Jamie Hartford from QSR Magazine and I spoke over the last few days as I was mediating the Wendy’s 2006 E. coli O21:H19 outbreak in Salt Lake City, Utah. Although Jamie and I primarily talked about how restaurants can protect themselves from contaminated product received from suppliers, some of what we talked about is why Wendy’s and it’s suppliers were unable to take care of all (we did resolve three) of Wendy’s customers. As Jamie wrote:
If a recall is not just precautionary and is linked to an outbreak of food borne illness, losses take on a whole new meaning. Consumers who were harmed can sue for millions of dollars. To avoid being held liable if the product was tainted before a restaurant received it, Bill Marler, an attorney specializing in food borne illness cases, suggests that restaurants ask for an indemnity clause to be included in supplier contracts.
“Ten years ago, it was not usual for grocery stores and restaurants to have indemnity agreements between themselves and their suppliers,” he says. “It’s a new phenomenon, and certainly I’m seeing that much more. You’re seeing more restaurants and grocery stores understanding that they have less control over the products they receive from suppliers. There’s a recognition that a lot of the products they’re getting came to them tainted, and they’re limited in what they can do.”
Marler says a rash of produce-related recalls and illness outbreaks in 2003 and 2004 led retailers and restaurants to tighten up agreements with their suppliers, often requiring that the suppliers’ insurance list the restaurant or grocery store as an additional insured party in the policy.
“The key is to push liability onto the entity that caused the problem to begin with,” Marler says. “If in your restaurant you’re getting contaminated food, there’s a limited amount of things you can do to protect yourself … The responsibility for your business loss, the loss to consumers, shouldn’t that burden be placed on suppliers?”
However, when a retailer (like Wendy’s) and its suppliers do not agree on what product or conduct caused the outbreak, a fight begins between several large, multi-million dollar food companies and their insurers. And, guess what happens to the poisoned customers:
‘When elephants dance it is the grass that gets crushed, when the elephants fight it is also the grass that gets crushed’
That is why injured people hire lawyers. When corporations and insurance companies do not step up and take care of the folks they hurt, someone has too.