The Pistachio Recall: More Salmonella
The FDA and the California Department of Public Health announced on March 30 the recall of pistachios from Setton Farms, which have been linked to a discovery of salmonella originally identified by Kraft Foods in Back to Nature Trail Mix. The FDA has a list of recalled products, but that may grow.
Obviously, we have been through this drill before. It is interesting to note the reactions of different involved parties.
Continue Reading...The Uniform Commercial Code and Food Recalls
Article 2 of The Uniform Commercial Code. The Uniform Commercial Code ("UCC") is my Bible. So, when I read about the pain caused to businesses and charities by the peanut butter recall, I look first to the UCC to see what might be available to help.
Article 2 of the UCC covers transactions in goods. It expressly does not repeal laws on sales to consumers, nor does it change tort law. But my focus here is not on torts, it is on contract law. When a wholesaler buys tainted peanut butter paste from a factory, when a manufacturer buys that same paste from a wholesaler, when a grocer buys the products of that manufacturer directly or from another wholesaler, and when a consumer buys those products from a grocer, there is a simple contract for the sale of goods involved, and that contract is governed by Article 2. When someone is made sick from the tainted product, there is a lot of law you can refer to; Ken has blogged on it a lot and will again. But what happens in the case of a recall to parties who are, fortunately, unharmed by the tainted goods except in an economic way?
To begin with, to apply Article 2, there needs to be a sale. Sale is defined in Article 1 of the UCC (the definition is applicable to Article 2 and the whole UCC) and requires the passing of title for a price. Thus, a food bank that receives donated goods will not have any direct rights under Article 2.
A contract for sales over $500 generally requires a writing. This can be as simple as a purchase order or sales order or as elaborate as a 100-page contract for the sale of an airplane. Even an exchange of e-mails can be sufficient.
Generally, the more elaborate the contract, the more likely it is to protect sellers, not buyers. This is because Article 2 protects sellers by default. Article 2 contains what are called "gap filler" terms, which govern in the absence of express agreement otherwise. Some of the most critical of these protect buyers from exactly the kind of issues that a food recall might generate.
Express and Implied Warranties. Among the gap filler provisions are implied warranties. The UCC implied warranties include:
- A warranty of title
- A warranty against infringement (which is only given by merchants)
- A warranty of merchantability (also only given by merchants)
- A warranty of fitness for a particular purpose
In addition, sellers can give (or be deemed to have given) express warranties.
Continue Reading...
Nestle's Makes the Very Best Peanut Decision
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On Thursday, March 19, the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee held another hearing on Peanut Corporation of America and the Salmonella outbreak. A focus of the hearing was the different choices made by Nestle USA, which had refused to buy PCA peanuts, and the companies testifying at the hearing, including Kellogg and King Nut, which had.
Nestle, when considering buying peanuts from PCA, had sent its own inspectors to PCA's plants. They found, according to a report of the hearing in the Washington Post, some rather damaging items:
rat droppings, live beetles, dead insects and the potential for microbial contamination
Nestle, not surprisingly, declined to buy from PCA.
At the hearing, witnesses from Kellogg and King Nut were questioned as to why they had not done their own inspections, instead relying on inspections by AIB, the American Institute of Baking, which were paid for by PCA, and which apparently tipped PCA about when it was coming.
The question nobody seemed to ask--and no one from Nestle was at the hearing--was why Nestle could not have made the results of its inspection public at the time? If there are "rodent droppings in the break room cabinets", and the company is selling peanuts to other members of the general public, just not through Nestle, isn't this something that should be made known to someone?
One answer lies in the fear of the various torts that come under the heading of "trade libel." Nestle is a big company, and even though it presumably trusts its inspectors (and makes important business decisions based on their reports), it must recognize that it is a potential "deep pocket" for lawsuits. Thus, to report publicly what its inspectors found, or even to make that information avaiable to others in the food industry, is to risk a major lawsuit.
The flip side should also be considered. If you are PCA, and someone broadcasts to the world that you have rat droppings in your break room cabinets, you are likely to experience significant losses, regardless of whether the report is true, and whether the presence of rat droppings in your cabinets affects the actual safety of your food. What we do know is that in 2008 PCA began shipping peanuts that killed people. The rat droppings found in the 2002 Nestle inspection presumably had nothing to do with those deaths, nor are we aware of any deaths or illnesses from PCA peanuts in the interim. Finally, we do not of course know whether there are other suppliers Nestle or others who conducted their own inspections rejected, and what they did with the news of rejection. Nestle, for instance, didn't write off PCA when it rejected it in 2002; it checked out another PCA facility in 2006 (and came to similar conclusions).
Then there is the question of what contractual rights and obligations existed between PCA and Nestle. Did PCA require Nestle to sign a non-disclosure agreement when it allowed it into the plants? Any well-advised company would require such an agreement at the very least to protect proprietary technology. Thus, Nestle may have been contractually bound not to reveal the results of its inspections.
As food safety legislation is being considered, the issue of tort liability and the right to use contracts to silence someone who knows about your dirty facility should be faced. It is not as simple as "all inspections should be public", but it is also unlikely to remain as business as usual. We publicize the results of government restaurant inspections without putting all restaurants that fail to pass inspection out of business.
Back to School
In the next couple of weeks, I have the unique opportunity to travel back to Cornell University, my law school alma mater, to spend time getting acquainted with its world renowned food science program.
While in "gorges" Ithaca, I plan to audit courses such as “Food Safety Assurance” and “Current Topics in Food Science & Technology.” I also plan to speak to graduate students in the program about “life in the trenches.” This should be interesting as the intersection of science and law is never boring.
I expect to have plenty to write about upon my return. In the meantime, if you are shopping for some of the best maple syrup or dairy products available, be sure to visit the Cornell Dairy Store where you can order online to stimulate the upstate New York economy.
Georgia House Unanimously Passes Food Safety Bill; Kellogg CEO Calls for Food Safety Reforms
Update to today’s earlier post: the Georgia House of Representatives unanimously passed a bill today that would strengthen food safety laws in Georgia. The Georgia House and Senate now will resolve minor differences in the proposed legislation and send a final version to Georgia Gov. Sonny Perdue for his signature.
Also today, the AP reports that the chief executive of Kellogg Co. is urging food safety reforms, including written safety plans for all food companies and annual inspections of facilities that make “high-risk foods.” The AP article notes Kellogg lost $70 million worth of peanut products in the recent salmonella outbreak linked to Peanut Corporation of America.
Georgia is One Step Closer to Tough New Food Safety Law
The Georgia House of Representatives today considers proposed legislation to strengthen food safety rules in that state. Among other things, Senate Bill 80 includes a provision that would require food makers to alert state inspectors within 24 hours if a plant’s internal tests show products are tainted. Experts say no other state has such a rule.
The bill already has passed the Georgia Senate. House approval would mean Georgia Gov. Sonny Perdue soon could sign the bill into law.
The bill was introduced following the salmonella outbreak linked to Peanut Corporation of America. Investigators say the company knowingly shipped salmonella-laced products even after PCA's internal tests showed the products were tainted. State law did not require the company to share those test results.
California Appeals Court: No Mercury Warnings Required on Canned Tuna
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The California Court of Appeal for the First Appellate District has upheld a trial court ruling that canned tuna sold in California need not warn consumers about methylmercury.
In 2004, the State of California sued three tuna companies: Tri-Union Seafoods, LLC; Del Monte Corporation; and Bumble Bee Foods, LLC. The state argued, among other things, that California’s Proposition 65 requires the companies to provide warnings to pregnant women and women of childbearing age that the canned tuna the companies distribute and sell contains trace amounts of methylmercury, a chemical that can cause harm to a developing fetus. After a six-week trial in 2006, the lower court ruled against the state, holding that (i) Proposition 65 was preempted because it conflicts with federal law, (ii) the amount of methylmercury in canned tuna does not rise to the threshold level that would require a warning on the product, and (iii) the tuna companies are exempt from Proposition 65’s warning requirements because virtually all methylmercury is “naturally occurring.”
The state appealed, and the appellate court recently issued a decision upholding the tuna companies’ victory on the sole basis that substantial evidence supported the trial court’s finding that methylmercury is naturally occurring in canned tuna. Proposition 65 contains several exemptions to its warning requirements, one of which provides that there is no duty to warn if a chemical is naturally occurring in food. Significantly, the appellate court did not address the preemption or threshold level findings of the trial court. The court also posited scenarios that could lead to a renewed Proposition 65 claim against the tuna companies (see page 28 of the decision).
No word yet on whether the state plans to appeal to the California Supreme Court.
Obama Administration Focuses on Food Safety
The Obama administration placed food safety front and center over the weekend. In his weekly radio address, President Obama on Saturday announced new leadership at the Food and Drug Administration and the creation of a panel to toughen food safety laws.
Characterizing outdated food safety laws and the lack of resources at the FDA as “a hazard to public health,” Mr. Obama announced the appointment of Dr. Margaret Hamburg, a former New York City health commissioner, as FDA commissioner, and Baltimore Health Commissioner Dr. Joshua Sharfstein as the FDA principal deputy commissioner. The president also unveiled the Food Safety Working Group – a group that will consist of cabinet secretaries and senior officials to advise the president on how to update and enforce food safety laws.
President Obama also announced two additional food-safety steps on Saturday: closing a loophole in federal regulation that allows some diseased cows to be slaughtered for food, and a billion-dollar investment to modernize labs and increase the number of food inspectors.
Read a transcript of the president’s weekly radio address, download the .mp3 audio, or view the video below.
Maple Leaf Foods: A Case Study in the Persistence of Memory
Maple Leaf Foods is Canada's largest food processor, and as the name implies, it traces its history a long way with our neighbor to the north. It has always prided itself on its food safety procedures.
Last year, as was widely reported, more than 20 people all across Canada died from listeriosis traced to one of Maple Leaf's processing plants in Toronto. A huge recall of Maple Leaf products was ordered. Recently, the company settled class action cases for a reported $27 million.
Perhaps Maple Leaf thought that put it all behind them. Hardly. A Thomson-Reuters article described how Maple Leaf considers itself well-placed in the current economic environment. The story is 11 paragraphs long. Five of the paragraphs tell the company's story. Six of the paragraphs, including the lead paragraph and the final five, are concerned in whole or in part with the listeriosis outbreak, plus a new recall of frankfurters and hot dogs.
People have long memories. The article in today's Wall Street Journal that peanut butter sales in the four weeks ending February 21 dropped 13.3% compared to the same period last year is just another indication of that.
Alaska Unfair Trade Practices and Consumer Protection Statute
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As discussed previously on this blog, the ABA Section of Litigation, Products Liability Committee will soon publish its 50-state survey on consumer protection statutes. In addition to the chapter on Washington, Bryan Anderson and I also coauthored the Alaska chapter.
As with Washington, the Alaska statute is quite broad. See AS § 45.50.471-.561. A recent development in Alaska law extends the act to permit claims between commercial entities. See W. Star Trucks v. Big Iron Equip. Serv., Inc., 101 P.3d 1047 (Alaska 2004).
A unique aspect of Alaska law is that it follows the English Rule awarding attorneys’ fees to the prevailing party. An interesting issue arises in the class context when a defendant “prevails” in a class suit. Who is responsible for paying prevailing party fees under Alaska Civil Rule 82 or AS § 45.50.537? The Alaska Supreme Court has resolved this issue by deciding that “named” class members may be liable for a prevailing defendant’s attorneys’ fees but that “absent” class members who are passive and have “relatively small claims” may not. See Turner v. Alaska Commc’ns Sys. Long Distance, Inc., 78 P.3d 264, 266-70 (Alaska 2003).
The Best Restaurant on Earth Closed Due to Food Poisoning
The Fat Duck, Heston Blumenthal's three-Michelin star restaurant which was once named the best restaurant in the world (it is currently second), was closed temporarily because of reports of food poisoning. Nothing has been found in a thorough search, leading to speculation that there may have been some form of sabotage, or simply a non-specific virus passed along not by the food but by a contagious member of the staff.
In an interview in the Guardian, Blumenthal detailed all the efforts that had been made to isolate the problems, which appeared as stomach ailments in customers, which--unusually for food poisoning--appeared four to five days after diners ate at the restauarant. The closure was voluntary and he plans to reopen Wednesday and compensate not only those who were affected with free meals, but give those whose bookings were cancelled something special upon their return.
UPDATE: It appears now more and more that the cause of the customers' illnesses was an unspecified airborne virus, and neither sabotage nor food poisoning. Restaurants are, after all, gathering places, and the lessons of winter viruses apply as much to a restaurant, for all the efforts a place like the Fat Duck may take to remain clean, as to any other indoor place.
