1 FOOD SAFETY MANAGING 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 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 FOOD CONTAMINATION 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 You Elizabeth Haws Connally Alston Hunt Floyd & Ing