Product Liability – Protect Yourself and

Protect Your Business

Kenneth Odza, Esq.

Product was defective

Defect caused injury

Focus is on the product, not fault or lack of care

Strict Liability

Anyone “engaged in the business of selling or otherwise distributing” the defective food product.

- Restatement Third, Torts: Product Liability § 7

Strict Liability – Who’s Liable?

FarmFarm Processor andManufacturer

Processor andManufacturer

Restaurant orStore

Restaurant orStore

Legal Ramification$• $15.6 million settlement in the Jack in the Box E. coli food

poisoning outbreak.

• $12 million settlement with Odwalla after E. coli-contaminated Odwalla apple juice caused illness.

• $4.6 million jury award in the Finley Elementary School (Finley, Washington) E. coli food poisoning infections.

• $6.25 million settlement after an outbreak traced to green onions served at a Chi-Chi’s restaurant.

Consumer Confidence

Spinach sales in 2005 & 2006

Hallman, W.K., Cuite, C.L., Nucci, M.L. Pleasant, A.F. Chess, C. 2008. “Examining the 2006 Spinach Crisis from Multiple Perspectives,” Food Policy Institute, New Jersey Ag Exp Station, http://www.foodpolicyinstitute.org/news/default.asp?id=9.

Products And Pathogens To Worry About

Listeria Monocytogenes

• Pregnant women, newborns, and adults with weakened immune systems

• Kills 20-30 percent of those hospitalized – more than any other food-borne pathogen

• Also worry about Salmonella, STECs, etc.

Number of Outbreaks by Food, 1990-2005

Source: Outbreak Alert! Center for Science in the Public Interest, 2007

Raw Milk Cheese

?

Total RFR Entries Related to HVP Recall by Commodity

Acidified/LACF (9)

Dairy (178)

Dressings, Sauces and Gravies (183)

Frozen Foods (15)

Meal Replacement/ Nutritional Food

and Beverages (1)Multiple Products (42)

Prepared Foods (13)

Snack Foods (154)Soup (57)

Spices and Season-ings (113)

Stabilizer/ Emulsi-fiers/

Flavors and Colors (209)

Unknown (27)

An Ounce of Prevention

• Agreements with Suppliers and Vendors

• Insurance

• Strategic / Crisis Preparation

• Product Safety Programs

[… for the recovery of damages… arising out of or alleged to have arisen out of (a) the delivery, sale, resale, labeling, use or consumption of any Product…]

Seller agrees to defend, indemnify and hold harmless Buyer

Careful Review of Supplier/Vendor Agreement

Seller’s insurance described herein shall be primary and not contributory with Buyer’s insurance

Buyer shall be named as an additional insured

waivers of subrogation

Careful Review of Supplier/Vendor Agreement (cont.)

ORGANIC PATHOGENS EXCLUSION

1. Any actual, alleged or threatened exposure to, existence of, presence of, ingestion of, inhalation of or contact with any “biological agents” whether or not occurring alone.

Example of What to Look Out for in Insurance Coverage

Product Testing (Necessary But Crude)

• Negative Tests Don’t Prove Absence

• Testing Is Still Pretty Crude and Narrow (don’t look for full spectrum of organisms)

• No Government Standards

Public/Press Relations

· Coordinates internal and external communications

· Company spokesperson, serves as contact for media

· Develops strategy to limit impact to brand

Quality Assurance

· Fact investigation and trace-back

Sales and Marketing; Purchasing; Receiving

· Notify direct buyers· Notify suppliers· Monitor effectiveness of recall· Coordinate product return

Others ?

Accounting

· Estimate costs of options team is discussing

· Manage system for customer reimbursement

Scientific (Epidemiologist, Microbiologist, Infectious

Disease Expert)

· Speaks to health and food safety aspects of the problem

· Helps quantify the risk

Coordinator

· Senior operations manager· Manages activities of Team

Legal

· Fact investigation· Address liability questions· Deal with government

regulations· Prepare for litigation

Composition of Strategic Response / Crisis Management Team

Legal CoordinatorPublic/Press

Relations

SalesMarketing

PurchasingReceiving

OthersAccounting

ScientificQuality

Assurance

StrategicResponse/

CrisisManagement

Team

Reportable Food Registry and Recall Tools

What To Do

• Log events, actions and communications

• Record all reported injuries

• Document investigation

• Institute litigation “hold” on the destruction of any company documents or e-mails (including back-up media)

• Retain recalled product for future testing

• Cooperate and communicate with government officials

Reportable Food Registry (RFR)

• “Reportable Food”:

– “reasonable probability” of “serious adverse health consequences to humans or animals.”

• “Responsible Party”:

– FDA registered facility where product is “manufactured, processed, packed, or held.”

• Requirement:

– Report to FDA within 24 hours

New Laws and Regulations On The Way

• S.510/H.R. 2749 Pending

• FDA Moving Forward Now

– New Preventative Requirements

• Written Food Safety Plan

• Risk Based Procedures, Practices and Processes, Etc.

– Traceability

– Mandatory Recalls

– Expanded FDA Access To Records

– Fees

– And Much, Much MORE!

Questions?

www.foodliabilitylaw.com

Twitter:@KenOdza