MG+M obtained on June 1, 2018, an order granting summary judgment and dismissal of its client, a nationwide distributor of Asian food products in the 24th Judicial District Court for the Parish of Jefferson in the state of Louisiana. The plaintiff consumed sushi at a New Orleans area sushi restaurant and within days became violently ill, followed by 9 days of hospitalization caused by salmonella poisoning.  The Centers for Disease Control eventually traced the plaintiff’s poisoning to contaminated ground tuna that had been imported into the United States from India.  Some of the ground tuna that originated from India had been distributed by MG+M’s client to the New Orleans sushi restaurant chain.  Other defendants in the case included Little Tokyo Restaurant, and Moon Marine (settled manufacturer). Over 400 cases of the poisoning were reported nationwide, with many lawsuits brought in several jurisdictions.  The plaintiff’s alleged medical conditions resulting from the poisoning episode were: autoimmune thyroid disease, Cushing’s Syndrome, gastrointestinal problems, kidney tumors, lifetime vitamin B-12 deficiency, and Stargardt’s disease (early onset macular degeneration leading to blindness). MG+M persuaded the court, following ample discovery, that its client notified the New Orleans restaurant chain customer of the nationwide recall of the tuna product in a timely manner, and otherwise met its legal duty to the plaintiff and consuming public in this food-provider poisoning case.

MG+M’s Lake Charles Partner, David R. Frohn, was lead counsel, and he received excellent support from the firm’s New Orleans Associate, Helen M. Buckley.

 
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The overwhelming majority of courts (including all seven federal circuits that considered the issue) have rejected the so-called “innovator liability” doctrine.[1]  In 2017, however, the California Supreme Court in T.H. v. Novartis Pharm. Corp.[2] unanimously recognized the doctrine holding that brand-name prescription drug manufacturers owe a duty to warn to consumers who use generic drugs.[3]  In March of 2018, the Massachusetts Supreme Judicial Court (SJC) considered the issue, and took a middle ground.  Specifically, in Rafferty v. Merck & Co., Inc.,[4] the SJC held that plaintiffs who ingest the generic form of a drug may bring failure to warn claims against the brand-name manufacturer of the drug if the brand-name defendant acted recklessly by “intentionally fail[ing] to update the label on its drug while knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.”[5]  In so doing, the SJC reasoned that a plaintiff is, in fact, injured by a brand-name product’s label despite never having used said product because statutes require identical labeling of the generically manufactured version.[6]

The Facts

In 2010, a physician prescribed Finasteride, the generic version of the brand name drug Proscar, to treat Rafferty’s enlarged prostate.[7]  Rafferty experienced anticipated temporary side effects from the drug, causing him to stop taking the medication.[8]  Rafferty, however, continued to experience these side effects and his physician informed him that they could actually continue “indefinitely.”[9]  The potential lifelong side effects of this drug were not disclosed within the brand-name manufacturer’s nor the mirrored generic manufacturer’s warning label.[10]  Rafferty presented evidence that the brand-name manufacturer became aware of these potential long-term side effects by 2008, when it updated Proscar’s warning label in select European markets to include this risk.[11]

Rafferty filed suit against the brand-name manufacturer in 2013, asserting a claim of negligence for, inter alia, failure to warn and for violation of the Commonwealth’s Consumer Protection Statute, G.L. c. 93A.[12]  The Superior Court dismissed Rafferty’s claims, “ruling that [the brand-name defendant] owed no duty of care to [him].”[13]  The SJC took over the case by its own motion from the Appeals Court.[14]

The SJC Weighs In

Traditionally, Massachusetts has not recognized liability for products manufactured by others.[15]  However, the SJC noted that The Restatement (Third) of Torts allows a modification to this general rule in exceptional cases.[16] The SJC considered innovator liability to require such a modification given the certainty that a user of a generic drug will rely on the label fashioned by the brand-name manufacturer and as state law shields failure to warn claims from generic manufacturers, leaving plaintiffs without recourse for their injuries.[17] However, the SJC also recognized that imposing innovator liability could impact the public policy of encouraging innovation in the drug market and a potential increase in drug pricing.[18]

Balancing these competing interests, the court held that, “a brand-name manufacturer
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beefCareful consideration of the language used in an insurance policy, or any contract for that matter, is extremely important.  A food services company, Meyer Natural Foods LLC (“Meyer”), found that out the hard way in a recent case filed in the U.S.D.C for the District of Nebraska.[1]  Exclusionary language in an insurance policy precluded Meyer from recovering its $1.4 million of damages related to the loss of a beef order due to contamination from a pathogen.  Meyer had contracted with a beef supplier, Greater Omaha Packing (“Greater Omaha”) to purchase certain beef products.  As part of their contract, Meyer required Greater Omaha to obtain an insurance policy to protect the value of the beef that was to be shipped, which they did through the Defendant in this case, Liberty Mutual.  One of the beef shipments Greater Omaha made to Meyer, unfortunately, contained E. coli, which resulted in the destruction of the entire shipment valued at $1.4 million dollars.

In an effort to recover that loss, Meyer turned to the Liberty Mutual insurance policy, which was purchased by Greater Omaha pursuant to their agreement.  However, there were certain exclusions in the policy, which may not have been considered by Meyer and/or Greater Omaha, and this language is the reason that U.S. District Judge John M. Gerrard dismissed Meyer’s suit against Liberty Mutual.  The language in question? An exclusion of coverage for “loss attributable to . . . contamination”.  Meyer’s main argument was that the policy exclusion did not specifically refer to E. coli, and that the word contamination is ambiguous, such that E. coli cannot be included therein.  But that argument was unsuccessful, as the court simply relied primarily on the plain meaning of the word contaminate, “to render unfit for use by the introduction of unwholesome or undesirable elements.”  In doing so, the court determined that E. coli clearly fits within this definition.[2]

The first lesson to take away from this case?  Always read and understand the insurance policy that will be covering a potential loss of your property.  No matter where you are on the food chain, you must be aware of all provisions of the insurance covering your property.  In this instance, Meyer did not obtain the insurance policy directly, but rather Greater Omaha did as part of their contract.  This case is a cautionary tale for obtaining insurance coverage of your property through a third-party.  In cases where a third-party obtains coverage, you still must read the policy, and understand the implications of its various exclusions.

Taking a step back to think about this particular scenario, one must ask, for what purposes would a company in the food distribution and supply industry seek insurance on their food products from a potential loss?  Risk of contamination or adulteration of the beef due to a pathogen such as E. coli would clearly be high on that list and, therefore, it should have been tantamount for Meyers to have sufficient language in the policy to protect against such
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MillerCoors LLC, owner of the Blue Moon Brewing Company (“Blue Moon”) brand and purported brewer of the Belgian-style witbier, recently removed to the U.S. District Court for the Southern District of California a class action lawsuit filed by Evan Parent on behalf of himself and all similarly situated consumers.  Despite the fact that he claims to be a “beer aficionado,[1]” Parent alleges to have purchased Blue Moon beer from various retailers from 2011 to mid-2012 under the mistaken belief that it was a “microbrew or ‘craft’ beer.” Parent asserts that MillerCoors deceptively marketed and charged a premium for Blue Moon beer by: (1) misleadingly characterizing it as a “craft” or “artfully crafted” beer; and (2) withholding the name “MillerCoors” from its label.

In 1980, there were 8 craft breweries in the United States. By 2014, that number had grown to 3,418.  During that time, craft breweries have slowly cut into the massive share of the $100 billion domestic beer market held by large breweries, such as Anheuser-Busch and MillerCoors. Craft beer has quickly grown from roughly a 3% market share in 2000 to 19% in 2014.  The large breweries have responded by creating their own “craft beer” brands, such as Blue Moon and Shock Top, and by purchasing craft breweries, such as Goose Island, Kona Brewing Co., Leinenkugel, and 10 Barrel Brewing.

Parent’s claim is founded upon the definition of “craft beer” set forth by the Brewer’s Association, a not-for-profit trade association, “dedicated to small and independent American Brewers, their beers and the community of brewing enthusiasts.”  The Brewer’s Association defines “American Craft Brewer” as:

  • Small: Annual production of 6 million barrels of beer or less;
  • Independent: less than 25 percent is owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer; and
  • Traditional: a brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation.

Parent alleges that Blue Moon is located in Coors Field, but that the Blue Moon beer sold in stores is brewed at MillerCoors’ Colorado and North Carolina breweries. Parent asserts that MillerCoors’ massive annual production takes it outside the definition of Craft Brewer set forth by the Brewers Association.

It is undisputed that MillerCoors does not qualify as a “Craft Brewer” pursuant to the guidelines set forth by the Brewer’s Association. Contrary to plaintiff’s assertion, however, the Brewer’s Association is not the arbiter of how “Craft Brewer” is defined.  Additionally, it remains to be seen whether “craft beer” can only be brewed by a “Craft Brewer.” In other words, it is unclear whether the term “craft beer” is reflective of the brewer who produces it or relates to the product itself. Does MillerCoors’ size preclude it from producing a “craft beer,” even if it uses quality ingredients and small batch sizes? Presumably, Parent will have a difficult time disputing the “quality” of Blue Moon beer given he purchased and consumed it
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How to ‘Bell-weather’ a Recall: Position Your Company to Withstand a Recall Efficiently and Effectively

Headlines announcing the recall of some product or another seem to appear as regularly as the changing of the seasons, and often times, to the consumer at large, they come and go just as subtly. It is wholly unsurprising, however, that recalls involving a food item often land with the jolt and turbulence of a spring thunderstorm.

The notion that food, the very purpose of which is to nourish and sustain, could in fact be causing us substantial harm is inherently alarming, and opportunistic news outlets are well aware that food-related recalls increase viewership and website traffic.

Making headlines right now, just as warmer weather is finally reaching much of the country, are two separate wide-ranging recalls involving that American favorite, ice cream. The recalls were initiated by popular producers Blue Bell Creameries, of Texas, and Jeni’s Splendid Ice Creams, of Ohio. The culprit in each recall has been identified as the bacteria Listeria monocytogenes, a potentially lethal contaminant.Jeni's Splendid Ice Creams

Jeni’s Splendid initiated a preemptive voluntary recall of its entire product line on April 23, 2015, while temporarily closing its retail scoop shops, after a random sample collected by the Nebraska Department of Agriculture tested positive for the bacteria. Blue Bell’s path to recall followed a rockier road.

A joint CDC and FDA investigation into an outbreak of 10 reported illnesses resulting in hospitalization, including three fatalities, from January 2010 through January 2015 eventually pointed to Blue Bell ice cream as the likely source. After laboratories in multiple states isolated the Listeria bacteria in several of its products, Blue Bell issued a limited voluntary recall of what it believed were the affected lines in March, 2015. After further investigation resulted in positive test samples in additional product lines, Blue Bell finally moved issued a full recall of all of its products currently on the market on April 20, 2015.

A recall has the potential to create consumer panic towards a product, sometimes an entire brand, and it is almost always a major conundrum for the product seller. The decision to issue a recall of a product that your company has placed on the market involves balancing as many factors as there are flavors of ice cream. The potential impacts are far reaching and substantial, not just to the consumer, but to everyone involved in placing the product in the stream of commerce, from the manufacturer, to the distributor, to the retail seller. What are the risks to the consumer? How many people may potentially be affected? What is the cost of the recall to your company, not just in dollars and cents, but in brand goodwill? How will your employees be impacted? Will you be facing punitive action by a regulatory agency is nothing is done? Will you be exposed to civil or criminal litigation? If a recall is necessary, how broad should it be?

The recalls issued by Jeni’s and Blue
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