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This page needs to address tort liability as well as liability due to breach of contract. The current discussion focuses on tort liability, but it may be appropriate to add some discussion about contract liability, especially in terms of using contractual obligations as a non-regulatory means to impose expectations on suppliers; that is, the contract specifies the legal expectations that buyers have imposed on their suppliers.

Purpose of this page is to consider the potential for a commodity producer, food processor or food preparer to be liable for injuries suffered by a consumer due to a food safety problem. The basic premise is that an injured consumer is entitled to be compensated by the entity that caused the injury. For example, If my product caused your injury, I am responsible for having to compensate you. This area of the law is generally referred to as product liability.

Product liability as it applies to food

• Overview of product liability prepared by Legal Information Institute
  • Note the statements about negligence, strict liability, and breach of warranty of fitness.
    • The concepts of negligence and strict liability reflect tort law, whereas breach of warranty more closely aligns with contract law.
  • Introduce and distinguish between contract law and tort law.
    • Contract -- you and I have voluntarily established a legal relationship, such as we agreed that I will store your food in my warehouse and you will pay be a fee for my service. Or our agreement can be more implicit, for example, when you buy a bottle of food from my grocery store. If my service or my product is defective (e.g., the roof of my warehouse leaks which leads to damages to your food, or the bottle of food is defective and you become ill after eating the food), you can bring a legal action against me because I did not complete the agreement as we expected.
    • Tort -- I am responsible if my action injures you, such as losing control of the car I am driving and striking you as you walk on the sidewalk, or the food product is unsafe and you become ill after eating it.
    • In all of these situations, the law states that I have to compensate you for the damages I caused, whether it is your damaged food, your broken leg, or your illness due to eating the food you bought from me.
    • You are entitled to be compensated for the injuries or damages I caused, such as the income you lose because you are not able to work and the medical expenses you incur when you seek medical care after the accident or after you become ill.
  • See AM. UNITED LOGISTICS, INC. v. CATELLUS DEV. CORP. could not pursue $30 million tort claim for faulty warehouse that damaged food; instead had to pursue their claim on the basis of a breached contract (in which the parties had agreed damages would be capped at $1 million).

    Does this case help illustrate the distinction between contract law and tort law?

• North Dakota defines product liability:
  • N.D.C.C. §28-01.3-01(2) [Product Liability action means] "any [lawsuit] brought against a manufacturer or seller of a product ... on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, installation, preparation, assembly, testing, packaging, labeling, or sale of any product, or the failure to warn or protect against a danger or hazard in the use, misuse, or unintended use of any product, or the failure to provide proper instructions for the use of any product."

• Product Liability and Microbial Foodborne Illness at http://www.ers.usda.gov/publications/aer799/ and http://www.ers.usda.gov/publications/aer799/aer799.pdf.
  • By Jean C. Buzby, Paul D. Frenzen, and Barbara Rasco.  ERS Agricultural Economic Report No. 799. 45 pp, April 2001. This report examines how product liability law treats personal injuries attributed to microbially contaminated foods. The risk of lawsuits stemming from microbial foodborne illness and the resulting court-awarded compensation may create economic incentives for firms to produce safer food. It is not known how many consumers seek compensation for damages from contaminated foods because information about complaints and legal claims involving foodborne illness is not readily accessible, especially for cases that are settled out of court. Reviewing the outcomes of 175 jury trials involving foodborne pathogens, the analysis identifies several factors that influence trial outcomes, while noting that the awards won by plaintiffs tend to be modest.
  • Food businesses are interested in minimizing the adverse consequences of having produced or sold a defective or unsafe product. This concern about public image may provide as much motivation for a food business to assure it has a safe product as is provided by regulatory standards.

Consider the "Product Liability Lawsuits" materials included in the University of Florida publication at http://edis.ifas.ufl.edu/pdffiles/FS/FS10800.pdf (pages 78 and 79 of pdf file).

• [Compensatory damages] -- a payment from the food manufactuter to the injured party that returns the injury party to the financial position it would have been in had the injury not occurred.
• Punitive damages -- a payment from the food manufacturer to the injured party to teach the food manufacturer to not ignore product safety concerns that it was aware of. Punitive damages, if warranted, are generally imposed in additionl to compensatory damages

  Note the distinction between compensatory and punitive damages

• Criminal proceedings -- government bringing an action against a food manufacturer for violating the law; could result in fines being paid to the government or imprisonment of responsible company officials.
  • Such as enforcement action brought by FDA.
• Civil proceedings -- lawsuit brought by injured party against the food manufacturer seeking a payment to compensate the injured party.
  • Such as a lawsuit brought by an injured consumer.

Note the distinction between criminal and civil proceedings.

An unsafe product could lead to both a criminal proceeding brought by a regulatory agency and a civil proceeding brought by an injured consumer.

• Negligence -- the product causes illness, injury or death because the manufacturer was careless (the business was not as careful as society expects a food manufacturer to be).
• Strict liability -- business is responsible for damages regardless of how careful it may have been in manufacturing, storing, transporting and marketing the product.

Note the distinction between strict liability and negligence. For example, even if a processor did everything possible to assure the safety of its product, if the law states that the firm will be strictly liable for its product, the firm will be responsible for its damages. By comparison, if the law states the firm is liable only if the firm was negligent in its activities, the firm would not be liable if it can prove that it did everything it could to assure the safety of the product.

• Causation -- the legal system recognizes that the person or entity that caused the problem should bear that responsibitlity and the loss; establishing cause can be a complex issue; e.g., was the problem caused by it the manufacturer, or the shipper, or the retailer or the consumer?
  • North Dakota begins to address the issue of who is responsible for the injuries resulting from the product; for example, is the seller responsible (such as the grocery story) or is it the food processor?
    • An injured consumer may sue the seller but the seller can then shift the liability to the manufacturer.
      • N.D.C.C. §28-01.3-04 (1). In any products liability action ... against a seller of a product who did not manufacture the product, the seller shall [identify] ... the manufacturer of the product allegedly causing the personal injury, death, or damage to property.
        • How does this relate to the concept of traceability

• Class-action -- court proceeding that allows a group of injured persons to pursue a single legal action against a food manufacturer, rather than requiring each person to bring their own lawsuits; it benefits the manufacturer because it only needs to address one court case and it benefits the injured parties because they can pool their resources to bring one lawsuit rather than each one having to pay the cost of bringing a lawsuit.

Consider the following excerpt from United States Food Safety System PRECAUTION IN U.S. FOOD SAFETY DECISIONMAKING: Annex II to the United States' National Food Safety System Paper -- link is not working

A.2. Producers' Responsibility for Caution

This report focuses upon the role of the U.S. regulatory system in assuring food safety. However, the success of this system can be understood only if one first grasps the legal duty of sellers of products in the United States, a legal duty enforceable by injured consumers under contract and tort law under the law of the states, and reinforced by transparency and publicity. [emphasis added]

...

At the foundation of the U.S. food safety system is the responsibility of food processors to exercise caution in marketing their products. Food processors are allowed to offer consumers only food that is safe. They may be held "strictly liable" if they fail to carry out their duty. "Strict liability" means that a processor who sells a food that causes injury to a consumer may be legally responsible even in the absence of actual knowledge of the product's hazard. The legal responsibility includes both the possibility of a private lawsuit by any injured consumers and the possibility of regulatory actions. Also, processors must have a reasonable basis for believing their products to be safe; they cannot simply assume this is so. Factors in the caution exercised by producers are discussed in more detail at the end of the outline, in paragraphs 201-205.

In sum, the fundamental U.S. legal system genrally places upon processors a duty of care to the public. On top of this fundamental legal system is strong regulatory infrastructure, administered by scientific food safety regulatory agencies at the Federal and State level.

 

See EATERIES, INC. v. J. R. SIMPLOT CO. -- link is not working

"Eateries is the sole shareholder of Fiesta. Fiesta owns and operates several Garcia's Mexican Restaurants. Eateries and Fiesta contracted with Simplot for Simplot to provide the Garcia's restaurants with chile rellenos. Simplot delivered the chile rellenos but some of them were contaminated with salmonella. Customers at four Garcia's locations became sick after eating the contaminated chile rellenos. Newspaper and television stations provided extensive coverage of the salmonella contamination.

Seeking to recover the damage they incurred as a result of the salmonella contamination, Eateries and Fiesta filed suit in Oklahoma state court alleging breach of contract and breach of express and implied warranties."

Does traceability complicate or clarify the issue of product liability? Why?

Does it help our understanding if the purpose of traceability is described as "to identify the source of the problem; not the source of the product?" 

What impact will technology have on being able to identify the source of a food safety problem?

Summary of Key Point

Government regulation is one motivator for the food industry. Loss of customers due to a reputation of not providing a safe product is another motivator.  A third motivator is the responsibility of having to compensate an injured consumer. Collectively, these three motivators provide incentive for the food industry to pursue practices that reduce the risk of unsafe food.

Last updated May 3, 2010

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