Take-Aways from November 17 Webinar: Sustainable Foods Increase Litigation Risks: Developing Strategies to Minimize Exposure
On November 17, we held our final webinar in a three-part series on bringing sustainable food products to market. Take-aways from the third webinar include:
• Be aware that "natural" is a hot button when advertising and labeling sustainable food products.
• "Sustainable" is not addressed in FTC Green Guides so it is imperative to be specific with your claim and/or use third-party certification.
• Truitt Brothers packaging/labels depict the source of their ingredients.
• Food-borne illness issues affect all food producers. Large producers have made significant investments in prevention in recent years; small producers of sustainable products without capital to improve farming or manufacturing practices are at a competitive disadvantage and possibly more susceptible to legal exposure from food borne illness claims.
• Food sellers should identify a crisis management team, review supplier agreements and understand insurance coverage to mitigate risk.
• Food sellers should understand that product recall coverage is excluded on most Commercial General Liability coverage forms.
Thanks again to our presenters and attendees. The recorded webcast was archived and is accessible here. Click here to access a PDF copy of the presentation slides.
Stay tuned for a possible new webinar series on food traceability. We're tracking the latest regulatory and legislative developments.
Comment On Recent New York Times E. Coli and Beef Article: How Retailers Can Protect Themselves
Co-Authored By Guest Blogger Scott Hansen
According to its website, last Sunday’s New York Times article on E. coli and beef is among the most widely read pieces published by the newspaper this week. The article tells the story of a 22-year-old Minnesota dance instructor who was left paralyzed after being infected with a strain of E. coli in an “Angus Beef Pattie” she ate in fall of 2007. The article traces the story of her burger, points out the many limitations in the current system, and calls eating beef a “gamble.”
While the article is clearly targeted at meat producers and processors, food retailers selling beef products, such as grocery stores and restaurants, are also at risk. This piece is a reminder of the need for retailers to take steps to ensure proper systems and procedures for tracing food to its source (according to yesterday's statement by Secretary Vilsack, retail traceability of ground beef is soon to be a USDA requirement). The Times lauds Costco, which it says is one of the few big producers that tests trimmings for E. coli before grinding.
Retailers should also be mindful of the utility of supplier agreements sufficiently tailored to limit liability or to procure insurance coverage. The greater protections afforded by well-drafted supplier agreements and carefully placed insurance are the best way to mitigate exposure.
Some may choose strong indemnification provisions and additional insured provisions. Another route, not yet the prevailing trend in the industry but perhaps in the near future, involves wrap-up insurance covering the entire supply chain, accompanied by covenants of cooperation between members of the supply chain.
Wrap-up insurance/covenants of cooperation approach has the advantage of potentially avoiding expensive and reputation-damaging litigation between members of the supply chain. Wrap-up insurance is also more likely to result in sufficient coverage to protect the retailer or restaurant chain.
No matter the path chosen, thoughtful placement of insurance coverage and confidence in supply chain contracts can help a food company weather the storm of a food-borne illness outbreak.
