William D. Marler, Esquire - Speech Before the House of Lords dinner - How one Peanut Company caused $1.5 Billion in Losses
The recall of Salmonella-tainted peanuts and peanut products processed and produced by the Peanut Corporation of America has caused one of the largest food recalls in US history; almost 4000 products made by hundreds of companies have been withdrawn, and the number is still growing. The 700 culture-confirmed cases of Salmonella indicate a much higher number of unreported illnesses – the actual number is probably close to 25,000. At least nine lost their lives. Beyond this terrible human toll, the financial toll on businesses and the American food supply has been staggering.
How did it happen? How did a single peanut processor in rural Georgia cost the American economy over a billion dollars? The two factories run by PCA only processed 2.5% of the annual US peanut crop, but their actions had huge repercussions. The investigations into the actions of the Peanut Corporation of America have revealed that PCA repeatedly retested product until a clean sample was obtained, shipped product that they knew was contaminated, and did not act on recommendations from the FDA to clean up their act.
It’s too easy to point to the company as a “bad actor” - an isolated case. There was a similar widespread outbreak of Salmonella in peanut butter two years earlier, centered not 75 miles from the Georgia plant. Unbelievably, this did not appear to affect how PCA ran its business, or how they were inspected or regulated so it can - and may - happen again.
Let’s start with the human toll, which is what I know best. My firm represents over 100 people who were sickened by the Salmonella and two families who lost a family member to it. One of our clients, Clifford Tousignant, won three purple hearts in the Korean War, but lost his life to peanut butter. Another family’s three-year-old son got sicker and sicker as his pediatrician allowed him his favorite food during his illness - the peanut butter crackers that later turned out to be the source of his infection. Hundreds of families spent time and money in emergency rooms and Intensive care units as their family members struggled with their illnesses. Although no one can put a price tag on human suffering and loss, these claims will probably settle in the range of 30-35 million dollars. That’s serious money, but most of it will be covered by insurance. Those settlements will be, well, peanuts, compared to the other costs surrounding the nationwide recall.
Recalling tainted food is the right thing to do – for legal and ethical reasons as well as basic public relations. But recalls come with astounding costs. One of my good friends in the food-processing industry estimates that the peanut recall will cost well over $500 million. It’s impossible to assign precise numbers, but you can start with the costs of tracking down, retrieving and transporting millions of items, most of which have already found their way onto retail shelves and kitchen cabinets. Kellogg, just one of the companies that recalled products recently, has estimated those costs at $75 million – for just one company.
Then there are the lost sales – not just of the tainted products themselves, but also of related peanut products that may be completely safe. The tomato-Salmonella recall last year resulted in $100 million in lost tomato sales – even though the real culprit proved to be peppers. In 2006, E. coli-tainted spinach cost that industry over $175 million - even though the outbreak was linked to just one fifty-acre farm in California. Peanut sales already have plummeted by more than 25 percent. Demand is down and peanut fields are lying fallow. The peanut industry estimates the loss is over one billion dollars in lost production and sales.
Let’s not forget the costs of advertising and public relations aimed at restoring consumer confidence. We have already seen expensive newspaper ads from peanut butter-makers, reassuring readers that their product is safe. What about the cost of restoring tainted brands?
Those in the chain of distribution are feeling the effects as well. Suppliers may or may not have to reimburse retail stores for lost sales. Large retailers like Wal-Mart include such reimbursement in their contracts; small businesses probably don’t do that, but suppliers may reimburse them anyway. And, then there are the losses to stock prices. One major food processor lost $1 billion in stock value following an E. coli outbreak. Imagine what’s happening to peanut stocks these days.
The Big Guys – the Kelloggs and ConAgras and Jack-in-the-Boxes – can sustain those losses. Not so the smaller retailers. My heart goes out to mom-and-pop businesses like Betsy Sanders of Santa Clara, California whose small business supplies cookies for local Parent Teacher Association and marching band fundraisers, and who now has to reimburse her customers for recalled products that contained peanut butter from PCA.
Is anyone keeping track of the math? Let’s call it $1.5 billion - just because of the actions of one small player in the peanut industry. The likely costs of compensating their sickened customers are a tiny part of that number; virtually none of the rest of that $1.5 billion will be covered by insurance. In an economy already battered by failing banks, lost jobs and scarce credit, people will be driven out of business. And, it was preventable.
As I was preparing this speech, the Food and Drug Administration announced that President Obama’s 2010 proposed budget included an increase of almost 20% for the FDA, including almost $260 million for better food safety. That sounds like big money, but if it can prevent a single billion-dollar recall and prevent citizens from being sickened, it’s a step in the right direction. However, there are a few other things that I would suggest.
First, be honest with the American Public. With 76,000,000 foodborne illness cases yearly, 325,000 hospitalizations and 5,000 deaths, our food supply might be safer than some – but it is not safe enough.
Second, put food safety on the “front burner” and turn up the heat. It is time that we commit to the American Public to get animal feces out of our food. How to do it - Here are my “top ten” ideas to combat this recurring epidemic:
- Improve surveillance of bacterial and viral diseases. First responders - ER physicians and local doctors - need to be encouraged to test for pathogens and report findings directly to local and state health departments and the CDC promptly.
- These same governmental departments, whether local, state or federal, need to learn to “play well together.” Turf battles need to take a back seat to stopping an outbreak and tracking it to its source. That means resources need to be provided and coordination encouraged so illnesses can be promptly stopped and the offending producer - not an entire industry - are brought to heal.
- Require real training and certification of food handlers at restaurants and grocery stores. There also should be incentives for ill employees not to come to work when ill.
- Stiffen license requirements for large farm, retail and wholesale food outlets, so that nobody gets a license until they and their employees have shown they understand the hazards and how to avoid them.
- Increase food inspections. While domestic production has continued to be a problem, imports pose an increasing risk, especially if terrorists were to get into the act. Points of export and entry are a logical place to step up monitoring. We need more inspectors - domestically and abroad - and we need to require that they receive the training in how to identify and control hazards.
- We need to reform federal, state and local agencies to make them more proactive, and less reactive. This too requires financial resources and accountability. We also need to modernize food safety statutes by replacing the existing collection of often conflicting laws and regulation with one uniform food safety law of the highest standard.
- There are too few legal consequences for sickening or killing customers by selling contaminated food in the US. We don’t need to impose the death penalty, as China did recently. But, we should impose stiff fines, and even prison sentences, for violators, and even stiffer penalties for repeat violators.
- We need to use our technology to make food more traceable so that when an outbreak occurs authorities can quickly identify the source and limit the spread of the contamination and stop the disruption to the economy.
- We need to promote university research to develop better technologies to make food safe and for testing foods for contamination.
- We need to provide tax breaks for companies that push food safety research and employee training.
- And, we need to improve consumer understanding of the risks of foodborne illness.
Last year I testified before the US Congress and laid out the above 11 points. I told them the time has come to act and not continue simply to react. Consumers, Farmers, Suppliers, Manufacturers, Retailers, Regulators and Politicians need to work together to make our food supply safe, profitable and sustainable. When a quarter of our population is sickened yearly by contaminated food, when thousands die, we do not have the “safest food supply in the world.” We should, must, and can do better.
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Today we amended our complaint on behalf of “Daniel Krim, 49, [who] became ill after eating alfalfa sprouts on a turkey sandwich he purchased from a La Vista restaurant in late February. His flu-like symptoms worsened, forcing him to go to the emergency room at Midlands Hospital in Papillion. Days later, his doctor confirmed he had been infected with the .gif)
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It is likely that bird or rat feces in the Peanut Corporation of America 
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A couple of other things to think about from an historical perspective – this is not the first time we have had outbreaks – see the 
The recalled peanut butter and peanut paste were distributed to institutions, food service industries, and private label food companies in 24 states, the province of Saskatchewan in Canada, Korea and Haiti for further processing. The U.S. states are the following: Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Maryland, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah and Virginia. In addition, affected product was used as an ingredient in other products that may have been distributed in other states..jpg)
The FDA, and the states of Minnesota, Georgia and Connecticut, confirmed Salmonella contamination in peanut butter manufactured at the Peanut Corporation of America (PCA) facility that ships peanut products to 85 other food companies, including Kellogg.
Efoodalert
Laboratory tests by the 
Washington State health officials
The FDA has announced
The Jalapeno Peppers being recalled were shipped in 35lb. plastic crates and in 50lb. bags with no brand name or label. The recall is a result of sampling by FDA, which revealed that these Jalapeno Peppers were contaminated with the same strain of .jpg)
Why, if the 
Well, the stocking are hung and the presents are all wrapped, and I am surfing the net to see what there is to blog about (my version of the “Night Before Christmas”) when I found this quote:
Public health investigators at Johns Hopkins University estimate that workers in poultry factories in the United States are 32 times more likely to be colonized with E. coli that repels the antibiotic gentamicin than other people. The drug is used to treat both poultry and humans.
Recently, in a new study, 
The NARMS program monitors changes in antimicrobial drug susceptibilities of selected enteric bacterial organisms in humans, animals, and retail meats to a panel of antimicrobial drugs important in human and animal medicine. Animal and human isolates currently monitored in NARMS include 
Some people gamble in Reno, others eat hamburger. Perhaps the odds of winning or loosing are about the same. Steve Timko from the 
Now talk about gambling odds, according to the USDA’s Economic Research Service, in 2004, the average American consumed 60.1 pounds of cattle meat, of which about 59% was hamburger. Also, in 2004 there were about 275,000,000 Americans. In the last statistic I could find, a 1987 study tested for the presence of 
Here is a quote of mine form CFO Magazine .jpg)
"From 1993 to 2002, 95 percent of my revenues came from cases involving E. coli tied to hamburger," Marler says. "That has dried up to nearly zero since 2003. Once producers started testing and getting a lot of positives, they began looking at their procedures and processes to figure out how to eliminate the contamination. The fact that they were able to eliminate it to such a degree has put me out of the hamburger business, and I'm happy about that, candidly. I never thought I would say this, but I think the food industry across the board needs to take a really hard look at what the hamburger industry has done."
AP reported that 5,500 pounds of "Green Paradise" brand basil has been recalled. The basil was shipped in sets of 12 one-pound boxes marked with lot No. 1219. The basil grown in Mexico and sold in the United States has been recalled because of fears it may be infected with 
It is clear that this in not the first time Basil has been linked to recalls and illnesses. .jpg)
Dinesh Ramde of Minneapolis Associated Press reported in 
Mr. Ramde also reported that my firm, “Marler Clark, based in Seattle, has filed six other lawsuits against ConAgra in connection with the pot pie recall. The others were filed on behalf of residents of Michigan, Minnesota and Nebraska, as well as three in Washington.” We have been retained by 20 others. According to the CDC, at least 272 isolates of Salmonella I 4,[5],12:i:- with an indistinguishable genetic fingerprint have been collected from ill persons in 35 states. Ill persons whose Salmonella strain has this genetic fingerprint have been reported from Arizona (1 person), Arkansas (4), California (18), Colorado (9), Connecticut (7), Delaware (5), Florida (2), Georgia (2), Idaho (11), Illinois (7), Indiana (3), Iowa (1), Kansas (4), Kentucky (9), Massachusetts (7), Maryland (7), Maine (2), Michigan (3), Minnesota (7), Missouri (18), Montana (6), Nevada (6), New York (10), North Carolina (2), Ohio (11), Oklahoma (1), Oregon (4), Pennsylvania (18), Tennessee (6), Texas (4), Utah (12), Virginia (9), Vermont (2), Washington (27), Wisconsin (24), Wyoming (3).
To date, we have filed six lawsuits against ConAgra stemming from this Salmonella outbreak. We presently represent nearly two dozen people throughout the United States. Today we are in the ConAgra Pot Pie Manufacturing Facility in Marshall, Missouri inspecting the plant. As my readers might recall, the CDC has published its preliminary findings on the scope of the outbreak involving ConAgra’s Banquet Pot Pies and other private label brands such as Wal-Mart’s Great Value. The USDA's Inspection Report has yet to be released to the public.
You may already be aware of this but just in case you aren’t I’ll pass this along. I received information yesterday that there has been another illness reported that is associated with product from the ConAgra plant in Marshall, MO. This is a lab-confirmed report of Salmonella is associated with consumption of a Banquet Turkey Meal. There was a previous similar complaint reported in October that was not lab-confirmed. Both previous and present complaints apparently involve the Banquet Turkey Meal with a sell by/use by date of January 2009. The product is a 9.25 oz “Turkey Meal”. I have not seen a label from this product but I am told it says turkey meal, mostly white meat with gravy, dressing, mashed potatoes and peas. The complainant is apparently located in North Carolina and purchased the product at a local supermarket.
Standing in the New Orleans Airport yesterday afternoon, I had a nice chat with Mark Morey of the Yakima Herald about the status of the ConAgra Salmonella Peanut Butter litigation (.gif){kind=small}
On the same day it was announce that I settled the last of the Salmonella suits against Sheetz, the Post-Bulletin of Rochester reported that 
In 1990, a reported 174 Salmonella javiana illnesses, as part of a four state outbreak, were linked to raw tomatoes. In 1993, 84 reported cases of Salmonella Montevideo were part of a three state outbreak that was linked to raw tomatoes. In January 1999, Salmonella Baildon was recovered from 86 infected persons in eight states. In July 2002, an outbreak of Salmonella javiana occurred associated with attendance at the 2002 U.S. Transplant Games held in Orlando, Florida during late June of that year. Ultimately, the outbreak investigation identified 141 ill persons in 32 states who attended the games. 
I am sitting at home not wanting to head to the airport for a trip to New Orleans (it is Thanksgiving weekend anyway) to meet with lawyers and insurers from ConAgra (sounds fun?). I must admit that I am skeptical of the meeting given that to date ConAgra has resolved no claims of any significance However, there seems to be some recent interest in resolving the thousands of legitimate customer claims. Given that ConAgra is facing legal defense bills of seven figures each month, has incurred some $50-60 million in recall cost - and who knows how much in lost sales - and now faces more of the same in Pot Pies, perhaps it will get serious and take care of its customers..jpg)
So, wish me luck (or a bit of magic) on the flight. More importantly, however, wish ConAgra the wisdom to understand that its future success is tied to taking care of its poisoned customers and in making a serious commitment to food safety. ConAgra needs to remember that it is no "Big" deal, in fact it is "Easy," to do the right thing. If taking care of customers is too hard, ConAgra also needs to remember the FDA inspection of 2005:
The U.S. Food and Drug Administration (FDA) reminds consumers to pay special attention to the handling of eggs and preparation of foods that contain eggs during this holiday season. Some holiday favorites, such as cookie dough, homemade eggnog, and some types of stuffing, may contain eggs that are raw or undercooked. Eggs sometimes contain a bacteria called 
National Pasteurized Eggs, Inc. (NPE), producers of Davidson's Safest Choice Pasteurized Shell Eggs, announced today that sales in the quarter ending Sept. 30, 2007, increased 46 percent over 2006, led by sales from hotels and resorts across the country. By using pasteurized shell eggs, hoteliers eliminate the risk of .jpg)
When Taco Bell offered free tacos for every American during baseball’s World Series last month, all I could do was hold my head and mutter something like: "Hasta luego, Amigos!".jpg)
Take, for example, a major outbreak of .gif){kind=small}
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As the Indy-Star reports, Marler Clark is representing a Greenwood man in a 
Time has come to begin trying to hammer out financial settlements for hundreds of people who were sickened by a batch of salmonella-tainted tomatoes last summer. Marler Clark represents 98 of the more than 400 people who were sickened in Pennsylvania, Ohio, West Virginia and six other states after eating Roma tomatoes served at Sheetz stores last year. 
The United States Food and Drug Administration (FDA) announced on July 8, that Orchid Island Juice Co. of Fort Pierce, Florida was recalling unpasteurized orange juice after fifteen cases of Salmonella Typhimurium were traced to consumption of Orchid Island orange juice. In light of the FDA's recall announcement, Seattle attorney William Marler of Marler Clark has called again on the FDA to completely ban the sale of all unpasteurized juices. .jpg)
Resources for victims of Salmonella outbreaks are available on the Web, with sponsored sites on Salmonella and Salmonella litigation provided by Marler Clark, the Seattle law firm nationally recognized for its successful representation of victims of foodborne illness. The firm sponsors a Web site specifically about Salmonella, its symptoms, risks of infection, treatment, and news about outbreaks (see 
The Centers for Disease Control and Prevention (CDC) estimates that each year 76 million - or one out of every four - Americans are sickened as a result of consuming contaminated foods or beverages. Some become seriously ill; 325,000 require hospitalization and 5,000 die. Older adults, young children, and those who have weakened immune systems are particularly vulnerable.
Marler Clark today announced the settlement of two salmonella cases stemming from the May, 2001 salmonella outbreak tied to contaminated cantaloupe.
In a Pittsburgh Post-Gazette story 
As Marlene Hunt of the PioneerLocal reported, 
As Clint Williams of the Atlanta Journal-Constitution reported yesterday, It's been a rough year for Cindy Horney. Ten days of fever, nausea and diarrhea were only the beginning. The case of salmonella food poisoning triggered a case of Reiter syndrome, an uncommon form of arthritis. Intense pain in her hips made it hard to walk and sleep. Cindy Horney is one of seven people on behalf of whom Marler Clark has 
As the Associated Press' article 
Authorities said all of the Washington cases stemmed from eating almonds sold at Costco under the Kirkland Signature brand. Costco has mailed about 1.2 million letters to members worldwide about the recall. The recalled almonds were in packages with "best (used) by" dates from Aug. 21, 2004, through March 15, 2005.
The FDA has tentatively linked 18 cases of food poisoning to raw almonds from Paramount Farms of Lost Hills in Kern County, the state's largest almond grower. Potentially related illnesses still are being investigated.
