When Your Contaminated Product Requires Litigation

Recall Response
In the most serious circumstances, manufacturers are required to report to the FDA’s Reportable Food Registry within 24 hours of learning that a food presents a reasonable probability that the use of, or exposure to, such article of food will cause serious adverse health consequences or death to humans or animals (Class I Recall). Where the probability becomes more remote and/or the potential impact less severe, the required response time may be somewhat longer, moving from hours to days (Class II Recall). The FDA has published guidelines helping to determine whether the contamination qualifies as a Class I or Class II. To report a contamination to the FDA, contact the local FDA District Recall Coordinator.

If a recall is warranted, a press release will issue, along with communications to both suppliers and customers. Although the first instinct might be to quickly send out a voluntary notice of recall, that strategy would not be prudent. It is best only one recall notice is published. To do that it is necessary in determining how broad the scope of the recall needs to be. Additionally, the FDA has very specific requirements for the format of an approved notice of recall. The Recall Coordinator will oversee and approve all recall notices. If the scope or the format is wrong, one or more subsequent recall notices will have to be issued—each time bringing more adverse publicity to the company.

While the crisis management team, including regulatory counsel, is addressing the recall and working with the FDA, litigation counsel acts as a risk manager by providing input on how the steps taken and things said during the recall process will impact later potential litigation. What is said and done during the recall process may ultimately have to be explained to a jury.

Litigation Response
Litigation may result from the same contamination as gave rise to the recall. Litigation may also arise wholly independent of any previously known contamination. In either event, the first three steps are the same. First, contact litigation counsel, as there are deadlines by which a lawsuit must be answered after it is served. Second, put the insurance carrier on notice. If the carrier isn’t notified within a reasonable time, coverage may be denied. The insurance carrier may also have the right to demand the company use a particular attorney to defend the lawsuit. Third, a litigation hold must be put in place within the company. A litigation hold requires that documents, electronic data, or any type of evidence that might be relevant to the lawsuit be protected and not destroyed. Failure to do this could result in a court instructing a jury that it can infer there was damaging evidence in what was destroyed.

If the litigation arises without having first gone through the recall process, a thorough investigation needs to be done to determine whether or not a contamination occurred and if so, what caused it. An internal investigation should not begin until legal counsel is involved. If an investigation is done at the direction of counsel and “in anticipation of litigation,” the findings are protected by the attorney client privilege and work product doctrine. If counsel is not involved, all investigation and interviews are discoverable by the opposing party.

A lawsuit for injuries from an adulterated food product can be brought under a number of different theories of law. The two most frequent theories are negligence and strict liability. The particulars of both theories vary by state law. In negligence, the fault of the manufacturer is compared to the fault of the plaintiff and sometimes to the fault of others. Fault can be measured in part by showing failure to comply with industry standards, failure to use state-of-the-art, and failure to respond quickly when a contamination was discovered. Strict liability claims are much harder to defend. While state laws vary, in some states a manufacturer who puts an adulterated product into commerce is going to bear the liability regardless of its lack of knowledge of the contamination or its good faith efforts to prevent it from occurring.