FRESNO, Calif. » A landmark $500 million agreement was reached to settle a slaughterhouse abuse case in California that led to the biggest meat recall in U.S. history in 2008, an animal welfare group announced today.

The civil settlement with the owners of Westland/Hallmark Meat Co. is the largest-ever penalty for an animal abuse case, and the first time federal fraud statutes have been used, according to the Humane Society of the United States, the lead plaintiff.

The settlement is largely symbolic because the company is bankrupt.

"It’s a deterrence judgment," said Jonathan R. Lovvorn, chief counsel for animal protection litigation at the Humane Society of the United States. "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."

As a supplier of meats for the national school lunch program, the Riverside County company had signed federal contracts certifying that it would provide humane treatment of animals sent there for slaughter.

The animal welfare group 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 had two felony convictions related to illegal industry practices.

"This is a first-of-its-kind lawsuit regarding farm animals, the first time federal fraud statutes have been applied," Lovvorn said. "When you look at the video, it’s about as far from humane treatment as you can get."

The widely circulated video shot by an undercover operative 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.

Downed cows can pose an increased risk for mad cow and other diseases. Thus far, no mad cow cases have been linked to the recalled meat from Westland/Hallmark Meat Co.

The video sparked the largest beef recall in U.S. history. 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 lawsuit alleged the government paid the company money it was not entitled to because the company lied about meeting the conditions of its contracts.

The settlement agreement followed another slaughterhouse abuse investigation in August in Central California.

In that case, the federal government suspended school lunch 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, shot and pulled by the tails by workers trying to get them to stand. That cruelty investigation is ongoing.

In the Hallmark case, the partial settlement announced today is with two of nine defendants in the case, Donald Hallmark Sr. and Donald Hallmark Jr. Neither is the packing plant partner with the felony convictions.

Under the terms, the father and son also have five years to pay $316,802, or the bulk of their remaining personal assets. They have also agreed to cooperate fully with the Justice Department and the Humane Society of the United States in settling the litigation against the remaining seven defendants.

Attorneys for the defendants and the Justice Department did not immediately return calls seeking comment. The symbolic settlement will become final when the cases against the other defendants are resolved, Lovvorn said.

If accepted by the court, the $497 million agreement reached with the defendants against the bankrupt company likely will go unpaid, Lovvorn said. The amount was determined under the treble damages provision of the federal False Claims Act.

In the 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.