Product Liability – Protect Yourself and Protect Your Business Kenneth Odza, Esq.
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Transcript of Product Liability – Protect Yourself and Protect Your Business Kenneth Odza, Esq.
Product Liability – Protect Yourself and
Protect Your Business
Kenneth Odza, Esq.
Product was defective
Defect caused injury
Focus is on the product, not fault or lack of care
Strict Liability
Anyone “engaged in the business of selling or otherwise distributing” the defective food product.
- Restatement Third, Torts: Product Liability § 7
Strict Liability – Who’s Liable?
FarmFarm Processor andManufacturer
Processor andManufacturer
Restaurant orStore
Restaurant orStore
Legal Ramification$• $15.6 million settlement in the Jack in the Box E. coli food
poisoning outbreak.
• $12 million settlement with Odwalla after E. coli-contaminated Odwalla apple juice caused illness.
• $4.6 million jury award in the Finley Elementary School (Finley, Washington) E. coli food poisoning infections.
• $6.25 million settlement after an outbreak traced to green onions served at a Chi-Chi’s restaurant.
Consumer Confidence
Spinach sales in 2005 & 2006
Hallman, W.K., Cuite, C.L., Nucci, M.L. Pleasant, A.F. Chess, C. 2008. “Examining the 2006 Spinach Crisis from Multiple Perspectives,” Food Policy Institute, New Jersey Ag Exp Station, http://www.foodpolicyinstitute.org/news/default.asp?id=9.
Products And Pathogens To Worry About
Listeria Monocytogenes
• Pregnant women, newborns, and adults with weakened immune systems
• Kills 20-30 percent of those hospitalized – more than any other food-borne pathogen
• Also worry about Salmonella, STECs, etc.
Number of Outbreaks by Food, 1990-2005
Source: Outbreak Alert! Center for Science in the Public Interest, 2007
Raw Milk Cheese
?
Total RFR Entries Related to HVP Recall by Commodity
Acidified/LACF (9)
Dairy (178)
Dressings, Sauces and Gravies (183)
Frozen Foods (15)
Meal Replacement/ Nutritional Food
and Beverages (1)Multiple Products (42)
Prepared Foods (13)
Snack Foods (154)Soup (57)
Spices and Season-ings (113)
Stabilizer/ Emulsi-fiers/
Flavors and Colors (209)
Unknown (27)
An Ounce of Prevention
• Agreements with Suppliers and Vendors
• Insurance
• Strategic / Crisis Preparation
• Product Safety Programs
[… for the recovery of damages… arising out of or alleged to have arisen out of (a) the delivery, sale, resale, labeling, use or consumption of any Product…]
Seller agrees to defend, indemnify and hold harmless Buyer
Careful Review of Supplier/Vendor Agreement
Seller’s insurance described herein shall be primary and not contributory with Buyer’s insurance
Buyer shall be named as an additional insured
waivers of subrogation
Careful Review of Supplier/Vendor Agreement (cont.)
ORGANIC PATHOGENS EXCLUSION
1. Any actual, alleged or threatened exposure to, existence of, presence of, ingestion of, inhalation of or contact with any “biological agents” whether or not occurring alone.
Example of What to Look Out for in Insurance Coverage
Product Testing (Necessary But Crude)
• Negative Tests Don’t Prove Absence
• Testing Is Still Pretty Crude and Narrow (don’t look for full spectrum of organisms)
• No Government Standards
Public/Press Relations
· Coordinates internal and external communications
· Company spokesperson, serves as contact for media
· Develops strategy to limit impact to brand
Quality Assurance
· Fact investigation and trace-back
Sales and Marketing; Purchasing; Receiving
· Notify direct buyers· Notify suppliers· Monitor effectiveness of recall· Coordinate product return
Others ?
Accounting
· Estimate costs of options team is discussing
· Manage system for customer reimbursement
Scientific (Epidemiologist, Microbiologist, Infectious
Disease Expert)
· Speaks to health and food safety aspects of the problem
· Helps quantify the risk
Coordinator
· Senior operations manager· Manages activities of Team
Legal
· Fact investigation· Address liability questions· Deal with government
regulations· Prepare for litigation
Composition of Strategic Response / Crisis Management Team
Legal CoordinatorPublic/Press
Relations
SalesMarketing
PurchasingReceiving
OthersAccounting
ScientificQuality
Assurance
StrategicResponse/
CrisisManagement
Team
Reportable Food Registry and Recall Tools
What To Do
• Log events, actions and communications
• Record all reported injuries
• Document investigation
• Institute litigation “hold” on the destruction of any company documents or e-mails (including back-up media)
• Retain recalled product for future testing
• Cooperate and communicate with government officials
Reportable Food Registry (RFR)
• “Reportable Food”:
– “reasonable probability” of “serious adverse health consequences to humans or animals.”
• “Responsible Party”:
– FDA registered facility where product is “manufactured, processed, packed, or held.”
• Requirement:
– Report to FDA within 24 hours
New Laws and Regulations On The Way
• S.510/H.R. 2749 Pending
• FDA Moving Forward Now
– New Preventative Requirements
• Written Food Safety Plan
• Risk Based Procedures, Practices and Processes, Etc.
– Traceability
– Mandatory Recalls
– Expanded FDA Access To Records
– Fees
– And Much, Much MORE!