Food Liability Law Blog : Food Safety and Liability Lawyer & Attorney : Stoel Rives Law Firm : Food Safety, Organic Food, Recalls

By Guest Bloggers Tyler Anderson and Stephanie Meier

On November 13, the FDA notified nearly 30 manufacturers of caffeinated alcoholic beverages that the agency intends to look into the safety and legality of their products. As the FDA explained in a news release announcing this action, under the Federal Food, Drug, and Cosmetic Act any substance intentionally added to food, in this case caffeine in alcoholic beverages, is deemed unsafe and is unlawful unless its specific use has been approved by an FDA regulation, the substance is subject to a prior sanction, or the substance is Generally Recognized as Safe (GRAS). To date, the FDA has only listed caffeine as GRAS as an ingredient for use in cola-type beverages in concentrations specified by the agency.

The FDA noted in its release that it is not aware of any basis on which manufacturers may have concluded that the use of caffeine in alcoholic beverages is GRAS sanctioned. Consequently, in its letters to notified companies, including City Brewing, Gaamm Imports, Inc., and United Brands Company, Inc., the agency asked that within 30 days the notified companies “produce evidence of their rationale, with supporting data and information” for their conclusion that the use of caffeine in their products is GRAS or prior sanctioned. If the FDA determines that the use of caffeine in the alcoholic beverages is not GRAS or prior sanctioned, the agency stated it would take “appropriate action to ensure that the products are removed from the marketplace.”

This issue has been fermenting (pun intended) for some time. In the past year, alcoholic beverage industry leaders Anheuser-Busch and MillerCoors agreed to discontinue their popular caffeinated alcoholic beverages Tilt, Bud Extra, and Sparks, and further agreed not to produce any caffeinated alcoholic beverages in the future. In late September 2009, the FDA received letters from eighteen attorneys general and one city attorney and five scientists expressing concerns about caffeinated alcoholic beverages. Among the chief policy concerns cited by these stakeholders was the increasing popularity and consumption of caffeinated alcoholic beverages by college students, coupled with general health risks associated with excess consumption of both alcohol and caffeine.

Manufacturers of alcoholic beverages had been operating under the TTB guideline that caffeine was a permitted but restricted ingredient, and had been warned by TTB and FTC about prohibited and/or deceptive advertising practices related to the effects of combining caffeine and alcohol. If the FDA takes the strong position that caffeine is an illegal additive, these advertising concerns related to caffeine and alcohol will disappear. The TTB and FTC will likely continue to focus scrutiny on other less common alcoholic beverage additives that have been treated like caffeine, such as ginseng, guarana and taurine.

And consumers will turn back to the original Red Bull and vodka for their caffeinated alcoholic beverage.

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American Conference Institute (ACI) recently held its latest conference on food-borne illness litigation. The conference has been a fairly intimate gathering of the nation’s lawyers, insurers and experts involved with food-borne illness litigation.

This year, I had the privilege of moderating an in-house counsel “think tank.” The panel was composed of lawyers from a nice cross-section of food businesses: Yum Brands, Hormel, Fresh Express and SUPERVALU (though for each, food-borne illness litigation is a rare event)  A slide-deck from the panel can be found here.

Also among the presenters at this year’s conference were Center for Disease Control’s (CDC) Dr. Arthur Liang and USDA/FSIS representative Dr. Dan Engeljohn. Both presentations provided fascinating insight into changes afoot in food safety enforcement and policy at the federal level. Here are some of the take-aways:

• “Outbreaks Waiting to Be Discovered” – Dr. Liang opined that, based on surveilled illnesses, most food-borne illness outbreaks are not presently discovered. He believes that recent data shows that there are perhaps 2-3 times more outbreaks nationally than what’s been uncovered over the last few years.

• Food Safety Progress Being Undone by Retail Deli Operations – FSIS says there has been a “steady increase in risky behavior at the retail level.” According to Dr. Engeljohn, budget authority is being sought to intervene with retailers, particularly smaller supermarket deli operations.

• Negative Tested Product Can Be Considered Adulterated - FSIS will be issuing a policy soon that for the first time will consider a “negative tested product to be determined adulterated” under circumstances where an associated product tested positive for pathogens.

• Non-0157 STECs - FSIS will be finalizing methodology to detect non-0157 Shiga Toxin-Producing Escherichia coli (STEC).

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This week kicked off the three-part webinar series on bringing sustainable food products to market. Thanks to our presenters and attendees. The recorded webcast was archived and is accessible at this link or by clicking the image at the bottom of this blog entry. Click here if you just want to view or download slides.

Take-aways from the first webinar include:

• Darigold’s definition of sustainability: Prosperity + Stewardship + Community = Sustainable Value

• Customers, regulatory pressures, industry leadership and vocal stakeholders drive sustainability.

• Engage sustainability by “connecting the dots” in the food chain.

• Sustainability is not an event; it’s a process and you need to select something that’s core to your business.

• Build SMART (specific-measurable-attainable-realistic-timely) objectives around your sustainability goals.

• Keep your sustainability efforts tangible by going after low-hanging fruit (e.g., packaging).

• Use the same metrics (e.g., ROI and NPV) to evaluate sustainability projects as you use to evaluate other projects.

• Funding sources for sustainability food products: equity from investors, debt from lenders and government programs.

• Look at GRI standard as a guideline in developing sustainability key performance measures.

I hope you can join me, my colleague at Stoel Rives, Jere Webb, Alison Dennis from Burgerville, Roberta Anderson from Food Alliance and Ricardo Carvajal from Hyman Phelps and McNamara on November 3, at 9 am PST, noon EST, (live Twitter feed at #sustainlaw) for the next webinar as we discuss the following:

• Regulatory Traps – Current Regulatory Environment For Making Sustainable Claims and Standard-Setting Efforts Currently Underway,
• Avoiding “Green Washing”,
• Pros and Cons of Third-Party Certification, and
• A Restaurant Chain's Perspectives on Sustainability.

Live Twitter feed of the next webinar is also available at #sustainlaw.

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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:

1. The relationship and interaction between the tort system and food regulation;
2. Basic principles of products liability law as it affects food;
3. Three different types of food products claimants and how we respond to each;
4. Why consumer claims matter to food companies;
5. The importance of investigating agencies in determining the outcome of claims;
6. The relationship between food-borne illness, home food preparation, organic food and locavores; and
7. How lawyers use expert witnesses.

I’ll post the slides after the lecture.

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U.S. House of Representatives approved HR 2749 moments ago. This action followed some confusion yesterday where it was brought to the floor needing a 2/3 vote and failed. Here’s a link to a report by the Rules Committee including the language of the bill as approved today by the House. Changes to the bill from what was proposed by the Energy and Commerce Committee include amendments aimed at concerns by smaller farmers of the $500 “facility registration fee,” performance standards and record keeping.

The legislation has been the subject of heavy debate inside and outside the beltway. Here’s a link to the Editorial in the New York Times in support of the bill. The Grocery Manufacturer’s Association (GMA) also has expressed support in a June press release for the bill as marked-up by the Energy and Commerce Committee. From some opposed to the bill, here’s a link with an impassioned argument from yesterday.

Note that the registration requirements in the bill as currently written “does not include farms; private residences of individuals, restaurants, other retail food establishments; nonprofit food establishments in which food is prepared for or served directly to the consumer.”

The bill further exempts from registration farms that sell food primarily at farmers markets. Also exempts farms that “manufacturer grains or other feed stuffs” grown on those farms and distributed to other farms for “consumption as food by humans or animals on such farm.”

Also note that traceability provisions remain. Section 107(c)(2) recognizes that work remains on the regulatory level for FDA to collect information, and develop technology and systems, and establish pilot programs before traceability becomes a reality.

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By guest blogger Jerry Chiang

In starting any business enterprise, especially in the food industry, incorporating the business as a corporation or limited liability company is as important as having a good product or solid business plan. Incorporation is essential because it shields owners from the liabilities of their business. A lawsuit against the business will not impact the personal assets of the business owners because the law recognizes the corporation or limited liability company as a distinct and separate entity.

Incorporation by itself, however, is not enough. In order for the liability shield to remain in place, or for the law to continue to recognize the corporation or limited liability company as a separate entity, the entity’s owners need to observe certain formalities. If the owners are not careful, the law may treat the entity and the owners as one and the same and disregard the corporate entity. This is commonly referred to as “piercing the corporate veil.”

Over the next few days, this blog will give you an overview of what the courts look at when they decide whether to disregard a business entity and find its owners liable. We’ll also provide a list of dos and don’ts to help you avoid losing your liability shield. 

For more in-depth discussion of the latest case developments on piercing the corporate veil, especially as it relates to LLCs, keep up with Doug Batey's blog, LLC Monitor.

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An important study was released this month by the Institute of Food Technologists addressing the challenge of responding to food contamination with limited scientific information. Ricardo Carvajal at Hyman, Phelps & McNamara wrote about this on the FDALawBlog last week. You can read the summary by Rosetta L. Newsome here.

Ms. Newsome summarizes the three main sections of the study as follows:

First Section:

“details the U.S. legal framework that provides the foundation for U.S. food safety policy,
describes international considerations (e.g., Codex standards) that impact foods in international commerce, and addresses European Union law and standards.”

Second Section:

“briefly addresses structure activity relationships, surrogate compounds and metabolites,
predictions based on physical/chemical data, toxicological evaluation, use of animal studies, statistical considerations, and other aspects of risk assessment.”

Third Section:

“addresses why a new approach is needed to conduct a risk-based evaluation of the potential exposure, hazard, and toxicity of low levels of unwanted chemical substances in foods and how information on risk can be used to make appropriately conservative and balanced decisions[;] . . . also calls attention to the importance of evaluating benefits of the food(s) in which the component is found as well as risks.”

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The American Conference Institute announced this week its latest food litigation conference. Here’s the conference brochure. The conference will take place in Chicago on October 26-27 at the Sutton Place Hotel.

Plaintiffs’ lawyer Bill Marler and defense lawyer Al Maxwell are co-chairing the conference. This year promises a greater variety of presentations by in-house food personnel, government regulators, and others. As in past years, I expect a stimulating exchange of information and vigorous debate about competing views of food liability issues. Feel free to email me or comment if you are attending or want more information.

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For food sellers interested in promoting a “sustainable” brand and inspiring food safety confidence in their consumers, meet Food Alliance. Food Alliance “is a nonprofit organization that certifies farms, ranches and food handlers for sustainable agricultural and facility management practices.” It bills itself as “the most comprehensive certification program for sustainably produced food in North America.”

I’ve recently joined the Food Alliance Board of Directors (in fact, I’m headed to Portland today for a board meeting). My hope is to assist Food Alliance in becoming more widely accepted and mainstream. Credible third-party certification, such as Food Alliance provides, offers a transparent pathway to sustainability of our food supply and consumer confidence in food safety.

Food Alliance takes a holistic approach that is broader and more dynamic than organic certification, which does nothing to address food contamination from pathogens such as Salmonella, E. coli, and Listeria (in fact, many experts believe that organically grown food may be more likely to be contaminated by these pathogens). By way of example, Food Alliance certification standards, among other things, address “soil and water quality,” “ensure the health and humane treatment of animals,” “conserve energy and water,” and “ensure quality control and food handling safety.”

For more on why a holistic, independent third-party certification correlates with food safety (and accompanying consumer confidence), I’d suggest reading this op-ed piece co-authored by Food Alliance Executive Director Scott Exo, which was written earlier this year in the wake of the PCA peanut recall.

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We’ve explained previously in this blog why increased surveillance by state and federal agencies will lead to detection of more outbreaks (and, therefore, more legal exposure). Others seem to agree.

Law360 published a nice interview with Jim Neale at McGuire Woods, another lawyer experienced in the food liability arena ( a Law360 subscription is needed to access the full article). Jim is quoted in the article as saying, “when, despite the best efforts of all concerned, outbreaks do occur, improved surveillance allows them to be caught and, most often, quickly tracked to the source.” And, as federal money increases to the state health departments (the front line in detecting most of the nation’s outbreaks), rates of detection will accelerate.

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Mediation has become a critical process for resolving large, multi-party consumer claims. Settlement of these claims is often complicated by insurance and third-party recovery. Often a brokered process is the only practical way to get to a meeting of the minds. Yet, in my experience mediations that can succeed fail because of the lawyers and mediators. Having been through a number of multiparty mediations (sometimes with more than 20 separately represented interests) and having been trained as a mediator, here are my top five tips entering into a multiparty mediation:

1.            Bargain from Strength—Be Prepared to Try the Case. Go into the mediation with well-developed trial themes, a trial plan, an opening statement, prepared expert witnesses, and, if possible, jury research. Whether the mediation occurs early on in the case or on the eve of trial, your opponents will know whether you are prepared to try the case. If you are not prepared, settlement will be harder and your client will be asked to compromise more. While trial preparation is critical in any case, it is most critical where the liability and damages claims against your client are the strongest and your client is in a difficult position (i.e., those cases your client would least like to try). For these cases, any leverage your client can bring to the table is important. Creating the perception that your client is ready to go to trial will create leverage.

2.            Make Sure the Right Players Are Present and Educated. Mediation cannot succeed unless each party includes a client/insurer representative with full settlement authority (or easy access to full settlement authority). For large multiparty claims, having those representatives physically present is critical. Perhaps more important is that those with authority be prepared in advance of mediation to exercise authority. It should go without mention that a lawyer should prepare his or her own client for mediation by providing a complete and honest assessment of the settlement value.

As or more important may be educating the opposing party, though this is easier said than done. Communicating your adversary’s weaknesses to your adversary is tricky. In most situations, a lawyer’s assessment of the opponent’s weaknesses is not considered credible and is written off as “chest-beating.” The only way a lawyer can succeed in communicating with an opponent about the opponent’s weaknesses is if the lawyer has worked in advance at building a relationship and credibility with the adversary.

3.            Select the Right Mediator. For difficult multiparty cases, mediator selection is an important, though often overlooked, key to success. Look for a mediator who will work hard in advance of the mediation to understand the barriers to settlement (see number 4 below). Look also for a mediator who (1) has the ability to quickly grasp complex issues impeding settlement; (2) is not afraid to confront parties with difficult questions; and (3) understands the mediation process, possesses good people skills, and is creative. Avoid at all costs a mediator whose primary tool is to brow-beat, make rulings, or intimidate the parties (this never works unless the mediator also happens to be your trial judge).

4.            Educate the Mediator (Well in Advance of the Mediation if Possible). If a mediator has waited until the morning of mediation to first meet with the parties, it may be too late. If there are more than a few interests represented, the entire mediation session may be consumed in educating the mediator about the relevant issues. Worse, the mediator may feel a need to take “short-cuts” and end up alienating the parties before negotiations have really begun. At minimum, the mediator should spend time well in advance of the mediation date, preferably in person, talking with counsel from each side. In advance of mediation, parties should also consider setting up a session for the mediator to hear directly from key expert witnesses. On the morning of the mediation, the mediator should have learned enough to understand the major settlement impediments and should come with a plan of action.

5.            Diffuse Personality Conflicts and Emotions. If your client’s goal is to settle the case if at all possible, a trial lawyer must do what he or she can to set aside the skirmishes, grudges, or ill will that might have built up during discovery, motion practice, pretrial preparation, etc. While I’m a big proponent of setting aside ego and of building relationships in litigation, this may not always be possible. But mediation/settlement negotiations are the one time in the litigation process where consensus building is the objective. Lawyers should do what they can (swallow pride, move on, etc.) to extricate personality conflicts from the mediation.

Similarly, lawyers should assess during the mediation the degree to which personality conflicts and emotions among the parties are inhibiting consensus. When practical, lawyers should consider counseling their clients on setting aside ego and emotions. If a heart-felt apology or another message can bridge the difference between the parties, the client should be told and given the opportunity to make the apology or to communicate.

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Last week, members of the U.S. House of Representatives Committee on Energy and Commerce released a discussion draft of the “Food Safety Enhancement Act of 2009.”
 

The draft proposes beefing up the FDA registry of “all food facilities serving American consumers” and charging every facility $1,000 per year to fund FDA food safety activities. The new legislation would expand the types of facilities that need to register by eliminating certain exemptions from the 2002 Bioterrorism Act, though for now it appears to maintain exemptions for retailers, restaurants, farmers and nonprofits.
 

The proposal’s most ambitious and controversial proposal may be traceability.

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Law 360 has an article up this week titled “Coverage May Be Tricky For Food Recalls.” I am among the lawyers quoted in the article. For me, the takeaway is that any food company should have in place a strong team of insurance coverage counsel and brokers. Food companies need to ensure that they have in place the coverage they intend to have in place.
 

The article also suggests that the markets for recall insurance may be evolving and becoming more accessible. Recalls can be financially devastating. To the extent that recall insurance is affordable and provides relevant coverage, it should be considered.

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Nobody disputes that consumers have a favorable view of organic certification in foods. Consumers generally believe that organic foods are healthier, and many believe they taste better. Yet, among food scientists, uncertainty prevails as to whether organics are safer, especially raw fruits and vegetables.

Absence of synthetic fertilizers is a primary distinction between organic and non-organic foods. And, from a safety standpoint, the absence of pesticides is the only provable claim that organic foods are healthier. But does the absence of one hazard imply the existence of another?

The prevailing pesticide substitute for organic foods is manure or composted manure. Dangerous pathogens such as E. coli O157 reside in manure. Some guidelines exist for composting manure. Unfortunately, as I learned recently in a presentation by Dr. Francisco Diez-Gonzalez at the University of Minnesota Food Science Department, these guidelines were written a decade ago, before science began to understand the prevalence of E. coli in the environment.

Science now understands that E. coli O157, for example, can persist for years in soil, let alone a more rich environment like manure. In some cases, it may be virtually impossible to rid of an environment of E. coli O157, short of treatment with non-organic substances such as tear gas or asphalt.

Outside of the 2006 spinach outbreak, there have been few food-borne illness outbreaks associated with organic fruits or vegetables. As organic farming continues to grow and detection of food-borne illness increases, the only question is how long it will be until another well-publicized outbreak. When it happens, will consumers continue to believe organic foods are safer? Will the industry be ready with evidence that proves the benefits of organic farming outweigh its risks?

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The Food and Drug Administration is seeking to increase its budget for Fiscal Year 2010 by nearly 20 percent more than FY 2009 – to $3.2 billion. The Washington Post reports that the increase is the largest in the agency’s history.

The FDA’s spending request includes $259.3 million to be devoted to the “Protecting America’s Food Supply” initiative. The agency plans to, among other things, strengthen the safety and security of the food supply chain, increase food inspections, and reinspect food facilities that fail to meet FDA’s safety standards. The Associated Press reports that the FDA’s proposed budget would put 222 more food inspectors in the field, for a total of 1,022. A summary of the FDA’s FY 2010 budget is available here.

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The third annual Nebraska Governor’s Conference on Food Safety Issues related to E. coli is May 5-7 in Lincoln, Nebraska.

Together with Bill Marler, I have been invited to speak to agricultural stakeholders about legal issues and ramifications of Shiga toxin-producing E. coli outbreaks. In the past, the emphasis for this conference has ranged from basic science to applied science, and this year's conference will emphasize issues ranging from animal and plant management strategies to regulatory issues. Given the inevitable changes that will be coming in food safety regulation under the Obama administration, this should be a lively conference.
 

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By Guest Blogger Per Ramfjord  

In my February 3, 2009 blog entry, I briefly discussed the steps a company should take to avoid criminal prosecution under the Federal Food Drug and Cosmetic Act. The FDA’s criminal investigation of Peanut Corporation of America continues to provide lessons on this subject—in particular, on what not to do.  

The enormous public harm caused by the company’s actions, coupled with its seemingly cavalier attitude to contamination already created a high risk of prosecution. But that risk was heightened still further on February 5, 2009, when the FDA issued an amended investigatory report indicating that company management did not initially provide complete and accurate information regarding the testing of contaminated products.  

This report and other information disclosed by the FDA shows that PCA management initially told the FDA that the company had shipped products that had tested positive for salmonella only after the products had been retested and it did not appear that they were contaminated. But this information was apparently inconsistent with company records, which, according to the report, showed that the company sometimes shipped products before it even received the positive test results and that, when it did so, it did not always even bother to do re-testing to find out if the positive results were false. This type of inconsistency between management statements and company records is precisely the type of misstep that companies should seek to avoid in a criminal investigation.  

The Department of Justice has published its Principles of Federal Prosecution of Business Organizations. According to those Principles, one of the key factors that the government looks to in deciding whether to charge a company criminally is the “corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation.” Any statements that are inconsistent with company records or the statements of other company employees are likely to be viewed as a failure to “come clean” under this standard. Indeed, should the government conclude that there was an active effort to conceal negative information, it is likely to go a step further and add charges against company management for false statements or obstruction of justice to the other charges in the underlying case.  

Again, this underscores the need to engage in a prompt, thorough and complete investigation as soon as possible when a potential problem arises. Equally important, it shows the need to exercise caution in verifying any statements that are provided to the government, particularly early in an investigation when there is a great deal of pressure—both from the government and the public—to provide an explanation of what happened. Putting too positive a “spin” on the events is virtually certain to backfire, as it appears to have done with PCA management.  

Update by Richard Goldfarb

As though to show the truth of what Per wrote, the FBI just announced that it would participate in the investigation of PCA, while the FDA's Office of Criminal Investigations would remain the lead investigative agency.

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By guest blogger Per Ramfjord

The FDA’s recent announcement that it is pursuing a criminal investigation of Peanut Corporation of America, arising out of the Salmonella-driven peanut product recall, is sure to raise concerns with executives in food product companies throughout the country. White House Press Secretary Robert Gibbs’s comment that the Obama administration intends to put in place a “stricter regulatory structure” to prevent breakdowns in food safety only heightens that concern.

And looking at the law, there are reasons to be concerned. The Federal Food, Drug, and Cosmetic Act criminalizes under sections 331 and 333 more than two dozen practices, including a host of activities associated with the manufacture or sale of contaminated food products. The potential punishment for such offenses includes corporate fines and the possible imprisonment of executives for up to one year for misdemeanor offenses or up to three years for felony violations. The burden of proof to establish such crimes against corporate executives is very low. For misdemeanor offenses, the government needs to prove only that the violation occurred under the executive’s watch; it need not show that the executive had any actual criminal intent or personal involvement in the violation. For felony violations, the government can prove the required intent simply by showing that a defendant consciously avoided knowledge of the violation or was involved in a prior violation.

So, the question arises, what should companies do to avoid prosecution if they become aware of potential criminal violations? The obvious first step is to stop the offending practice as quickly as possible and to identify and take any available remedial action, up to and potentially including a recall. Although there may be concern that the remedial action or recall may itself draw attention to the problem, the benefits of acting in a manner that the government deems responsible will pay off down the road. The second step is to investigate the violation immediately, with counsel, to develop facts that can help steer the case away from criminal enforcement. The FDA will almost always hold a “Section 305” meeting to allow a company to tell its side of the story before initiating a criminal prosecution. The decision about whether to prosecute will be based on factors such as the nature and seriousness of the offense, the potential deterrent effects of prosecution, and the company’s or individual’s culpability, criminal history, and willingness to cooperate. Uncovering evidence to show that the event in question was isolated in nature, due to unique and excusable circumstances, and not part of a pattern of misconduct or noncompliance is critical to making such a meeting a success and to the company’s overall defense going forward. Finally, an important third step is avoiding pitfalls during the investigation itself that could contribute to the government’s decision to prosecute. The current enforcement atmosphere is one in which the “cover-up” is often deemed worse (and more likely to spark prosecution) than the “crime.” Avoiding any false statements, document destruction, or other actions that the government could construe as constituting obstruction of justice is therefore of vital importance.

In sum, obviously the best way to avoid prosecution is to avoid violations, particularly through adopting policies and procedures that minimize risk. But once a potential violation has been discovered, it is vital to respond quickly and with the benefit of counsel who know and understand the system. While any enforcement proceedings are unfortunate, the prospect of criminal proceedings, with their potential of adverse publicity to the company and incarceration of executives, poses unique problems that require a rapid and focused response.

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By Guest Blogger Bryan Anderson

The maker of Chicken of the Sea products has asked the U.S. Supreme Court to grant certiorari in a case we reported on involving preemption of state-law tort claims. In August 2008, the Third Circuit in Fellner v. Tri-Union Seafoods, LLC reversed the district court and held that Food and Drug Administration (FDA) actions regarding methylmercury content in tuna did not preempt the plaintiff’s claims under the New Jersey Product Liability Act. Tri-Union Seafoods’ certiorari petition presents two questions for the Supreme Court’s consideration:

1. Whether state-law tort claims based upon failure to warn of the risks of methylmercury in tuna fish products are preempted by the Federal Food, Drug, and Cosmetics Act and regulatory actions of the FDA, including a written determination that state-law warning requirements concerning methylmercury in tuna products are preempted by federal law and denial of a petition to require such warnings; and

2. Whether a “presumption against preemption” applies in conflict preemption cases.

If the Court grants the petition and hears the case, it certainly will have implications concerning local and state labeling requirements vis-à-vis federal agency action. Stay tuned; we will update you on this case as the plaintiff/respondent submits her brief opposing the petition.

Also related to methylmercury, the FDA yesterday published a notice in the Federal Register announcing the availability of two draft documents assessing the benefits and risks of consuming commercial fish.

The first document attempts to quantify the impact of eating commercial fish on three health endpoints: (i) fetal neurodevelopment, (ii) risk of fatal coronary heart disease, and (iii) risk of fatal stroke. The FDA notes that “[e]ach of these health endpoints has been associated in the scientific literature both with adverse effects of methylmercury exposure (including through fish consumption) and beneficial effects of regular fish consumption.”

The second document provides an overview of published scientific literature regarding beneficial effects of fish consumption and Omega-3 fatty acids for neurodevelopmental and cardiovascular endpoints.

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Happy New Year. Thank you for your support, readership and feedback for this site. Since we launched the blog in late February of 2008, the growth in readership has been extraordinary. I'm overwhelmed at the response. My hope is that the blog has provided some measure of assistance to those in the food industry. As always, I welcome your feedback, suggestions and critiques.

In the coming year, I hope to spend more time on the blog exploring trends in liability, insurance coverage and consumer claims related to the food industry. I also hope to discuss more deeply the anatomy of consumer-based food borne illness and labeling litigation.

You may notice a drop-off in the frequency of postings between February and April as I will be spending more time on the road. I apologize in advance. One of the things I will be doing (and posting about) is visiting with students and faculty at the Cornell Food Science program in Ithaca, New York. I hope to learn more about emerging technologies related to food production and safety.

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I was interviewed recently by Food Innovation Weekly on “Melamine, Recalls and Crisis Management.” This question-and-answer article discusses how the waves of melamine issues circling the globe affect the way a company should think about crisis management. I suspect that we’re not done hearing about melamine contamination and that the scope of fraud has yet to be fully uncovered. Some of the more interesting issues are safe dosage levels, product testing and what companies should or should not disclose to consumers.

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While largely under the radar in the American press due to the compelling election cycle and historical meltdown in the financial markets, the news out of China concerning melamine has gone from bad to worse. Concern about Chinese dairies has morphed into a global crisis affecting what seems like an infinite number of products tainted with melamine.

Melamine has been intentionally introduced into animal feed, dairy products, pet food and other products because it can make diluted or poor-quality products appear to be higher in protein by elevating the total nitrogen content detected by some simple protein tests. Already, the FDA has identified a wide variety of products affected in the first wave of concerns about Chinese dairy products.

How should a food manufacturer or retailer prepare for a melamine issue? Any food company that imports any food ingredient or product from Asian markets should be concerned, and its first steps should be to update its crisis management plan and rehearse a melamine recall.

Food companies should also review with coverage counsel and their brokers whether they have—or can obtain—insurance coverage for financial exposure from melamine tainted products. Financially, a food company will be affected by a melamine issue in at least three ways: recall costs, loss of business and personal injury/consumer fraud claims. Standard comprehensive general liability (“CGL”) insurance may not cover any of these exposures. Most CGL policies do not cover recall costs. While recall and property insurance policies are available, the coverages offered by these policies also may be problematic.

Even personal injury or consumer fraud claims might be denied by CGL insurers. For example, many CGL policies will only provide coverage for occurances that arise out of events that are “accidental.” “Accident” is commonly defined as “a sudden, unforeseen or unintended event.” Even though a food company may have no knowledge of an upstream supplier’s fraudulent acts, some insurers are sure to argue that claims arising from products intentionally tainted by melamine are not covered.

The insurer's argument denying coverage is not a slam dunk and may not prevail. But, the key is to avoid (or minimize) the dispute with the insurer. To the extent possible, when placing insurance, a food company should obtain a representation or endorsement from its insurer that coverage will be extended to claims arising from melamine-tainted food.

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Recently, I’ve received several requests for resources explaining the anatomy of a food-borne illness claim. In other words, what events can be expected, and when? What can or should a company (in particular the legal department) do in response to a claim?

Part I – Notice of an Outbreak (and Possible Claims)

First off, don’t panic. Your company’s crisis management team (which has been well-rehearsed for this scenario) should convene action upon the first notice of a possible outbreak—even before verification and before claims are apparent. Food safety experts should contact the health departments that may have identified the outbreak. Together with the legal, sales and quality assurance departments, your food safety experts should be involved in a full investigation of the possible outbreak. The earlier the intervention, the greater the possibility of collecting key information that may be useful in determining whether your company is linked to the outbreak and pinpointing other possible sources of the outbreak. Public relations experts should also be consulted at the first possible moment.

Checklist for the legal department:

• Log events, actions and communications. This is critical for responding to government agencies and to claims.
• Record all reported injuries. Collecting information about potential claims early is a key to mitigating those claims and future legal costs.
• Notify insurers. Insurance companies require prompt notice; insurers may also have assets available for crisis response.
• Document the investigation. Litigation may be protracted, and a well-documented investigation may be key to the company’s defense.
• Institute a litigation “hold” on the destruction of any company documents or emails. Don’t turn a bad situation into a nightmare; spoliation claims can take on a life of their own.
• Retain product samples for future testing. This may be critical to support experts’ opinions at trial and to preserve claims against suppliers.
• Review and retain vendor/supplier documents. Recovery against suppliers could be as important as or more important than insurance recovery.
• Assess the merits of a consumer hotline. It could be helpful in disseminating accurate information to consumers (inaccurate or conflicting information can lead to litigation) and in collecting information about the pool of potential plaintiffs.
• Assess the merits of a consumer/vendor reimbursement program. Like having a consumer hotline, providing immediate reimbursement could help dampen the volume of future plaintiffs.

Stay tuned for Part II – Receipt of the Demand Letter.

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