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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.

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Food Fraud – An Emerging Litigation Risk

April 24, 2012 2 comments

Food Fraud presents an emerging litigation risk in California and nationwide.

What is Food Fraud?

Food fraud occurs when someone sells a product that is not what it purports to be.  A few examples include short weighting (e.g., including the weight of excessive ice glazing) of frozen seafood, species substitution, dilution of premium olive oil with inferior oil, and misrepresenting a product’s country of origin.

How do Fraudsters Get Away with It?

Many times, only minor distinctions differentiate competing products, so it can be difficult even for trained professionals to detect fraud.  Almost two hundred years ago, British writer Cyrus Redding stated that consumers could avoid food fraud by becoming “perfect[ly] acquaint[ed] with that which is good.”  But how can one become “perfectly acquainted” with the differences between conventionally-produced and “free range” eggs, other than by the price paid?

Why is this an Emerging Litigation Risk?

Food fraud is economic fraud, because labels matter, and customers want to get what they pay for.  Some states have already seen food fraud class actions filed that allege honey laundering.  Food fraud also presents a risk of food allergy personal injury litigation for companies that substitute cheaper finfish products like surimi for shellfish like crab.   Food fraud also may result in criminal indictment and imprisonment.  There  are also the indirect costs of negative publicity arising from conviction in the court of public opinion.

What can be Done to Manage Food Fraud Risks?

Companies that implement food fraud risk management plans that include traceability systems like RFID and third-party verifiers may be able to reduce their food fraud risks and increase sales.

“Pink Slime” and Lessons Learned Re: Labeling and Advertising

By now, the use of “lean, finely textured beef” (LFTB, known to its detractors as “pink slime”) in ground beef products is well-known.  And that’s the problem.  If its manufacturers had been proactive in disclosing (and even advertising) its use instead of waiting for others to define the debate, then they may have minimized their risk of huge financial losses.

The purpose of this posting is not to take sides in the “pink slime” vs. “boneless lean beef” debate or to argue that one side’s arguments are more palatable, no pun intended. 

Rather, it is to highlight the importance of labeling, advertising, and promotional practices as part of a proactive risk management program.  That’s why this blog addresses more than just food safety issues; regardless of the product’s purported safety or purity, the key issue appears to be the lack of disclosure to consumers.  Why did it take 20-plus years for consumers to be able to identify what products contain this ingredient?  How could BPI, the largest producer of this product, not have seen this PR train wreck coming?

The irony of industry complaints about how the media have “smeared” the product and its producers’ reputations is that the industry’s wounds are almost entirely self-inflicted.  The producers chose not to disclose the pervasive addition of the product to ground beef, so critics naturally focused on why it was concealed from the public.  Iowa Rep. Steve King called for congressional hearings about the product’s critics, stating “they’ll have an obligation then to explain themselves why they could not base their allegations on facts and what they’ve done to damage an industry.”  However, the congressman failed to address a key issue: if the producers had disclosed these “facts” proactively, there would probably have been no “damage” to the industry.  

Consumers for decades (if not longer) have expected their ground “100 percent beef” to appear this way, not this way.  Similarly, BPI does not have even one picture of its product anywhere on its website or in its YouTube video rebuttals to films like Food Inc.  Its published images portray children enjoying burgers and the high technology used to produce its product.  Its videos feature company officers, a scientist who can’t make eye contact with the camera, and a lobbyist.  The lack of disclosure begs the question of what else might be in food fed to children?

Now, imagine that the companies producing this product had focused proactively on its claimed merits: that it’s a safesustainable, low cost, way to enjoy beef.  Photos of production machinery that looks like an indoor oil refinery just might appeal to the market segment that enjoys products like toxic waste candy.  Perhaps a catchy brand name like “spin safe” ™ could have defined the debate about using centrifuges to separate fat from lean meat.  Most importantly, calls for mandatory labeling of the product would become irrelevant; half of consumers do not read labels anyway

Lesson learned: manage labeling, advertising, and promotional issues proactively.

Customers are (Still) Willing to Pay More for Safer Food

Today’s top story on Marler Clark’s Food Safety News site discusses a study (re-)confirming that people are willing to pay more for safer food.  (The March 2011 Deloitte Consumer Food Safety Survey reached a similar conclusion.)  However, as with most risk management plans, this recent study confirms consumers consider a cost/benefit analysis and will not pay an unlimited amount for minor safety improvements.

The bottom line for manufacturers, grocers, and restauranteurs: your customers will pay more to avoid food-borne illness (although they will not pay unlimited sums for minor food safety improvements), and a comprehensive food safety risk management plan may also reduce the costs and risks of litigation and lost brand value.

You may be Sued Even if You Sell Safe Food

Your food processing company or restaurant may be sued even if it sold perfectly safe food, and even if your customers incurred no physical injury.  Recently, a New Jersey state appellate court ruled that Hindu restaurant patrons could sue a restaurant for serving them a dish containing meat, after they expressly told the staff they were strict vegetarians.

The customers claim they incurred spiritual and emotional injuries.  They seek damages to recover the cost of traveling to India to cleanse their souls.

The purpose of this posting is not to question anyone’s religious beliefs or comment on any factual support for the plaintiffs’ allegations or the restaurant’s possible defenses.

Rather, this litigation should serve as a reminder that “labels matter.”  As discussed in Kwikset v. Sup. Ct. (Benson) 51 Cal.4th 310, 330 (2011), companies that incorrectly represent that their product is, for example, Kosher, when it is not, may not cause any physical harm to a customer who follows Kosher dietary laws.  However, a customer that pays for food that a company misrepresents is Kosher likely has standing to sue the company for an economic injury based on that misrepresentation (at least in California).  It appears that the New Jersey courts are following similar reasoning in this recent case.

The takeaway message: your customers take your representations seriously, and misrepresentations can be very costly.  Just ask McDonald’s.  In 2009, it paid $10 million to resolve claims arising out of allegedly mislabeling its french fries as vegetarian, even though no plaintiff incurred any physical injury (although the company represented that “vegetarians can enjoy” its french fries, they contained beef flavoring; nonetheless, McDonald’s denied plaintiffs’ allegations).

Childhood Food Allergy Prevalence Higher than Previously Estimated

The Journal of the American Academy of Pediatrics published a new study today which concluded that “the prevalence and severity of childhood food allergy is greater than previously reported.”  Some six million children in the U.S. have food allergies, and almost 40 percent of food allergy reactions are “severe.”

Although there is some research indicating that a novel food processing method may reduce peanut allergenicity, until there is a highly-effective treatment or cure for food allergies, food-allergic consumers must avoid foods that cause their reactions.

When accommodating a food-allergic consumer, restaurants may want to consider whether their staff are aware of not just the potentially life-threatening allergic reactions, but also some persistent myths about food allergies.  Troublingly, some people believe that eating just a little bit of an allergic food may be okay, or that cooking makes a food less allergenic.

Restaurants and retail foodservice providers that can successfully implement risk management plans can increase their sales and meet their customers’ requests for safer food.

Real-Time Temperature Traceability Helps Maintain the Cold Chain

 My new article, RFID Improves Food Safety Risk Management, discusses how RFID can help maintain the cold chain.