Power Lunch: Defense Strategies for Food Liability

April 18, 2007
Sound preparation before a food illness outbreak ever happens will help minimize the outbreak and provide legal defense.

Agriculture as a whole is the largest industry in the U.S., the leading employer and a source of more than $1 trillion in economic activity annually. The economic disruption that would result from contamination of the food supply should be obvious.

For example, last September's E. coli outbreak in California is estimated to have caused economic losses ranging from $37-74 million. The toll from the more recent contamination of ConAgra peanut butter is still being counted.

The other great risk from contamination of the food supply is the impact on the health of the populace. Each year in the U.S., contamination of the food supply in the form of foodborne pathogens is responsible for an estimated 76 million cases of illness, 325,000 hospitalizations and 6,000 deaths. Recent outbreaks of hepatitis A, salmonella, botulism and E. coli have increased consumer concern over the wholesomeness and safety of the food supply.

To effectively address food safety concerns, focus first on health and hygiene practices both internally and from suppliers; and focus second on protecting the business as a competitor in the marketplace.

Consumers demand both a good quality product and a safe product. Internal protocols addressing quality (i.e., freshness and crispness) will not suffice where health and safety issues are concerned. Appropriately rigid internal policies and procedures must be in place to ensure compliance with a schedule of third-party audits, as well as Good Agricultural Practices (GAPs), Good Manufacturing Practices (GMPs), Hazard Analysis and Critical Control Points (HACCP) and recommendations found in the FDA's Guide to Minimize Microbial Food Safety Hazards for Fresh Fruits and Vegetables.

Further, each party in the chain must be able to trace the product one step up and one step down the distribution chain. Internally there must be a rigorous record keeping policy, even an electronic database where feasible, that allows a link between incoming product and outgoing product. Use of pallet tags, bin numbers or some other internal coding system will be essential to proving the source and recipient of products.

This is the same information that will be required by government agencies in the event of an outbreak investigation or recall. A recall team should be organized in advance, whether for litigation, investigation of an outbreak or to respond to an actual recall. The team should be trained, with a clear chain of command and knowledge of the criteria that would require a recall. As necessary, any recall should be initiated quickly in accordance with guidelines provided by the USDA and FDA.

Litigation surrounding allegations of food contamination or foodborne illness will involve claims for strict liability under Section 402(a) of the Food, Drug and Cosmetic Act, negligence per se and breach of warranty. Liability will be claimed on the basis that the food supply contains a poisonous or deleterious substance which may render it injurious to health. In these instances, proving and defending the actions and due care of the food processor will take a back seat to evidencing and defending the wholesomeness of the product at every stage. The above described traceback documentation, third-party audit results, internal policies/procedures and any microbiological testing will be critical.

However, before an incident occurs, a legal team should be in place. Lead attorneys with expertise in product liability litigation, the Food, Drug and Cosmetic Act, GAPs, GMPs, epidemiology, etc., need to be involved immediately to monitor correspondence and document production to government agencies, the news media and industry groups. Further, counsel should be called upon to provide advice and assistance in submitting notice to the insurer of a claim.

The legal team should include the consulting experts who have been retained and consulted in advance on the appropriateness of internal policies and procedures in light of government recommendations and regulations. Such expertise may be desired in areas of produce post-harvest practices, quality control, epidemiology, food science, etc. Further, either an in-house expert or a consultant should be knowledgeable about the presentation and incubation periods for staphylococcus, salmonella, botulism, trichinosis, E. coli, hepatitis A, listeria, campylobacter and norwalk in order to react appropriately.

Finally, given the guaranteed rampant news coverage, sensational press releases and internet blogs, which increase the public concern as well as litigious intent, a communications team or a PR team should be prepared in advance with knowledge of the business, its practices, its product, its clients, etc. These folks interface with the public and address both the public interest in food safety and the business' interest in customer safety and consumer satisfaction.

To best serve the public, the business must remain viable in the face of food contamination or foodborne illness claims. The financial health of the business can be provided for with adequate self-insurance up to a given dollar amount and then substantial primary and excess liability insurance. The premium cost of the large policy will be offset by the initial self-insurance amount. Additionally, self-insuring the first $1 million, for example, allows the business to retain control of any litigation in the early stages. By controlling the litigation, the firm is actively involved in any ensuing investigation, the retention of legal counsel and experts, as well as interaction with government authorities. This allows the business to address those issues most salient to the industry and to the future of the business.

Another option is the use of vendor agreements containing indemnity clauses and hold harmless provisions. In the absence of such agreements or where parties cannot negotiate such an agreement successfully, obtaining endorsements of insurance is an alternative.

Sound preparation in advance of an outbreak will assist in bolstering public opinion of the food processor's efforts at food safety while an outbreak is occurring, and it will further the industry's goals of providing a safe and healthy product.

John Hall is a member and Livia Langton is an associate with Eckert Seamans Cherin & Mellott LLC, a Pittsburgh law firm specializing in the defense of foodborne illness cases. Contact them at 412-566-6000 or see www.eckertseamans.com.

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