Lecture at the University of Minnesota
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Off to Minneapolis this week for a lecture at the University of Minnesota’s Department of Food Science. I’ll be talking to professor Francisco Diez’s Food: Safety, Risks and Technology class. My lecture is titled “Consumers vs. Food Companies: Intersection of the Court System and Food Science.”
I plan a wide-ranging talk that touches on:
- The relationship and interaction between the tort system and food regulation;
- Basic principles of products liability law as it affects food;
- Three different types of food products claimants and how we respond to each;
- Why consumer claims matter to food companies;
- The importance of investigating agencies in determining the outcome of claims;
- The relationship between food-borne illness, home food preparation, organic food and locavores; and
- How lawyers use expert witnesses.
I’ll post the slides after the lecture.
PCA Investigation: Anatomy of A Recall
FDA has a short video "anatomy of a recall" about the investigation of the Salmonella outbreak and recalls associated with Peanut Corporation of America (PCA). Anyone interested in learning how the federal government (with the help of Minnesota's "Team Diarrhea") goes about a food borne illness investigation and recall should take a look.
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Hungry for Change: ABA Journal on Food Safety Reform and Its History
Kristin Choo has written a piece for the ABA Journal tracking the history of food safety regulation, recent outbreaks and current legislation pending in Congress. I am grateful to be mentioned in the piece. The article can be found at this link.
Ms. Choo writes:
Litigation is likely to increase as a pumped-up FDA, an arm of the Department of Health and Human Services, identifies more outbreaks of food-borne illness and collects more evidence about their causes. Meanwhile, many companies are likely to struggle, at least initially, with stricter requirements to develop safety plans, disclose business records when outbreaks occur and improve procedures for tracing products, according to Kenneth M. Odza, a member of Stoel Rives in Seattle, who litigates food safety cases and writes a blog on the subject.
Ms. Choo also includes a summary of information (see below) derived from CDC documented outbreaks (two or more people with the same illness after eating the same contaminated food) from 1990 to 2006 broken down by category of food. Note that nearly 50% of illnesses documented are from produce or "multi-ingredient." Produce and "multi-ingredient" account for about twice the number of illnesses as beef and poultry combined.
| Category | Outbreaks | Illnesses |
| Beef | 518 | 14,191 |
| Beverages | 101 | 3,640 |
| Breads and Bakery | 179 | 4,904 |
| Dairy | 221 | 6,364 |
| Eggs | 351 | 11,143 |
| Game | 28 | 193 |
| Luncheon and Other Meats | 196 | 7,108 |
| Multi-Ingredient | 1,054 | 30,254 |
| Pork | 233 | 6,954 |
| Poultry | 620 | 18,906 |
| Produce | 768 | 35,060 |
| Seafood | 1,140 | 11,809 |
| Other | 369 |
183 |
Macaroni Grill Changes Its Menu for the Right Reasons
While Denny's appears to be subject to a growing trend of people suing it to change its menu, Romano's Macaroni Grill is lowering the calories in its menu for another reason: to stem losses in sales. According to an article in the Wall Street Journal, Macaroni Grill is increasing sales while at the same time lowering food costs, prep time and the calories in its menu items. Criticism on The Today Show of a menu item with 1270 calories has caused it to be trimmed down to just 390 calories and 4 grams of fat.
As the debate over labeling caloric and other information in restaurants continues, this is an example of the market making its own correction without intervention from the legal system. According to Macaroni Grill, the new cherry tomatoes and small leaf basil in their tomato bruschetta makes the food taste better, too.
Sodium Putative Class Action Suits to Become Epidemic?
Following the putative class suit filed last month in New Jersey by the Center for Science in the Public Interest (CSPI) against Denny’s, a similar suit was filed in Illinois (apparently CSPI is not directly involved in this action). The Illinois complaint can be found here.
Like the New Jersey complaint, the Illinois action alleges claims of consumer fraud and breach of implied warranty of merchantability. Previous posts on this site have explained why both consumer fraud and implied warranty of merchantability claims should fail on their face.
The Illinois action adds claims for unjust enrichment, accounting and ”breach of contract implied in fact.” Claims for unjust enrichment and accounting seem intertwined and not all that different from consumer fraud and breach of implied warranty claims.
Breach of contract implied in fact is more creative. Instead of directly attacking Denny's representations (which as discussed in previous posts are not really alleged to be inaccurate), this claim asserts something that looks more like a products liability claim. The claim turns not so much on “fraud” but on whether the meals sold “contained excessive amounts of sodium, such that it was not fit for human consumption.” This cause of action alleges that the “bargained for” contract between class members and Denny’s required Denny’s to provide “a meal fit for human consumption.”
While creative, the breach of contract implied in fact claim may be more problematic than the fraud and implied warranty of merchantability claims. First, as discussed previously, Denny’s discloses on its website (and according to CSPI, at its restaurants) sodium content of menu items. Like the fraud claims, proof that plaintiffs could have reasonably bargained for something different seems problematic.
Second, plaintiffs are asking the court to use its equitable powers and step into the shoes of local, state and federal health departments and regulatory agencies to pass on appropriate sodium levels in restaurant food. As a rule, courts use their equitable powers only in extraordinary circumstances (e.g., a building falls down, assets leave the country, an individual’s life or liberties at stake, etc.). If regulators and legislators have not reached consensus on regulating sodium, odds are that most judges will avoid weighing in on the issue.
Despite their problems (and probable lack of merit), best guess is that the plaintiffs' class action bar will continue copy-catting these suits across the country. Doubtful that Denny's will be the only victim.
Litigation and Insurance Coverage Risks from Swine Flu (H1N1)
For food companies (and other businesses), a dangerous and deadly flu pandemic (e.g., H1N1) can be a business disaster. Adding insult to injury is personal injury litigation and the accompanying insurance coverage nightmares that follow.
What Are the Personal Injury Litigation Risks?
For restaurants, airlines, cruiselines, supermarkets, hospitals, schools, and other institutions, risk comes from exposure if customers can link their illness with employee or staff illnesses. While proof of causation will be a hurdle for these plaintiffs, employers without clear and enforced pandemic policies (e.g., policies aimed at limited transmission and keeping sick workers home) are at risk. Large-scale deaths of healthy children and adults will raise the stakes enough to garner attention from plaintiffs’ lawyers and motivate lawsuits (whether merited or not).
While workers’ compensation statutes generally shield employers from suits by their employees (both alive and deceased), the same bar may not apply to contract employees or customers. Both may have the right to sue if they can link exposure to illness.
Will Personal Injury Claims Be Covered by CGL Coverage?
Generally, third-party claims for bodily injury against a company should be covered by Commercial General Liability (CGL) coverage. Yet coverages, exclusions, and endorsements should be read carefully. With greater frequency, insurers are including relevant (and harsh) language excluding claims related to infectious disease. For example, many policies, especially those issued to food companies, include exclusions for “organic pathogens,” which could be construed by insurers to include flu viruses.
Insureds should also evaluate whether limits and excess coverages are sufficient. Increasing limits of liability are relatively inexpensive and should be considered. It’s not difficult to imagine claims exceeding $100 million if multiple deaths of healthy individuals are involved.
Will Lost Business and/or Lost Profits Be Covered by Business Interruption Coverage?
Possibly. The lawyers at Anderson, Kill and Olick have written a nice piece on this and other swine flu coverage issues. Here’s their summary of business interruption coverage for swine flu:
Depending on the facts, it may be possible for a swine flu pandemic to give rise to business interruption coverage. Such coverage typically is purchased by businesses as part of their property insurance policies, in the form of a rider or endorsement or an optional additional coverage. Business interruption coverage is designed to protect businesses from losses that they may suffer unexpectedly due to unavoidable interruptions in their daily operations.
Business interruption coverage may apply in a variety of circumstances, such as a forced shut-down, or a substantial impairment in access to, a business’ physical plant or warehouses. Recent, infamous examples of events giving rise to such business interruptions are the events of September 11, 2001, and Hurricane Katrina in Florida.
In most property policies, business interruption coverage is only triggered when the site suffers property damage. Physical damage, however, can include contamination of equipment. Moreover, some policies, particularly those written for policyholders in the hospitality industry, do provide coverage for losses stemming from infectious disease without requiring physical damage to premises. Further, civil authority coverage, which is triggered when authorities shut off access to an area in which a business is located, can be triggered without physical damage to the policyholder’s premises.
On the brink of a season during which some predict a possible dangerous pandemic, now is an opportune time for any company to gather its insurance coverage team (lawyers, risk managers, and brokers) to review and mitigate exposures.
