1. Animal Identification: Liability Exposure and Risk Management Prepared by: Doug O’Brien, Senior Staff Attorney Michael Roberts, Director National Agricultural Law Center University of Arkanas School of Law Email: dobrien@uark.edu Western Center for Risk Management Education Western Extension Marketing Committee

2. Overview Concerns that NAIS will make it easier to trace cattle in lawsuits. NAIS does not require that carcass and meat be traced through packing plant. NAIS is one more step toward traceability throughout the supply chain. Liability is different than confidentiality.

3. General Liability and NAIS Livestock producers have always been liable for practices they employ that injure someone else. Practices include treating animals with illegal drugs, ignoring withdrawal times, leaving a broken needle in muscle, or other poor management practices. NAIS may help identify which producer implemented the practice if the meat is traceable through the plant.

4. NAIS and Negligence Negligence is failure to exercise reasonable care. In negligence action, the plaintiff must show that producer failed to exercise reasonable care and caused the harm. –If a plaintiff suffered E-coli poisoning and sued feeder, plaintiff would need to show that feeder’s management practices were not reasonable and that something the feeder did caused the E-coli contamination.

5. NAIS and Strict Liability Strict liability is imposed when one has introduced a defective product that is unreasonably dangerous into the stream of commerce. Strict liability is different than negligence because strict liability is not concerned with duty of care or reasonable behavior. Unclear whether animals would be defined as “unreasonably dangerous product”, but probable that some courts would so find. –It is likely that a plaintiff that is infected by meat tainted with BSE could sue a feeder using a strict liability theory, even though farmer had no way of knowing that the feed that caused BSE was tainted. The critical issue for strict liability is whether the plaintiff establishes that the defendant caused the harm. If third party altered the product between the feeder and the consumer, the feeder would not be liable.

6. Practical Litigation Concerns In a food safety lawsuit, consumer may attempt to sue everyone in the stream of commerce, although plaintiffs may avoid ranchers and feeders who have little money. Even if found not liable, lawsuits can be very expensive. Cases where farmer or rancher is found liable for consumer harm is very rare because: –Farmers and ranchers lack deep pockets; –Meat usually not traceable through packing plant; and –Farmers or ranchers rarely do anything that causes harm to consumer. The ability to identify a particular animal may shield a livestock producer from being unnecessarily included in a lawsuit.

7. Ways to Limit Risk of Liability Liability insurance. Keep thorough records of your best management practices. Structure business to limit liability. –Move ownership of livestock into a limited liability company. State laws that exempt livestock production from implied warranty laws. –Would protect ranchers and feeders from strict liability claims involving diseased animals. –Many states have some version of this law. –Does not protect one from negligence claims.

8. Conclusion NAIS by itself not likely to increase risk of liability because meat must be traceable through plant. Farmers and ranchers can deal with risk of liability through employing sound management practices, keeping good records, and exploring insurance possibilities.

9. Contact Information Doug O’Brien University of Arkansas School of Law National Agricultural Law Center 479.575.7642 dobrien@uark.edu