When a food business signs a supplier agreement with Whole Foods, the supplier agrees to indemnify Whole Foods for any harm caused by its products. This is typical of how food businesses protect themselves from liability for things like a food safety crisis. Whole Foods latest food safety mishapis different. Its recent Warning Letter did not stem from suppliers’ products. Whole Foods processed its own products under unsanitary conditions – there is no supplier to assume the liability.
by Lauren Handel
The recent outbreak of Listeria monocytogenes linked to commercially-produced caramel apples, has been traced to the apple distributor, Bidart Brothers of Bakersfield, California. As of January 9, 2015, the outbreak has caused 32 people to become infected in 11 states and contributed to three deaths. Bidart Brothers and three manufacturers of caramel-covered apples have issued recalls.
Events like this remind us that food — even a product as seemingly innocuous as an apple — can be dangerous. For that reason, it is critically important that growers, manufacturers and other sellers of food products employ rigorous food safety practices to try to prevent hazards and plan ahead to be able to effectively recall products in the event that something goes wrong.
It is also important to understand that, no matter how careful a food manufacturer or supplier may be, it can be held strictly liable for all damages caused by contaminated food. Strict product liability means liability without regard to fault. In other words, an injured party may recover without having to prove negligence or intentional wrongdoing. The only way for a business to protect itself from such liability is to have insurance and contracts that appropriately put the responsibility for losses on the party that caused the harm. Food manufacturers and sellers, therefore, should make sure that their business liability insurance includes adequate product liability coverage and that their agreements with suppliers and customers include enforceable indemnification and insurance provisions.
by Jack Hornickel
NPR recently highlighted a new tool for raw milk producers: third-party quality control standards and independent certification. The Raw Milk Institute (RAWMI), a non-profit that supports a strong and safe raw milk industry, has published safety criteria for raw milk producers. If farmers meet RAWMI’s Common Standards and draft an adequate Risk Analysis and Management Plan, they can be listed on the RAWMI website as exemplar producers of “reliable, clean raw milk.” Doctors, veterinarians, epidemiologists, farmers, and consumers all participated in developing the safety measures.
The Common Standards include water and milk testing that probes for the presence of coliforms, salmonella, listeria, and E. coli. They also require testing the dairy herd to ensure the animals are free of tuberculosis and brucellosis. The Risk Analysis and Management Plans are developed uniquely for each farm. Generally they must address contamination risks that occur during animal transportation, cleaning of milk containers, management of bedding and manure, feed storage, and contact with farm employees. The Plan mandates responsible reflection on the entire dairy process and seeks to identify all points where contamination can occur, thereby mitigating risk.
By mitigating the risk that a consumer may become ill, RAWMI’s standards should also minimize exposure to civil lawsuits. However, compliance with such voluntary standards will not immunize a raw milk producer from civil liability or from criminal liability where raw milk sales are illegal. Because raw milk laws are different in each state, the independent certification offered by RAWMI will have varying effects depending on the location of the farm.
In New York, for example, dairies can sell raw milk from the farm after receiving a license. The standards for obtaining a license are similar to the RAWMI Common Standards but require additional testing for staphylococcus and organisms that cause mastitis in dairy cows. New York also requires farmers to post a sign reading, “Raw milk does not provide the protection of pasteurization.” Thus, raw milk producers that are independently certified by RAWMI are well on their way to being licensed by the state. By taking a few extra steps, farmers would be shielded from criminal liability.
New Jersey is another story. In that state, all sale of raw milk for human consumption is illegal. The RAWMI certification will do nothing to protect a New Jersey producer from criminal prosecution. In fact, listing on the RAWMI website is likely to draw attention to the illegal enterprise, and the paper trail of bacterial testing and food safety plans is evidence that can be used in a prosecution. Here, independent certification would raise the chances of criminal liability, despite the farmer’s honest attempt to provide safer food.
Now for the final twist: RAWMI’s standards will have only a minimal effect on farmers’ civil liability. In every state, raw dairies face strict liability in civil lawsuits for harms caused by the food products they sell. If anybody becomes sick from consuming a raw milk product, the producer can be held liable for the consumer’s injuries, even if the producer followed the highest safety standards. Raw dairies, like all food producers, have an absolute duty to make a safe product. The only effects RAWMI’s certification could have in a civil lawsuit might be to insulate the farmer from a negligence claim, an alternate theory on which a consumer could sue, as well as punitive damages.
RAWMI’s certification is a practical step forward, falling short of a legal solution. The Common Standards and Risk Analysis and Management Plan are a laudable attempt to legitimize and create industry-wide standards for the raw milk industry. However, they will have varying effects on farm liabilities, and farmers still must continue to navigate the patchwork of state laws. For a comprehensive guide to state raw milk laws, visit the Farm-to-Consumer Legal Defense Fund website.
After less than a month on the streets, the internet is starting to discuss the finer points of the new regulations implemented under the Food Safety Modernization Act. SmartBlog On Food & Beverage has a piece up today entitled “How Safe is Your Salad“. Key quote:
This month, the FDA proposed a set of rules for produce safety that includes hygiene standards for farm workers and best practices for limiting crops’ exposure to animal waste and dirty water. There’s a catch, though. Farmers who average less than $500,000 in annual food sales are exempt, which means much of the produce we buy at farmers markets won’t be subject to the stricter safety rules, Food Safety News reported.
And there a fine point, but let’s make the important distinction between regulatory liability and civil liability. Just because an inspector can’t shut you down does not mean that your food business is managing all of its production risk in an optimal way. These new regs may exempt compliance for small-scale producers, but compliance is still a very good idea even if a business qualifies for the exemption. Strict liability in tort is the alternative, compelling rationale for the practices and procedures described in the regs. Most of the new regs impose some common sense procedures and practices – it is a good idea to have a HAACP plan no matter what size business you have, even if you are not required by a reg to have one.
My restaurant clients always tell me how maddening and insufferable it is to be asked repeatedly “Is it local?” by their patrons. Though they appreciate the curiosity and the enthusiasm of their customers, owners are already very, very aware of the pressure to do their own sourcing. The Nation’s Restaurant News has some excellent guidance for restaurants looking to make a connection with a local source in “Five Steps to Local Sourcing For Restaurants”.
A few suggestions of my own from the Food Law toolkit:
1. Risk management. If a restaurant plans to do its own purveying, it has to assume the food safety management role of a broad line distributor like Sysco or Chef’s Warehouse. The food safety geeks at the big distributors always have a thermometer handy, they periodically inspect their producers’ facilities, and they will not do business with a producer who does not agree to assume most of the food safety risks inherent in the production process. Any restauranteur who wants to source locally has to be equally scrupulous. The food safety on some farms is superb, but it is not always the case. It is possible to screw up something like spinach and grievously injure a bunch of people without regard to farm size. Strict liability, a food product liability doctrine I rhapsodize about often, places liability for the injured customer on the entire food chain. That means everybody in the supply chain has the obligation, both moral and legal, to police each other.
A restauranteur might want to read a few good books on food production safety, or contact a local agricultural extension office for guidance on good agricultural practices. That should arm the restauranteur with enough information to ask the farmer the tough questions (Do the chickens have free reign of the area where the snap peas are grown? Do farm laborers have access to field sanitation? Why is there a cat running around the creamery where the artisanal cheese is made?) Conduct a site visit of the place where you source. If you see puddles of motor oil underneath the old tractor adjacent to the melons, move on to another source. Do not deal with amateurs – they are more likely than professionals to cause harm somewhere in the food chain. If you don’t get the impression that safety is a priority, or if they give you some mumbo jumbo that food safety is only a problem on “conventional” farms, the person is deluded and you should move on.
2. Contracts. If you truly want to support local producers, offer to pay for the crop before it is put in the ground. The truly professional farmers hate economic risk and will commit their time and dirt to grow for you if you make a legally enforceable promise to buy before the season begins. This is done all the time in the agricultural industry, and this practice is starting to trickle down to the small, local farms. Of course, a contract can and should include criteria for quality control, condition of goods upon delivery, and time of delivery. If the farmer fails to deliver, the restaurant can always go right back to the broad-line distributor, so the risk to the menu and the restaurant is minimal in the event of default.
Earlier in the week, Food Safety News ran a piece by the great Bill Marler on why we are seeing so many raw milk outbreaks lately. He was immediately referring to the Oregon outbreak vectored to Foundation Farms, and a similar outbreak in several counties in Missouri. I’ve got my Google News Alerts set to sniff out “Raw Milk” articles and I too have noticed that my daily queue is always full. A good 70% of the stories are illness-related.
Whether you are a raw milk proponent or a public health scold, Marler poses an excellent question.
Product popularity has to play a part in the increase we are seeing. For better of for worse, the market for raw milk has become the beneficiary of a die-hard group of consumers and their zeal for the product is drawing in new producers. More producers, more milk, more outbreaks – simple arithmetic.
Yet it’s still pretty shocking that raw milk producers are not doing more to turn out safer product. Besides pasteurization, vastly improved handling practices should be able to at least slow the rates of illness we are seeing.
The reason we are seeing more outbreaks also stems from ignorance of the law. Even in states where selling raw milk is legal, dairies still have to face strict liability in civil court for the harm caused by their products. If farmers had a better understanding of the almost-absolute duty the law imposes on them to make food that is safe to eat, they would either leave the raw milk business altogether or implement the technologies and practices that would lower the overall incidence of infection. The up-tick in outbreaks tells us neither is being done, and that is a shame for the farmers who may have to part with land to compensate the sick.
Cari Rincker and I will be covering some of these topics in our upcoming CLE, “Counseling the Local Food Movement“. Check us out on May 10, especially if you are an attorney who would like to begin advising some raw milk producers on the comprehensive issues they’ll have to contend with when they get into the business.
In the past, I have voiced cautious optimism for “cottage food” laws. For one thing, most of these laws are so narrowly tailored they negate the economic advantages of in-home processing altogether. Lauren Medoff, friend, food lawyer, now a proud resident of Texas, elucidates that point in this awesome post on her state’s regulatory implementation of its cottage food law. Thesis alert! State regulators are narrowly construing the law with even stricter regulations:
Less than a year ago, a group of home cooks lobbied the Texas State Legislature to pass a law with the goal of removing homemade goods from the black market. Those cooks rejoiced when the State Senate passed SB. No. 81, also known as, the Texas Cottage Food Law. Unfortunately, the law was written too broadly and gave unlimited power to state regulators to write its implementing rules. Now, small businesses are dealing with the ill-effects of poor drafting and can only hope a lighter version of the rules appears before they are finalized indefinitely.
The intent of the Texas Cottage Food Law was to lift burdensome regulations requiring home cooks to go to through overly expensive lengths i.e. obtaining a license, just to sell homemade foods to consumers. Unfortunately, the proposed rules set to implement the law are not only difficult to comply with, but also impose unreasonable regulations that big players in the food industry do not face. Thus, the rules act as sort of an unfair trade-off: we’ll allow you to sell your goods without license or inspection, but we’re going to make it exceptionally hard for you to make a profit.
A few highlights of Texas Administrative Code Rule 229.661 include: a limit of $50,000 on annual gross income, the requirement that sales must not occur over the internet, restricting the potential success of the business, and strict labeling requirements such as a list of ingredients in descending order of predominance by net weight, including a declaration of artificial color or flavor and chemical preservatives, an accurate declaration of the net quantity of contents including metric measurements and allergen labeling that complies with FDA regulations, a statement that the food was not inspected, suggesting a lack of fitness for consumption, and the usage of permanent ink, ruling out many home printers. The regulations are so riddled with technicalities that many home business owners might also incur legal fees just to ensure compliance and avoid harsh fines or future inspection by the governement.
These rules clearly undermine the intent of the Texas legislature and will be hard for home cooks like Michele Rippey, owner of The Sugared Whisk Bakery in Rockwall, Texas, to comply with. In addition, conventional bakeries do not have to comply with the expensive labeling requirements. When asked about her feelings on the proposed rules, Michele said, “I cannot afford to pay rent on a storefront at this time and to have only had the option of starting a bigger business would’ve impacted me enough to not start the business at all. Getting these types of labels made is very expensive. It is just not fair to impose the same regulations on my in-home business as large scale businesses or require a label stating that my goods were not inspected by DSHS, as if it’s not fit for eating. It’s far too often that we see the products that are inspected by the government causing major outbreaks of food-born illness.”
Even a co-sponsor of the bill, Eddie Rodriguez, is speaking out against the harsh rules stating on his website:
“It is clear to me that these proposed rules subvert the intent of the legislation we worked so hard to pass. We were pretty clear in trying to make it easier for small business to thrive and some of these rules proposed by the state will do just the opposite. I have spoken with the Department of State Health Services and let them know I take issue with their rules and will keep an eye on the process moving forward.”
It is important that you protect your business and be in compliance with the provisions of the Texas Cotttage Food Law. Read and understand Rule 229.661 and contact your local attorney if you still have questions. Also, be aware that being in compliance with this law does not protect your business from consumer lawsuits. Food safety is governed by strict liability and is always a risk in any food sale business.
Although the comment period ended on Feb. 26, it couldn’t hurt to still write a letter voicing your concerns! Interested parties wishing to comment on these proposed rules should write to: Cheryl Wilson, Food Establishments Group, Policy, Standards and Quality Assurance Unit, Division of Regulatory Services, Environmental and Consumer Safety Section, Department of State Health Services, Mail Code 1987, P. O. Box 149347, Austin, Texas 78714-9347, (512) 834-6770, extension 2053, or by email to firstname.lastname@example.org.
(We’d like to thank Michele Rippey for her time and her insight. If you would like to chat with her about her delicious, professionally baked nom-noms, you can reach her by email at Mrippey@vt.edu)
Over the weekend, the NYT ran an article detailing how food service companies profit from school lunches. In case you didn’t know, lunch ladies no longer have the ability to
torment children by serving them Army meat made from old draught horses prepare foods on-site using fresh ingredients. Your kids’ food is probably made by Sodexo or some other food service giant.
The stock media response to obesity is to blame evil corporations for poisoning children in order to make money, and the Times article stays true to form. Entertain the possibility, however, that out-sourcing school lunch is an amoral, rational response to the legal obligations imposed on food processors by the doctrine of strict liability. In food law, strict liability is the imposition of civil liability for harm caused by food products without regard to negligence. So no matter how careful you are in the food business, no matter how many times you checked the temperature or cleaned your work surface, if you make someone sick, strict liability means that you are legally responsible for the damages caused by your product. It is the legal equivalent of zero tolerance and it is the most severe level of responsibility to which a party may be held under the law. And guess what? Strict liability applies to school lunch programs.
Handing over responsibility to a private company that has the equipment and the skill-set to make utterly sterilized food is merely a rational response by school districts to strict liability. Outsourcing the cooking first and foremost a risk management tool for schools. The profiteering inevitably and unfortunately follows. The food might just be fatty, sugary, and salty, but contracting to a HACCP-knowledgable food service giants allows the districts to divest themselves of the massive obligations they would owe if and when they make somebody sick.
In conclusion, because I absolutely, positively cannot resist, here is a cart-wheeling, hair-netted Chris Farley doing his Lunch Lady bit with Sandler.
The Denver Post makes an excellent point about food-safety auditors. They often do a cursory job when certifying food production facilities and routinely ignore risks that should set off alarm bells. The Post reports that a food safety audit of Jensen Farms gave its facility a “superior” rating the very same month that listeria-contaminated cantaloupes were processed for shipping. While farmers alone face an array of meteorological and financial risks, they share with food processors the risk of causing food-borne illness. I am a big fan of risk management for anyone in the food business. The existence of strict liability in civil suits for food-borne illness makes the stakes too high – farmers and food businesses can never be too careful.
Food growers and food processors always use an agricultural or production process to control the growth and spread of pathogens. Farmers can implement Good Agricultural Practices to limit pathogen contamination at the sites of production and distribution. Food processors can create modern HACCP plans to maintain the safety of the products they package and serve. Either of these critical risk management steps requires physical or procedural measures to be taken in the field or facility where food is grown or produced.
It seems, however, that physical remedies like these are not 100% effective. The pathogens tend to somehow always get through, either because they are hardy and invidious like E. coli 0157:H7, or because of the lousy inspections and audits like the ones in the Post article. Implement the prophylactic measures anyway, and follow them as vigorously as you can. Have a zero-defect mentality. You will otherwise never be able to sleep at night in case you caused a tragic illness. These measures are also the best defense against dangerous pathogens.
Supplement these measures with a legal risk management plan to mitigate the financial risks should your best intentions fall short. A carefully organized corporate structure can limit the ability of creditors and judgment holders to secure the personal property of the farmer or food business owner. Producers and food entrepreneurs can also pass liabilities up and down the supply chain by contractual agreement at points of sale. Whether you are the buyer or seller of a farm product or a processed food, alleviating yourself of the risk is something to consider in the bargaining process. Finally, third parties like insurance companies can be paid outright to assume the financial risks of food borne illness. These financial arrangements require thorough drafting and review to ensure that the amount of insurance purchased meets the needs of the business based on the amount of the typical money judgment in that jurisdiction.
The bugs will find a way to get through. Part of your strategy should be to use a good independent inspector or auditor, not the chumps in the Post. Assume the moral responsibility to put out a safe product, yet always be otherwise prepared in case those efforts fail.
I am behind the news curve due to some joyous personal developments which have left me lately preoccupied. I have been very eager to write about the cantaloupe recall because it underscores an important legal liability faced by farmers and food entrepreneurs.
Last summer we were all entranced by the recall of 500 million eggs infected with salmonella enteritidis. The majority of the contaminated eggs came from an Iowa company called Wright County Eggs. During the height of the media frenzy, The Atlantic did an awesome hit piece on Jack Decoster, owner of Wright County Eggs and ovum super-villain. The article is a comprehensive list of Decoster’s labor disputes, child labor violations, beetle infestations, mass chicken graves, explosive OSHA violations, dung-mountains, plagues of flies, and horrific record of animal abuse. As you read it, keep in mind that the Atlantic article does not mention the equally horrifying conditions in the plant which produced the contaminated products. His cartoonishly excessive corporate malfeasance made a deadly outbreak inevitable.
Contrast this with the family-owned farm responsible for the current cantaloupe crisis. Jensen Farms is a commercially successful operation with a solid reputation. By all accounts, the family members do their best to run a reputable farm which is well-respected by peers. I am sure they were stunned to hear that their products ended up hurting and killing people. Check out the 00:48 mark on this Youtube vid – Eric Jensen is so genuinely grief stricken by the illnesses that he can barely get out a sentence without breaking down. Notice that there is no slick PR rep performing triage for the cameras. It’s just a hard working, honest farmer trying to come to terms with a terrible stroke of bad luck.
I began this post about cantaloups by talking about eggs to demonstrate the principle of strict liability for food producers who sell contaminated products. In the eyes of the law, Jack Decoster and Eric Jensen are equally culpable for the illnesses caused by their food. Strict liability in tort law makes a person liable for the harm caused by their food products without regard to negligence, misbehavior, malfeasance or even gross disregard for consumer safety. It is the highest level of responsibility imposed by civil law and it is the standard of care imposed by the majority of states upon their farmers and food entrepreneurs. Civil liability attaches to any producer who puts a dangerous or contaminated food product into the stream of commerce. This is true whether a food producer behaves like Jack Decoster, Scourge of the Caged Hen, or the eminently reputable and consciencious Jensen Family.
Strict liability is a potentially enormous risk for any agricultural or food business, but it is not beyond control. A professional consultation will identify if you live in a strict liability state. You can also have your business structure audited to ensure that your personal assets are protected from the damage caused by your farm or food product. You may also want to have your business practices assessed to see if some higher-risk activities, like the marketing of raw milk, should be abandoned altogether. No matter what, if you are in the food business, you need to involve a professional in your risk management strategy. Continued ownership of your land may one day depend on it.