The Foodservice Supply Chain

You are only as good as your weakest link

Food Production is a Risky Business

• Competitive Markets• Wall Street, Stockholder

and Management Pressures for Increasing Profits

• Lack of Clear Rewards for Marketing and Practicing Food Safety

• Risk of Litigation

To Put Things in Perspective

• According to the CDC, microbial pathogens in food cause an estimated 48 million case of human illness annually in the United States

• 125,000 hospitalized• 3,000 deaths• Foodborne Illness in United States cost $152,000,000,000 yearly –

PEW• That cost includes doctor and hospital visits, medications, lost wages

and productivity, functional disabilities, and death• It does not include recall cost, price of litigation or loss of reputation

A Legal Lesson – Strict Product Liability

• Strict Liability – Three Questions

1. Are you a manufacturer?

2. Was the product unsafe?

3. Did the product cause injury?

Who is a Manufacturer?

• “A manufacturer is defined as a product seller who designs, produces, makes, fabricates, constructs, or remanufacturers the relevant product or component part of a product before its sale to a user or consumer.”

Washburn v. Beatt Equipment Co., 120 Wn.2d 246 (1992).

Was the Product Unsafe?

• Proving a Product is Unsafe = Defective

1. Was the product unsafe beyond that which is expected by a reasonable consumer?

2. Did the product deviate in some material way from specifications?

3. Was the product not reasonably safe as it was designed?

4. Was the product not reasonably safe due to a failure to warn or instruct?

Did the Product Cause Injury?

• You tell me:

It’s the Product not the Conduct

• The focus is on the product; not the conduct

• It is called Strict Liability for a Reason:

1. The only defense is prevention2. It does not matter if you took all reasonable precautions3. If you manufacturer a product that makes someone sick you

are going to pay

Why Strict Liability?

• Puts pressure on those (manufacturers) that most likely could correct the problem in the first place

• Puts the cost of settlements and verdicts directly onto those (manufacturers) that profit from the product – cost shifting

• Creates incentive not to let it happen again

Worthless Excuse Number 1

• “I never read that memo”

• If a document contains damning information, the jury will assume you read it, understood it, and ignored it

Odwalla

Odwalla

Jack in the Box

Jack in the Box

Jack in the Box

ConAgra 2002 – Hard Lesson No. 1

• On June 30, 2002, the USDA Food Safety and Inspection Service announced the recall of 354,200 pounds of ground beef manufactured at the ConAgra

• The contaminated ground beef was produced at the plant on May 31, thirty days prior to the recall, and was distributed nationally to retailers and institutions

ConAgra 2002 – Hard Lesson No. 1

• E. coli O157:H7 was found at the Greeley slaughterhouse on May 9, 2002, yet they apparently did nothing with this information. The bacteria were detected several more times at the slaughterhouse over the next month, the last time being June 20, 2002

• Over 19 Million Pounds of meat recalled

• More than 40 sickened, 5 HUS and 1 Death

• In November 2002, the ConAgra plant in Greeley closed, due to repeated failures to prevent fecal contamination of carcasses

ConAgra 2004-2007 – Hard Lesson No. 2

• CDC Figures as of June 2007:1. 714 culture-positive

illnesses from 44 states – estimate 38.6 times more ill

2. 71 hospitalizations3. Illnesses reported

from 2005 to late 2007

ConAgra – Inspection Report 2005

• “Inspection revealed the following concerns:Two areas on production lines where filled containers of peanut butter were not completely covered from overhead contamination, an accumulation of spillage and or dust at wall/floor juncture around air handling cabinet in the ingredients room, and a temporary baffle made of cardboard in use on an empty jar line”

ConAgra – Inspection Report 2005

“. . . Inspection found the lot in question had been shipped and management cited corporate policy in refusing to allow review of production and shipping records

The current inspection was conducted in response to several complaints including most recently, number 29134, an anonymous complaint alleging poor sanitation, poor facilities maintenance, and poor quality program management. Specifics in that complaint include an alleged episode of positive findings of Salmonella in peanut butter in October of 200 …

2009 – Peanut Butter Again?

• Over 700 Salmonella Typhimurium reported from 46 states

• Over 150 people hospitalized

• Nine Deaths

• Over 4,000 products recalled

• Bankruptcy

• Criminal Prosecution?

• Declaratory Judgment

• Massive Recall Costs

The Supply Chain is very, very, Long

• German E. coli O104:H4 Outbreak

• 4,200 sick (6 in U.S.), 900 with HUS (3 in U.S.) and 50 deaths (1 in U.S.)

• Egyptian Fenugreek Seeds, German and British vendors

• Seeds in U.S.?

Sprouts – just don’t serve them!

Planning against Litigation – What’s Important?

• Identify Hazards

1. HACCP2. Do you have qualified and committed people?

• What is your Food Safety Culture?

• Are Vendors and Suppliers Involved?

1. Do they have a plan?2. Do they have a culture?3. Ever visit them?4. Contractual Indemnity?

Lessons Learned from an Outbreak

• You can insure the brand’s and the company’s reputation

• Arm yourself with good current information• Since you have a choice between doing

nothing and being proactive, be proactive• Make food safety a part of everything your

do• Treat your customers with respect

Questions?

• A couple of Resources:

1. Marler Blog2. Food Safety News3. Outbreak Database