Reanalyzing the Recall

Producers Final Recall food safety

A recent case raises nuanced concerns around biological hazards in food.

By J. Christian Nemeth and Daniel Campbell

The presence of biological contaminants in food is an all-too-common occurrence that businesses in the food industry have grappled with for decades. Since a massive recall of contaminated olives in the 1920s, product recalls have become an effective and routine response to possible contamination found in food.

Recalls sometimes involve other preventative measures as well, such as the offering of vaccines when pathogens are found in food. A recent decision from the Central District of California could complicate the legal effects of proactively instituting a recall and taking preventative steps such as offering vaccinations. The decision, which used the defendant’s recall as evidence of a product defect and the offering of a vaccine as evidence of damages, raises potential new concerns for food industry businesses. In this article, we explore those concerns and the potential impact of this recent decision.

The Lawsuit

Petersen et al. v. Costco Wholesale Co., Inc. et al., No. SA CV 13-1292-DOC (JCGx) (C.D. Cal. 2017), is an important and recent class action on these issues. In that case, Costco initiated a recall of berry mix and pomegranate seeds which were allegedly contaminated with Hepatitis A. After being informed by the FDA of the possibility of Hepatitis contamination, Costco also contacted its members, urging them to get a Hepatitis vaccine immediately.

Producers Final Recall berriesCostco offered free vaccines to its members and offered to reimburse consumers who already obtained vaccines. The class action was made up of consumers who had both allegedly consumed the berry mix and pomegranate seeds and also procured preventive medical treatment. However, the class did not contain any consumers who could prove a Hepatitis A infection.

In this case, Costco moved for summary judgment, arguing that the plaintiffs could not demonstrate that the berry mix and pomegranate seeds were “defective” for purposes of establishing strict liability. Costco maintained that each plaintiff had to demonstrate that they had consumed product that contained biological contaminants, but the class could not make this showing. Costco also argued that the plaintiff could not establish damages, given that no plaintiff contracted Hepatitis A.

The plaintiff disagreed. The plaintiff claimed that Costco’s initiation of a recall was evidence that it had sold a defective product. The plaintiff also contended that it did not matter that the putative class could not establish that they contracted Hepatitis A. The Hepatitis A shot, the plaintiff maintained, was enough to establish damages.

The Decision

The court ruled in favor of the plaintiff. The court ruled that, for purposes of summary judgment, the plaintiff class established a defect not because their individually purchased products contained biological contaminants, but rather because the act of recalling potentially contaminated food provided evidence of a product defect.

In rejecting the defendant’s contention that the court’s ruling was “tantamount to . . . find[ing] that a recall alone demonstrates defect in the recalled products,” the court stated that the products were defective not because of the recall, but because they were considered unfit for human consumption by Costco. The court also rejected Costco’s arguments that the plaintiffs could not show injury or damages. The court found that there was a “triable issue of fact as to whether there is physical harm associated with being forced to receive a shot.”

While it is possible that this ruling will be as limited to its facts, plaintiffs will undoubtedly try to apply a broader reading in future cases. The court’s ruling on damages is particularly important in future cases because the court essentially used the risk of exposure to Hepatitis and the fact that plaintiffs obtained a vaccine to establish the injury element of the claim.

Future cases applying the Peterson analysis will likely give more clarity about how a recall can be used to establish that a product is defective. The use of vaccines as evidence of per se damages are likely to crop up in future cases following Peterson. Regardless of how courts view these issues, the Peterson case underscores the importance of working with litigation counsel at the outset to carefully think through the scope of and steps to be taken during a product recall.

J. Christian Nemeth is a partner at McDermott Will & Emery where he provides legal counsel on complex commercial litigation, including class actions and other commercial disputes in the food, beverage and agribusiness industries. He can be reached at jnemeth@mwe.com. Daniel Campbell is an associate at McDermott Will & Emery where he focuses on commercial litigation matters, including collective and class actions and products liability actions. He can be reached at dcampbell@mwe.com.

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