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Lawsuits: A food safety help or hindrance?
Wednesday, 25th February 2015
Source : Melanie Neumann, J.D., M.S.,

This likely will not come as a shock to anyone â€" or need a statistic to substantiate this next statement.

According to the U.S. Chamber Institute for Legal Reform (ILR), the United States is the most litigious country in the world, imposing a tort cost of around a quarter of a trillion dollars each year.

To “spell” it out in numbers, that’s $250,000,000,000. That’s a lot of zeros.

In comparison with other world markets, the U.S. also has the highest liability costs as a percentage of GDP with some studies showing numbers greater than 2.5 times the average level of European economies (McKnight and Hinton). 

Thus the costs are high to play in U.S. industries â€" including that of food. Additionally, both the cost of litigation and the number of lawsuits are continuing to increase â€" and the food industry is seeing its share of that increase as well.

In some cases, litigation can be necessary to bring justice. And, in the food industry, there are certainly cases that have served justice â€" think PCA; and those that have led to improvements in food safety â€" e.g., Jack in the Box.

That saidâ€"remember that there is an angle to every litigation. It may be sick individuals suing food companies, or consumer groups suing FDA, or food companies suing other food companies for alleged unsubstantiated claims. The list goes on and on. Lawsuits are costly and time consuming, but how often does the litigation actually lead to such improvements? Or is it more frequently true that the litigation simply chews up resources that could be better focused on risk reduction strategies?

Take, for example, the recent bevy of consumer lawsuits against FDA for not meeting FSMA rule deadlines, against USDA for enacting the Poultry Modernization Rule, against food companies for putting natural claims on their labels …

With the original FSMA deadlines being unreasonable at best, the challenge to the Poultry Ruledismissed by the judge just last week, and no federal definition for “natural,” what do these lawsuits do except chew up resources? As ILR also states, “While the U.S. has the greatest legal system in the world, in some cases the courts have been hijacked by players who abuse the system.” Well said. They could very well have been speaking specifically about the food industry.

I’d also like to add that these abusive “players” are all too often the plaintiff attorneys that are bringing the cases. Too harshly stated from a defense attorney? In my defense, some do get it â€" they use the legal system to serve the people and help to bring justice or needed change. Others don’t â€" they use the legal system for personal gain, notoriety, vendettas, etc. These are the ones who have earned attorneys a bad rap and monikers like “ambulance chasers”; these are the ones who draw down resources that need to be invested in food safety prevention and risk management. So when the coffers bleed empty, there is nothing left to fund food safety education, regulation or risk reduction.

Even in cases more directly related to outbreaks, is it really the litigation and/or fear of litigation that brings improvements in food safety? While media coverage of the lawsuits certainly increases awareness of an issue, and the prevention of lawsuits and their resulting publicity, cost and brand damage does serve to keep the industry on its toes and provide another reason to ensure food safety, I’d really hate to think that the industry is so callous that it only enacts improvements when it sees or fears the impacts of a lawsuit.

Unfortunately, especially with the number of emerging risks of today, contamination happens; mistakes are made; outbreaks occur. Can they be reduced? Of course they can, and the industry is working to do so, and I truly believe that the impacted businesses, and the industry as a whole, take lessons from outbreaks and contamination occurrences and seek to improve its systems to prevent recurrence â€" even when they are not sued.  But can occurrences be prevented or eliminated altogether? No. And litigation sometimes takes too much advantage of this fact.

I have absolutely no doubt that some litigation, or the threat of litigation, has led to positive change with regard to food safety. Post Jack in the Box, there were numerous law suits against fast food companies in relation to E. coli O157:H7. In many of these instances, the companies settled â€" but was it the threat of legal action that drove change or the threat of brand damage that drove change? I feel very strongly it was the latter. Food companies don’t like having their names linked to illness â€" and negative press is often far scarier than lawsuits. Yet I recognize that sometimes the two go hand in hand.

So to reiterate the opening point â€" Is litigation valuable? Or does it simply chew up resources that could be better focused on risk reduction strategies? Do we really believe that, if Jack in the Box hadn’t been sued, the industry would have simply stuck its head in the sand, ignored the deaths, and blithely gone about its business in the same way it always had? If FDA hadn’t had to spend personnel, time, and money in court on FSMA deadlines, would the final rules be further along because there would be more time, money and resources available (because it did not have to be spent on litigation) to bring about change even more quickly?

On balance I do believe that some lawsuits catch bad or negligent behavior and do drive change in the food industry, but only if they are made very public â€" which seldom happens. Other lawsuits involving the food industry do not accomplish positive change in my eyes â€" for example lawsuits over natural claims. First, with as many suits as there are, I don’t see why a definition of natural hasn’t been determined and issued! Second, I understand the whole point of false and misleading advertising â€" selling something which purports to be something that it is not and thus deceiving the buyer. But some of these suits around natural seem to be nothing more than an excuse of the legal profession to go after some deep pockets, coupled with competitors trying to slash each other’s market share instead of competing on sales the good old-fashioned way..

We can’t really know the answers to all these questions. And I wouldn’t say that litigation is never needed or is never beneficial, nor would I say all plaintiffs’ attorneys are out for a windfall. But I truly believe we’d be a lot further along in the industry’s risk-reduction efforts if lawsuits were only filed that truly serve the public interest, freeing up resources to be allocated to areas of true benefit. But I know I am totally dreaming and nothing will change (until maybe the U.S. undergoes tort reform, but that is likely a dream too). … But it was fun dreaming while I could!

Melanie Neumann is the Vice President & Chief Financial Officer of The Acheson Group, a global food safety risk management, recall and crisis consulting firm to the food and beverage industry.  Melanie leverages her legal education and years as a food law attorney as well as her Master’s degree in food safety to help industry clients understand legal and regulatory requirements. This involves working with food and beverage companies to find ways to manage risk through cost effective strategies while at the same time implementing enterprise-wide change required by the ever changing food safety-related regulations both in the US and internationally.  In addition to recall and crisis management Melanie focuses on helping clients prepare for the Food Safety Modernization Act and other pending regulations, enhance supply chain risk control and focuses on international food safety with a growing focus on China.

In prior roles, Melanie served as legal counsel for major multi-national food companies, leading those companies through numerous recalls and other crises including social media debacles, necessitating interaction with government agencies and other key stakeholders.  Melanie also served as Vice President Crisis Management & General Counsel, RQA, a global recall and crisis management firm and assisted in the design and launch of a food safety consulting practice at PricewaterhouseCoopers.  In her spare time Melanie runs ultra-distance trail races and has completed three Ironman triathlons.

Melanie@AchesonGroup.com / www.AchesonGroup.com 

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