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Collateral Damage vs. Assumption Of The Risk

Jim Prevor’s Perishable Pundit, October 2, 2006

I’m reminded of a late night conversation I had with Joe Nucci of Mann Packing many years ago. Joe had been meeting with some equipment vendors, and there was a potential food safety issue with a process that was being considered. The specifics of the issue are lost in the shrouds of memory, but I do recall that he inquired about this potential problem to the vendor and the vendor said, “That is a one-in-a-million type of thing.” And Joe, considering the volume they were running, replied: “Oh, you mean it will happen once a week.”

Joe’s point, of course, was that very uncommon events happen frequently if the volume is high enough.

And the frustration on the growing and packing side is that, even now, with the current situation fresh in everyone’s mind, it isn’t obvious that the industry has been doing a bad job. Nationally, including the current outbreak, we know of 20 Escherichia coli O157:H7 outbreaks in the last ten years on these products.

Obviously, we would all like to see zero outbreaks; nobody wants anyone to get sick or die and, certainly, incidents such as this are enormously expensive. Minimizing such outbreaks deserves an incredibly high priority.

The problem is that the word “safe” has no defined meaning in this context.

When we say we know of 20 outbreaks in the last 10 years in the whole country — that is out of countless billions of pounds and bags of product.

Is that a bad safety record? A good safety record? Would 15 be good? 12? What is the number?

The Jack in the Box situation was very different. There were clearly identifiable violations of proper food safety protocol. Just the fact that the hamburger was cooked at the wrong temperature was a violation of proper food safety protocol.

Here, as far as we know, nobody did anything wrong.

Can it be made safer? Sure.

But that will always be true.

You can test water or product, shut down and sanitize machinery on any schedule — once a year, once a quarter, once a month, once a week, once a day, once an hour, every half hour, every ten minutes, etc. But none of those things make the product “safe” if you define safe as zero possibility of a foodborne illness.

My job means that I speak to everyone, so I’ve been corresponding with a few of the attorneys who have filed lawsuits against firms in the industry related to the spinach crisis. Bill Marler is famous for representing plaintiffs in the Jack in the Box and Odwalla outbreaks. And, interestingly enough, when I put the fact that you can always make things safer to him, he didn’t object. He agreed.

What he basically said was that the question, though, is what do we as a society do with the “collateral damage”? To put it another way, there are countless steps any industry can take to make products safer. These steps are not taken because they cost money or reduce the value of a product in another way.

The whole world is the beneficiary of these decisions, as these decisions are what make products affordable. But, as a result of the decisions, sometimes people get hurt or sick or die.

Personal injury attorneys such as Bill Marler would argue that these individuals have been harmed, and that it would be an injustice for these individuals to have to pay the price so that everyone else should have cheap products. In a sense, by compelling manufacturers to pay damages, the manufacturer provides “insurance” to people hurt by its products and the cost of the “insurance” is spread among those getting the benefit of less expensive product.

More to the point, such attorneys would explain that the law in California imposes on product manufacturers a “strict liability” standard.

Most of the time in life, the mere fact that you caused someone harm won’t suffice for a plaintiff to win a legal action. Generally someone has to prove that you not only caused harm but were negligent and that it was that negligence that led to the harm.

So if you have a parking lot in an icy, snowy climate, you probably need to have it shoveled, salted or have sand put down to reduce slipperiness. Maybe you even need signs saying: “Caution — surface may be slippery”. Perhaps you need lights, fences, etc. But if a person slips on a well maintained parking lot while cutting through the parking lot in Boston, in February, after a snowstorm, it won’t be an easy lawsuit to win.

The standard is typically based on the behavior an “ordinary reasonable person” would have been expected to take in that situation. And the purpose of a trial is, often, to determine if someone behaved as a “reasonable person” would have been expected to in that particular set of circumstances. So did the parking lot owner take the precautions that a “reasonable person” would have taken in the circumstance?

But products liability, which used to rely on the same negligence standards, has changed dramatically over the years.. In California in 1963 there was a famous case, Greenman v. Yuba Power Products, Inc. (1963) 59 C2d 57, which established that persons and companies can be held “strictly liable” for certain activities that wound up causing harm even if they were not negligent and did not have mens rea, or a guilty mind.

Now even a strict liability standard leaves open lots of questions, most notably how and for what those who have been damaged will be compensated.

People are entitled to compensatory damages. In E. coli-type cases where the deaths are often very young children or very old people, the compensatory damages are often quite limited. The primary measure of damages is pecuniary or financial loss. If the working parent of young children dies, for example, those children can sue for the loss of income as well as the loss of care, nurturing, etc. But the family of small children and elderly people often suffer no financial loss at all.

This provides additional motivation to people to seek punitive damages.

Sometimes defendants can argue that there was an Assumption of Risk by the plaintiff. The classic example is going to a baseball game and being hit on the head by a fly ball. The defense still doesn’t defend against negligence, and there must be knowledge of the specific risk at issue. Although courts have ruled that the specific mental state of the plaintiff may not be crucial but that, instead, the court can apply an objective standard: “The question of whether a plaintiff knew and understood the risk in a case is generally one for the trier of fact, but if a person of normal intelligence, in the same position as the plaintiff, would clearly have comprehended the danger, the question is one for the court.”

The problem for the food industry in asserting such a defense is that, of course, food companies don’t acknowledge the possible danger of eating their products. There is no warning label on a bag of spinach.

So we wind up with a counter-intuitive situation. Most people would think if you run your business properly and follow all proper standards, you should be immune from lawsuits. But, in fact, because there is no “safe” level of monitoring, modern products liability law has created a situation in which one has to run one’s business to proper standards but, in pricing, make sure you charge enough to both buy good liability and business interruption insurance. One stays in business by viewing the occasional outbreak and its consequences as a predictable cost of doing business.

Thus lawsuits become not so much a way for parties to resolve a dispute as a way for society to apportion costs. It is not pretty. But it is reality.

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