ambiguity.

ConAgra Foods, Inc. strongly supported this conclusion: faced with materially similar text and facts, the Delaware Supreme Court held that both interpretations were reasonable, rendering the lot/batch clause ambiguous. The Sixth Circuit found the same here and, under Galatis, construed the ambiguity against ACE.

(d) Surplusage: the endorsement can still do work (a “timing function”) without multiplying occurrences

ACE argued that Smucker’s interpretation renders the Lot Endorsement meaningless, invoking the anti-surplusage principle (Am. Eagle Invs., Inc.). The panel rejected that argument, relying on Sullivan-White’s caution that language should be deemed superfluous only when “manifestly required,” and on Kungys’s point that a provision need only avoid being “entirely redundant.”

Smucker supplied a plausible non-redundant role: the endorsement’s clause deeming the “occurrence” to occur when injury/damage occurs for the “first claim” arising from such “lot” can operate as a timing function, potentially limiting the occurrence to a single policy year even if additional claims from the same lot arise in later periods. That possibility defeated ACE’s redundancy attack and allowed the endorsement to be interpreted in the insured’s favor without “writing it out” of the policy.

3.3 Impact

This decision has immediate practical consequences for product recall and contamination claims handled under Ohio law (and, by extension, within the Sixth Circuit when applying Ohio law):

• Retained limits (SIR/deductible) exposure may be capped at one occurrence where claims trace to one continuous, accidental contamination event, even if injuries occur across many consumers and many sales.
• Endorsements referencing “lots” or “batches” must be drafted with precision if insurers intend to segment occurrences per lot. The panel’s ambiguity holding signals that “shall be considered as a single occurrence” language may be read as anti-fragmentation within a lot, not pro-fragmentation across lots, unless the endorsement clearly says otherwise.
• Policy-period and timing clauses may become a major battleground in lot/batch endorsements. The court’s acceptance of a plausible “timing function” suggests future disputes may focus not only on counting occurrences but also on allocation across policy years.
• Insured’s-perspective framing is reinforced: attempts to count occurrences by claimant exposure (or by downstream consumer acts) face strong headwinds under Ohio’s cause test and the “accident” inquiry used here.

4. Complex Concepts Simplified

• “Occurrence”: The event the policy treats as the unit for limits/retentions. Here, it means an “accident,” including repeated exposure to the same harmful condition. The court treated the production contamination event—not each consumer’s illness—as the occurrence.
• Retained limit: Amount the insured must pay per occurrence before the insurer pays (similar to a deductible, often functioning as a self-insured retention). If there is one occurrence, Smucker pays it once; if 225 occurrences, Smucker pays it 225 times.
• Ohio’s “cause” test: Counts occurrences by the cause(s) of the injuries, not by how many people sue or how many claims are filed. One continuous cause can mean one occurrence.
• Ambiguity and contra proferentem: If policy language can reasonably be read in more than one way, Ohio law generally construes it against the insurer (the drafter) and in favor of coverage for the insured.
• Canon against surplusage: Courts try to interpret contracts so each provision has some effect. But a provision is not treated as meaningless if it has any plausible function (here, potentially a “timing” role).
• “Products-completed operations hazard”: A standard CGL concept generally addressing liability arising out of the insured’s products after they leave the insured’s control (relevant because the endorsement applied to injuries/damages within that hazard).

5. Conclusion

The Sixth Circuit’s key contribution is its integrated application of (1) the policy’s “occurrence” definition, (2) Ohio’s cause test, and (3) Ohio’s strict ambiguity rules to reject an insurer’s attempt to multiply retained limits in a mass-claim product contamination setting. The court treated the alleged salmonella contamination as the single “accident” and single continuous cause of the injuries, and it refused to let an ambiguously worded Lot Endorsement transform that single occurrence into many. For insurers, the decision underscores the need for explicit drafting if “lot-based” segmentation of occurrences is intended; for policyholders, it strengthens arguments that a single contamination episode triggers only one retained limit absent unambiguous endorsement language to the contrary.