More on Compensation for Tomato Growers
I wrote recently about legislation introduced in Congress to compensate tomato growers for their losses during the recent and protracted Salmonella Saintpaul investigation. While the legislation has not yet advanced, Cindy Skrzycki from Bloomberg.com is also covering this issue and wrote a great article "Tomato Growers Seek Payback on Samonella Scare."
According to the Bloomberg article, even Bill Marler, the leading plaintiffs' attorney in the area has sympathy for the growers and believes that compensation may be warranted (though he believes its premature).
The Bloomberg article explains well how tomato growers (many of whom are small businesses) have no where else to turn:
"The U.S. Department of Agriculture runs crop-insurance programs that cover disasters from floods and hurricanes, not crops ensnared in recalls. Some companies have recall insurance, but they're not likely to collect unless there is a recall -- not a warning or an advisory."
Good Time To Review Crisis Management Plans
Personal injury and economic damage claims await for the FDA and CDC to determine causation. Produce industry, particularly in Mexico, stands to suffer long lasting injury.
Whether or not your business stands to be impacted (or has been impacted) by the current outbreak, now is a great time to review and rehearse your crisis management plan. I recommend that your team include the following (whether in-house personnel or outside consultants):
- Scientific - Epidemiology, Microbiology, Infectious Disease - Quantifies risks, assists public health officials and supports litigation;
- Accounting - Estimates costs of response options and manages system for customer reimbursement;
- Public Relations - Coordinates all internal and external communications and develops a plan to limit impact to the brand;
- Quality Assurance - Assists in conducting traceback;
- Sales and Marketing - Notifies suppliers and buyers, monitors recall effectiveness and coordinates product returns;
- Legal - Assists with fact investigations, assists coordination with regulatory officials, addresses liability issues, deals with issues of insurance coverage and prepares for litigation;
- COORDINATOR/TEAM LEADER - selecting a member of the team that can bridge a diversity of disciplines and demonstrate leadership is critical.
Tomato Fallout - Recall Insurance Coverage Disputes
A fundamental difference between tomatoes and spinach is shelf life. Tomatoes can last in cold storage for many weeks. Leafy greens like spinach must be sold within about a week of harvest. Therefore tomatoes that can’t be sold now may be able to be sold after the FDA pinpoints the contamination source. Growers and suppliers may avoid at least some immediate economic impact.
Still, given the scope of the FDA warning, many will suffer economic loss. No doubt litigation between those in the supply chain will ensue.
From a legal perspective, what may be more interesting is the insurance fallout. Although the FDA has not issued a “recall,” claims will be made by suppliers, growers and retailers holding so-called “recall insurance.” Policy language varies.
Some policies may require an actual “recall” and preapproval from the insurer before a claim can be made. These policies may make recovery especially difficult for a policyholder. Other policies may include broader terms, for example covering a situation where product “withdrawal is made necessary by reason of determination by the insured or by any ruling of any governmental body that the use of such product or property could result in bodily injury or property damage, because of any known or suspected defect, deficiency, inadequacy or dangerous condition in it.”
Even for those holding broader recall insurance, expect insurers to push back. Insurers will argue that the FDA never made a “ruling” that, for example, tomatoes from New Mexico “could result in bodily injury or property damage.” Yet the FDA has warned consumers and retailers for nearly two weeks that these tomatoes have not been ruled out as a possible source of the outbreak. Enough may be at stake for the insurers to resist these claims and argue the narrow scope of recall insurance.
Businesses contemplating a claim under their recall insurance should be as strategic as possible. Tenders should be made promptly but carefully. Information documenting the claim should be collected thoroughly and systematically.
Yes, We Have No Tomatoes
By Guest Blogger Richard Goldfarb
Sunday, at a local restaurant, I saw a sign saying that there would be no fresh sliced tomatoes on my burger. Although it is quite clear that there are safe tomatoes available, the FDA has encouraged restaurants simply to cease selling them. This makes a lot of sense: rumors fly so rapidly and irresponsibly. Though, individual restaurants may take different steps; those that pride themselves on knowing the source of their heirloom tomatoes should be advertising that fact.
The problem is salmonella, in particular a strain called “saintpaul.” The FDA identified salmonella in tomatoes as a significant risk a year ago. Thus, they had the infrastructure in place to monitor and deal with the significant number of reported outbreaks this year. So far, no one knows the source of the problem, and all the FDA can do at this point is to list those tomatoes that have not been associated with the outbreaks:
• Cherry tomatoes
• Grape tomatoes
• Tomatoes sold with the stems on
• Homegrown tomatoes
In addition, the FDA lists those tomato-growing areas that have been ruled out in the outbreaks. This doesn’t mean that tomatoes grown in those areas will always be safe, but that they have not been linked to this outbreak. The FDA also reiterates its advice on the safe handling of fresh tomatoes and other fresh fruits, both in restaurants and at home. The CDC website provided a nice summary:
• Refrigerate within 2 hours or discard cut, peeled, or cooked tomatoes.
• Avoid purchasing bruised or damaged tomatoes and discard any that appear spoiled.
• Thoroughly wash all tomatoes under running water.
• Keep tomatoes that will be consumed raw separate from raw meats, raw seafood, and raw produce items.
• Wash cutting boards, dishes, utensils, and counter tops with hot water and soap when switching between types of food products.
The problem isn’t limited to the United States; New Zealand tomatoes have been implicated as well, and banned in Hong Kong. It was nice to know that the tomatoes we had with dinner last night were doubly safe: they were hothouse tomatoes sold with the stems on, and they were from British Columbia, one of the locales ruled out by the FDA.
