Erroneous Public Warnings: Being Prepared For FDA Mistakes

By Brad Sullivan

Recently there were reports in the news of Costco rotisserie chicken salad being contaminated with E. coli and the resulting recall by a local company of its celery. Subsequent tests have not been able to identify the celery as the cause, and one is reminded of the 2008 outbreak allegedly involving Roma Tomatoes from the Southeast. Similarly, in the various outbreaks relating to Chipotle restaurants, both the company and the agencies are chasing after a root-cause, and seemingly coming up without the “smoking gun.” At least in the recent Chipotle outbreaks and investigations, no produce type has been mentioned without good evidence.

For a food producer, shipper or processor, a public warning from the U.S. Food and Drug Administration (FDA) that its product may be contaminated and responsible for a foodborne illness outbreak can be ruinous to employee morale, and customer or supplier relations, in other words – the bottom line. FDA’s Office of Regulatory Affairs (ORA) is the lead office for all field activities, including inspections and enforcement. §375 of the Federal Food, Drug & Cosmetic Act grants FDA the statutory authority to issue such a warning for food products when, in its opinion, there is an “imminent danger to health.”1

In contrast, when FDA issues a public warning under §375, the information is disseminated directly to the public without any prior warning to food facilities whose product may be implicated and the company is not provided an opportunity to respond to FDA concerns before the warning is issued. The intent of an FDA public warning is advisory-to educate consumers about products that may not be safe to eat. The warning does not require a producer to withdraw the targeted product from the market. Nevertheless, negative publicity associated with a §375 warning can be just as harmful to a company’s brand and operations as a recall.

But what if the product identified in the warning is safe and the FDA was in error? The implication arising from a recent federal appellate court opinion is that FDA error is a risk of being a food producer because recourse against the FDA for damages sustained as a result of an erroneous public warning is limited.

In Dimare Fresh, Inc. v. United States (15-5006 Decided: October 28, 2015), Florida tomato growers filed an action against the FDA in the federal Claims Court asserting that it should be held liable for losses that growers sustained after FDA issued an incorrect warning implicating Florida tomatoes in a Salmonella outbreak. Initially, FDA issued a press release warning consumers to “not eat certain types of raw red tomatoes.” FDA noted that the warning was based on “preliminary data” that tomatoes were the cause of the outbreak, but no specific tomato grower was targeted. FDA recommended that “retailers, restaurateurs and foodservice operators not offer for sale and service” certain types of tomatoes unless they originated from a state listed as safe by FDA. Subsequently, FDA announced during a nationally broadcast media briefing an additional warning specifically identifying Florida as an area of concern, and stating that the “vast majority” of the tomatoes produced at the time of the outbreak were “very likely” to originate from Mexico or Florida. Needless to say, the Florida tomato industry was devastated.

Forty-four days after FDA’s initial warning, FDA announced that it had determined that the cause of the Salmonella outbreak was not Florida-grown tomatoes, and it issued a press release retracting its prior warning. But that retraction came too late for the tomato producers, their season was already over-in just a month and a half, the damage to brand and bottom line was done. The earlier FDA §375 warning had triggered a market collapse for Florida-grown tomatoes.

In their complaint, the Florida tomato growers argued that the federal government should reimburse them for the hundreds of millions in losses they suffered as a result of the mistaken warning because FDA’s conduct constituted a taking without just compensation in violation of the Fifth Amendment to the U.S. Constitution. Specifically, the growers contended that they had “a reasonable investment backed expectation to realize the market value of their tomatoes” and that FDA infringed upon their property right to market and sell tomatoes as a healthy food product. The government moved to dismiss arguing the press releases did not constitute a regulatory taking. The growers appealed.

The appellate court affirmed the dismissal, although recognizing that an action might exist when federal regulations “compel the property owner to suffer a physical invasion of his property or prohibit all economically beneficial or productive use.” (Dimare, Pg. 9)
In this case, however, the FDA warning did not prohibit the growers from selling their tomatoes. Instead, the warning merely provided information to the public regarding the tomatoes. Simply, as noted by the appellate court, “[t]he right previously enjoyed by the Tomato Producers-their ability to supply their tomatoes in the relevant market-[had] not changed.” (Dimare at pg. 17) Whether FDA erred when it issued its warning was not relevant to whether the growers could sustain a takings claim.

The Appeals Court had previously discussed other takings cases:

“Unlike A&D Auto Sales [A & D Auto Sales, Inc. v. United States, 748 F.3d 1142, 1154 (Fed. Cir. 2014)] and Yuba [Yuba Goldfields, Inc. v. United States, 723 F. 2d 884 – Court of Appeals, Federal Circuit 1983], in the case before us, there is not a prohibition or any coercive government action restricting the Tomato Producers from selling, disposing, or using their produce however they desire. What Tomato Producers effectively request is for this court to find that government action devoid of coercion, legal threat, regulatory restriction, or any binding obligation may effect a regulatory taking. We will not.” (Dimare at pg. 16) [Emphasis added.]

The Dimare case should cause concern for food producers, although the case outcome is not particularly surprising. In matters of public health and safety, regulatory agencies typically are given wide latitude to act expeditiously, often without all of the requisite information needed to make fully informed decisions. It also strikes me that in numerous investigations or outbreaks, before and after the Food Safety Modernization Act (FSMA), I have yet to have a potential or actual recall that did not include some level of communication on the part of an agency that felt like coercion or a threat, i.e. “if you do not voluntarily recall the product, we will…[report that you are not cooperating, issue a warning, or now – a recall].” The Appeals Court did not discuss what level of “coercion, legal threat, regulatory restriction . . .” because the case had come to them after being dismissed on the pleadings.

This raises the question: How can a company protect itself from this sort of government action? The answer is preparation, with the Food Safety Modernization Act regulations serving as the basis.

Most importantly, a food company must be attentive in its efforts to identify and prevent hazards, including attention to management of its internal operations and all external supply relationships.

Then a company must prepare for the worst case, existential situation that a §375 public warning notice, like a voluntary or FDA-ordered recall, represents to it. Any company, from grower to grocer (or restauranteur), and all points in between, may find itself one day faced with a food safety crisis. A thoughtful, well-documented and accessible, oft-practiced recall plan addressing food safety, brand-reputation protection and crisis management concerns (including, where an agency {or your finger-pointing customer} has erred, good records that can demonstrate the safety of the product) can help minimize the damage a food company is likely to suffer in the event FDA labels its product unfit for consumption.

The Dimare case should not be read as one more challenge to your company, but as another call to keep good records and document your conversations during a food safety event, whether §375 public warning notice, a voluntary or ordered recall. Also, the Dimare decision is about governmental actions, not the finger-pointing they may come from another company making statements that potentially harm another.

[1] This grant of authority is in addition to FDA’s ability to issue a Form 483 warning letter directly to a food facility. During an inspection, ORA investigators may observe conditions they deem to be objectionable. These observations, are listed on an FDA Form 483 when, in an investigator’s judgment, the observed conditions or practices indicate that an FDA-regulated product may be in violation of FDA’s requirements. A Form 483 warning letter is intended to notify a food producer that it is in violation of an FDA regulation and provides the company time to respond to the warning and demonstrate compliance.

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Categories: Recall, Litigation