FOOD SAFETY MANAGING RISKS TO REDUCE LEGAL LIABLITY

1. FOOD SAFETYMANAGING RISKS TO REDUCE LEGAL LIABLITY ELIZABETH HAWS CONNALLY,ESQ. Alston Hunt Floyd & Ing

2. FOODBORNE ILLNESS IS HEADLINE NEWS • MILLIONS OF CASES A YEAR DEEMED TIP OF THE ICEBERG - STAR BULLETIN 2/20/09 • IDENTIFIED AS PRIORITY ISSUE FOR OBAMA ADMINISTRATION – BEFORE RECENT PEANUT CASES • LIKELY TO SEE MORE REGULATIONS

3. CDC ESTIMATES OF FOODBORNE ILLNESS CASES • EACH YEAR • 87 MILLION CASES • 371,000 HOSPITALIZATIONS • 5,700 DEATHS • PEANUT CASES – Allegations so far - • 640 ILL • 9 DEATHS – 44 STATES

4. CONSUMERS DEMANDING SAFE FOOD SUPPLY • CONSUMERS WANT TO HOLD ALL FOOD SUPPLIERS ACCOUNTABLE

5. FOOD SUPPLIERS NEED TO BE PROACTIVE • REDUCE CHANCE OF FOODCONTAMINATION • COMMON PATHOGENS • E. coli 0157:H7 • Hepatitis A • Salmonella

6. LAWSUITS – ON THE RISE • E. coli 0157:H7 – contaminated prepackaged fresh-cut spinach • 26 states, 204 ill, 3 deaths • Entire supply chain in lawsuits for over 2yrs • Hepatitis A – green onions • 650 ill, 4 deaths • Chi-Chi’s paid > $50M • Salmonella – peanuts • More costly – Possible Criminal Charges

7. Foodborne Illness Litigation • Prove by preponderance of the evidence that the food supplier committed wrongful acts that caused harm • 3 Potential Causes of Action • Product Liability • Breach of Express or Implied Warranty • Negligence

8. Product Liability • Plaintiff must prove the product was defective and unreasonably dangerous when it left food supplier’s control and the defect was the “proximate cause” of injury • Entire food chain exposed (i.e. production, transfer and handling) • Includes value added products and production process

9. Breach of Warranty • Claim food product does not conform to the warranty and non-conformance caused injury

10. Negligence • Negligence per se – violated law or deviated from food safety and health standards • Plaintiff must prove 3 elements • Legal duty to exercise reasonable care • Failed to perform duty • Failure to perform duty caused injury • Food Suppliers must exercise • DUE DILIGENCE • REASONABLE CARE

11. Negligence • Food Supplier has duty to use reasonable care such as inspecting food to prevent contamination or harm to consumer • Note – Inspecting is only one means of exercising reasonable care – not the only factor. • Food Supplier – may be liable if product contains unexpected items – peanuts

12. Manage Food Safety Risks • Good Food Safety Practices • Developed by USDA and FDA • 4 Tools • The Guide • Good Agricultural Practices • Good Manufacturing Practices • Hazard Analysis Critical Control Points (HACCP) • UH CTAHR workshops assist compliance

13. Good Food Safety Practices Legal Defense • Use of Good Food Safety Practices by ENTIRE Food Supply Chain • Minimize chances of foodborne illness • Provides legal defense • Even if found liable – punitive damages can be reduced or avoided • Show took “reasonable care” • Used best technology • Complied with laws, regulations, guidelines

14. Other Ways to Manage Risks • Use of contracts • Insurance

15. Use Of Contracts • Can require food supplier adopt and implement safe food handling practices • Can require food supplier purchase sufficient insurance coverage to cover buyer’s risks

16. Insurance • Different types of insurance • Determine if insurance covers foodborne illness • Determine if coverage levels sufficient • Buy enough – Inexpensive policy may prove costly in the future • Carefully review policy • Does it cover your risks?

17. Types of Insurance • Commercial general liability • Business interruption • Product Recall • Coverage for losses because of recall, cost of removing product and rebuilding reputation • Product Liability • Coverage for claims relating to injury from food product

18. Food Safety Practices • Use it as a marketing tool • Less costly to be proactive than embroiled in lawsuits • Protect your business • Use Good Food Safety Practices

19. Questions? Thank YouElizabeth Haws ConnallyAlston Hunt Floyd & Ing808-524-1800Ehaws@AHFI.com