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“Natural” Food and Artificial Injustice – Toward a Fair Liability Standard

Please see my recently-published article in Plaintiff Magazine regarding the liability standards that apply in California for food-related personal injuries.

The Mexicali Rose decision allows plaintiffs to state some previously non-cognizable negligence claims against restaurants that serve injury-causing food.  Mexicali Rose v. Sup. Ct. (Clark), 1 Cal.4th 617, 621 (1992) (“Mexicali Rose”).  However, if the injury resulted from a substance that was “natural to the preparation of the food,” then strict liability and breach of warranty claims remain barred.  Id. at 630.

In light of food processing and safety changes that have occurred since this 1992 decision, the artificial, vague, and unworkable distinction between foreign and purportedly natural substances should be overruled.  A fair measure of justice should be available for all consumers, based on their reasonable expectations for the food served.

“Good Things Come From Sysco” (Allegedly Via Unrefrigerated Storage Lockers)

NBC Bay Area has reported that foodservice giant Sysco allegedly kept perishable foods in unrefrigerated storage lockers for several hours before delivering them to customers.

If these allegations are true, they raise multiple issues regarding food safety and quality.  Most laypersons know that perishable food like milk and meat must be stored at proper cold temperatures to maximize food safety and minimize the growth of many dangerous pathogens.  The USDA recommends discarding many perishable foods that have been held above 40 degrees F for more than two hours.  Sysco clearly understands these concerns, as it (1) presents ServSafe “state-of-the-art food safety training” and (2) tells investors all about the high technology used in its climate-controlled warehouses.

Refrigeration is also critical to maintain food freshness throughout its recommended shelf life.  Perishable foods that have been subjected to temperature abuse rapidly degrade in quality, so buyers may not be getting all of the freshness they paid for.

This also raises an issue of unnecessary food waste.  Even utilizing modern temperature controls, each year, Americans throw away almost half of their food, worth an estimated $165 billion.  This means more than just people going hungry; it wastes massive amounts of water, land productivity, and energy.  Sysco represents that it takes its sustainability responsibility “seriously.”

So how can buyers protect themselves from temperature-abused food that might look just fine when it is delivered?  Technologies like RFID provide data to verify proper holding temperatures throughout the supply chain, but they are not used as widely as they could be.

If the allegations are proven, “Sysco faces misdemeanor criminal charges and a one thousand dollar fine for each violation,” not including possible customer lawsuits.

Why is Food Fraud Pervasive? Follow the Money.

NPR recently reported that a sushi chain owner in Japan paid $1.76 million for just one (489 pound) bluefin Tuna.  Per pound, that is more than the price of “the very best connoisseur cannabis” in California.  With such strong economic motivation and weak criminal penalties, is it any wonder that 39 percent of fish sold in the U.S. is mislabeled?

Food Fraud: More Than Just Economic Injury

Do you really know what kind of fish you’re eating?” And why that’s such an important question?

As recently reported in Food Safety News, food fraud (by way of species substitution) presents more than a risk of ripping off consumers.  Pregnant women may be unwittingly exposed to toxins, gastric distress, and allergens from consuming seafood that is not what it purports to be.  Honest employees of fishing companies, distributors, and retailers that sell genuine products can lose sales and their jobs.

U.S. Senator Barbara Boxer (D-CA) recently asked the FDA to increase its efforts to reduce seafood mislabeling.  For bad actors, increased “traceability and enforcement . . . from bait to plate” presents risks of criminal prosecution and civil damages from class action litigation.  However, for seafood companies that adopt best practices, it also provides promotional and marketing opportunities.

Country of Origin Labeling (COOL) Fraud: A Worldwide Problem

Today’s edition of Dairyreporter.com reports that numerous Chinese infant formula manufacturers are allegedly falsely claiming that their products were manufactured in New Zealand.  At least one company, Abid, allegedly falsely claimed a product endorsement from Prime Minister John Key.

Why is this Happening?

Chinese consumers are willing to pay a premium price for NZ baby formula due to its perceived safety and quality advantages over Chinese-made products.  Chinese consumer confidence in the safety of domestically-produced food has declined over the last year, and dairy products are the number one imported food in the country.  In just June and July 2012, Chinese firms recalled infant formula and milk products contaminated with mercury, aflatoxin, and lye.  These recent problems demonstrate that the country still needs to improve its food safety and quality after the 2008 melamine-contaminated infant formula disaster that implicated 22 companies.

Why should my Company Care about COOL Fraud?

Companies should consider proactively addressing country-of-origin labeling (COOL) fraud to reduce the risk of brand dilution, lost sales, and injuries to their customers.  New Zealand has a top-three country brand name.  Some of its manufacturers are specifically marketing their products as being “safe” or “tamper proof,” based on the country’s strong food safety and environmental standards.  Higher Western food safety standards present an opportunity to boost sales to Chinese consumers.  COOL fraud also may present risks of civil and criminal liability as well as conviction in the court of public opinion.

Kosher and Halal Certification Fraud: An Emerging Litigation Risk

At least three empirical examples demonstrate the real-world class action litigation risks for companies that allegedly improperly represent their products’ Kosher/Halal certifications.  The manufacturer of Hebrew National allegedly falsely represented the Kosher status of its deli meats.  Chipotle allegedly did not disclose the pork in its pinto beans.  Nature Made supplements allegedly failed to identify the presence of pork or other animal products.

Food companies face huge risks from this litigation due to the enormous size of the potential plaintiffs’ classes.  In the U.S., Halal-certified foods are a $20 billion market.  Kosher consumers buy $12.5 billion in food annually, and the broader market for Kosher ingredients exceeds $300 billion.  (Many non-Kosher consumers choose to buy Kosher foods due to their perceived higher quality, and Kosher is the “hottest word on food labels.”)

In addition to civil liability, fraudfeasors also face risks of criminal prosecution and conviction in the court of public opinion.

To manage some of these risks in the CPG market, some researchers are exploring the use of RFID technology to trace Halal-certified foods throughout the supply chain.  Food companies in related market segments should consider developing plans to manage their risks of this emerging and costly litigation.

Pink Slime Ate My Press Conference

Bruce Smith has postponed indefinitely a press conference to announce his book, How Pink Slime Ate My Job, and his lawsuit apparently arising out of the LFTB/pink slime controversy.

BPI Former Employee: “Pink Slime Ate My Job.” Or was It BPI’s Decision Not to Disclose LFTB on Labels?

Former Beef Products, Inc. (BPI) employee Bruce Smith has filed a lawsuit concurrently with publishing his new book, “How Pink Slime Ate My Job.”  (Apparently, Mr. Smith alleges that media publicity concerning the widespread, unlabeled addition of Lean, Finely Textured Beef (LFTB) to ground beef decreased BPI’s sales and resulted in company layoffs.)  Free copies of Smith’s book and his lawsuit will be available at his June 26, 2012 press conference.

Iowa Rep. Steve King has stated he supports Mr. Smith’s use of the court system to “get to the bottom of this” alleged controversy, but why?  And why has he stated that the federal government should order public schools to buy LFTB for their discounted lunch programs?  (Only three states have chosen to purchase LFTB next year due to public demand to curtail its use.)

Do these have anything to do with the fact that BPI is one Rep. King’s top 20 campaign contributors?  For other social issues, Congressman King has raised a concern that the nation’s “runaway judiciary” plays an “active role in the lives of our children.”  Rep. King also contends he is “a firm believer in states’ rights” and the need to “protect parental rights from being infringed by the federal government.”   Why is the LFTB/pink slime controversy any different?

Another unanswered question for Mr. Smith and Rep. King: if LFTB is so great, why did BPI make a concerted effort to avoid labeling it instead of just disclosing it on product packaging?  The free market Rep. King supports requires freely-available information so consumers can make intelligent buying decisions.  Two LFTB producers have submitted labeling requests to the USDA, because some consumers who have learned more about the product want to buy it.  Good for them.  As Marion Nestle (quoting Carolyn Scott-Thomas) noted, if companies selling this product had proactively disclosed its presence in the first instance, they might have minimized customer outrage (and BPI job losses) from its recent publicity.

Food Fraud Presents Risks of Criminal Prosecution

The latest reminder of the risks of perpetrating food fraud: on May 22, 2012, the U.S. government filed felony charges against a seafood importer for allegedly falsifying Country of Origin Labeling (COOL).  According to the filing, Worldwide Shrimp Company and others conspired to violate the Lacey Act by labeling Mexican shrimp as a product of the U.S.

The defendants, of course, are innocent until proven guilty beyond a reasonable doubt.  The purpose of this posting is not to suggest otherwise.  Rather, it is to identify three (of many) underlying reasons why COOL laws are important to businesses and consumers.

First, some consumers choose not to buy imported foods like shrimp and honey, because they may be contaminated with banned chemicals that might cause personal injury.

Second, even if no one suffers personal injury from an imported food, in some states, economic injury is enough to provide standing for plaintiffs to sue, because labels matter.  Consumers often are willing to pay more for foods from certain countries (or to avoid buying foods from others) for many reasons not directly related to safety, such as supporting local jobs or reducing energy use.

Finally, companies that are accused of violating COOL laws should keep in mind they risk conviction in the court of public opinion.  Many consumers understand that companies willing to violate COOL laws may also be more likely to break other laws that affect food safety.

Nutrition Facts Labeling: Do it Right the First Time

Please see my article at FoodandBeveragePackaging.com regarding the importance of including Percent Daily Value figures in the Nutrition Facts box for food products.

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