William D. Marler, J.D.6600 Columbia Tower701 Fifth AvenueSeattle, Washington 981041-800-884-9840bmarler@marlerclark.com

The Legal Costs of Foodborne Illness

FOOD: the most Dangerous Product in the United States?

“Contaminated food products caused more deaths each year than the combined totals of all 15,000 products regulated by the U.S. Consumer Product Safety Commission.”See Buzby, et al. Product Liability and Microbial Foodborne Illness (2001)

ERS Agricultural Economic Report No. 799

The “China Problem”• China shipped goods worth

a total of $288 billion to the U.S. in 2006.

• In 2007 the FDA rejected a total of 1,368 product shipments from China.

• Food imports from China to the US are big business and getting bigger. In 2006, they represented $64 billion – a 33 percent increase over 2003. 

The “China Problem”, Cont.Chinese-made products have accounted for 60 percent of recalls in 2007, according to the U.S. Consumer Product Safety Commission. In 2007 recalls included bean curd cubes, dried apples, dried peach, dried pear, dried mushrooms, olives, frozen bay scallops, frozen Pacific cod, sardines, dog food, tooth paste, spices.

Incentives for Companies to Produce Safe Food Products

• Market Forces - risk of damage to business reputation, loss of market share, and decreased sales revenue;– Contract Specifications as a

“market force”– Charging a “premium” for

safer food

Incentives for Companies to Produce Safe Food Products

• Food Safety Laws and Regulations - violations can result in fines, product-recalls, plant-closures or criminal penalties

Incentives for Companies to Produce Safe Food Products

• Product Liability Law - forcing firms to bear the full costs of decisions made about product quality and safety by requiring the payment of monetary compensation for the injuries caused by defectively manufactured or unsafe products

The Source of Obligation: From Contract to Tort

• ONCE UPON A TIME…. there was NO product liability law in the US.– A product need only be

as good as promised– Only broken promises

created liability– And liability was to the

buyer only

And then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured

And so then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured [2] while using the [product]

And so then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured [2] while using the [product] [3] in a way it was intended to be used

And so then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured [2] while using the [product] [3] in a way it was intended to be used [4] as a result of a defect in the design and manufacture

And so then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured [2] while using the [product] [3] in a way it was intended to be used [4] as a result of a defect in the design and manufacture [5] of which the plaintiff was not aware

And so then the New RuleThe Rule of Strict Product Liability“To establish the manufacturer’s liability it was sufficient that the plaintiff proved [1] he was injured [2] while using the [product] [3] in a way it was intended to be used [4] as a result of a defect in the design and manufacture [5] of which the plaintiff was not aware [6] that made the [product] unsafe for its intended use.”

Greenman v. Yuba Power Products (1960)

And so then the New Rule“To establish the manufacturer’s liability it

was sufficient that the plaintiff proved [1] he was injured [2] while using the [product] [3] in a way it was intended to be used [4] as a result of a defect in the design and

manufacture [5] of which the plaintiff was not aware [6] that made the [product] unsafe for its intended

use.”Greenman v. Yuba Power Products (1960)

Strict Liability is the Legal Standard (usually) applied to

ManufacturersA “manufacturer” is defined as a “product seller who designs, produces, makes, fabricates, constructs, or remanufactures the relevant product or component part of a product before its sale to a user or consumer….” RCW 7.72.010(2); (1992)

Strict Liability For Food: In Sum

STRICT LIABILITY IS LIABILITYSTRICT LIABILITY IS LIABILITY WITHOUTWITHOUT REGARD TO FAULTREGARD TO FAULT

The focus is on the product; not conduct.

You are liable if:

• The product was unsafe and thus defective

• The defective product caused an injury

Can a Chinese Manufacturer be sued?

• From Injured Person’s and Importer’s perspective:

1. Can the supplier be subject to personal jurisdiction of the U.S. courts?

2. Does the supplier have fixed assets in the United States that can be attached to satisfy a U.S. court judgment?

3. Can the supplier be sued in Chinese Courts?

Where this is headed?Unlikely that Injured persons will have rights in the short run directly against a Chinese Supplier, However:

• First, contracts with Chinese exporters will be amended to include specific indemnities in favor of the importer on product safety and quality issues.

• Second, contracts with Chinese exporters will be amended to include a specific provision requiring the Chinese seller to obtain and maintain sufficient product and general liability insurance, with a reputable U.S. or international insurance carrier, or to have sufficient, attachable, assets in the U.S.

Planning AGAINST Litigation What Is Really Important

• Identify Hazards– HACCP– Do you have

qualified/committed people?

What Will a Jury Think?A Jury = 12 Consumers

William D. Marler, J.D.6600 Columbia Tower701 Fifth AvenueSeattle, Washington 981041-800-884-9840bmarler@marlerclark.com

Questions?