The recent news that Stewart Parnell, convicted former Peanut Corporation of America CEO, is facing a possible life sentence as a consequence of his role in the nine deaths and hundreds of illnesses caused by PCA’s salmonella outbreak in 2008 and 2009, should send shock waves through the Food & Beverage industry.  It is a stark reminder that the safety of our country’s food supply remains a paramount public policy objective.

Despite the headlines earned by the PCA case, as all stakeholders in the Food & Beverage industry know, the focus of the nation’s laws on food safety has shifted from prosecution and enforcement to prevention.  The passage of the Food Safety Modernization Act in 2011 represented this paradigm shift in how our legal system is to address public concerns about the safety of our food supply.  The FSMA’s focus on preventing the introduction of contaminated or adulterated food and beverage products into the marketplace, rather than merely punishing such conduct through enforcement measures, continues to be a work-in-progress.  In addition to its new recall authority, the FDA has been working hard to create new systems for assisting the industry to assure the safety of food and beverage supply chains as the FSMA mandates.  The goal of the FSMA and the regulatory actions of the FDA are to ensure that disasters like those caused by PCA’s salmonella outbreak do not occur in the first place.

All segments of the F&B industry – farmers, ranchers, ingredient suppliers, manufacturers, importers, distributors and retailers – should be assessing their processes and procedures to ensure that all measures to ensure the safety of their products are taken, are well-documented and are verifiable.  Not only does the FSMA require it, but the public demands it.  To be competitive in an innovative industry, to achieve growth objectives and to be attractive to financing sources and possible acquirers, all food and beverage companies, small and large, must have in place systems that transparently and scientifically demonstrate the safety of their products.

It is not sufficient, however, for food & beverage companies merely to rely on their own adherence to best practices.  They all must take steps to assure that their own suppliers and vendors are similarly committed.  Assurances alone, however, are not sufficient to protect food & beverage companies within the supply chain from the liability and costs of a recall or the damages from injuries caused by an adulterated or contaminated product.  Entering into clear and comprehensive Hold Harmless/Indemnity/Product Guarantee agreements with suppliers and vendors with whom a food & beverage company is in contract are necessary to properly assign and allocate the liability for any product problems introduced into the chain of supply.  Appropriate product liability, including recall, insurance should also be in place.

As the Food & Beverage industry continues to adapt from a legal system focused on enforcement and prosecution into a new paradigm of mandated prevention measures, risk-based assessment, and scientifically established best practices under the FSMA, the specter of Stewart Parnell behind bars should nonetheless not be forgotten.

If you have any questions, please contact Mark at mcassanego@carr-mcclellan.com or at (650) 342-9600.