The nation’s second-largest grocery chain might have to notify shopper card holders in California about certain food recalls under a putative class-action lawsuit a San Francisco judge has allowed to proceed.
Safeway’s motion for a summary judgment in the case that dates back to early 2011 was denied in an April 7 order signed by U.S. District Court Judge Richard Seeborg. Instead, the judge called the parties to a May 15 conference for further case management.
Safeway asked the judge for the summary judgment by advancing the argument that California law does not impose a post-sale duty to warn on grocers. Like numerous other retail stores, Safeway makes its best prices available to customers who obtain one of their loyalty cards.
Shopper cards are playing roles in both recalls and foodborne illness outbreak investigations. Costco, for example, recently notified 50,000 of its card-holding customers about the recall of peanut butter by a Minnesota manufacturer. And state and local health departments have been known to obtain shopper card records in epidemiological investigations to help consumers remember what they may have consumed.
Plaintiffs, who claim to be regular Safeway customers and members of the “Club Card” loyalty program originally brought the case in state court, arguing that, under California law, Safeway is legally required to notify its customers of Class I recalls.
Safeway got the case moved to U.S. District Court for Northern California, and it was certified as a class action in May 2013. Safeway has about 500 stores in California.
Attorneys for the Safeway customers say there is a “duty to warn” under California common law and the concept of strict liability. Seeborg found the California Supreme Court has extended strict liability to product retailers because “as an ‘integral part of the overall producing and marketing enterprise,’ they too should bear the cost of injuries from defective products.”
The judge also found that, under California law, strict liability for failure to warn is only imposed when the risk of harm is known or knowable.
“Thus, under well-established principles of California law, Safeway’s duty to warn under strict liability extends only to those risks of which it had actual or constructive knowledge at the time of sale,” Seeborg wrote. “Without evidence indicating Safeway was aware of the Class 1 Recalls at the time the Recalled Products, strict liability cannot sustain plaintiffs’ post-sale duty to warn theory.”
California’s negligence law is another matter. The general rule is that each person has a duty to use ordinary care and is liable for injuries caused by failure to exercise reasonable care. The judge said that Safeway has not yet shown a statutory or public policy exception justifying a post-sale, no-duty rule.
At an early hearing in the case, attorneys for Safeway said that, unlike many others, their stores do not require customers to provide complete or even accurate information to obtain a Club Card. Anyone gets a card for simply providing a name, any name, they said.
If California shoppers with cards do eventually win the right to be notified about food recalls, it might not be long before it would be required elsewhere.
“The principles of California law discussed by the court are generally consistent with the law in most every state,” explains Arnold (Arnie) I. Friede, a former associate chief counsel in FDA’s Chief Counsel’s Office. “So if judges were to follow the ruling nationwide, the same result would likely ensue, at the motion-to-dismiss stage at least.”
Friede is currently of counsel and a senior food and drug law attorney with Florida-based Sandler, Travis & Rosenberg. He says the Safeway case will likely cause others with customer contact lists to voluntarily provide such notices as Costco currently does.
Safeway is being acquired for $9.4 billion by the New York private equity firm that already owns Albertsons, the nation’s fifth-largest grocery chain.
Cerberus Capital plans to merge Safeway, it’s Vons and Vons Pavilion stores, and Albertsons into a network of 2,400 retail stores, 27 distribution centers, and 20 manufacturing plants. When fully implemented, the Safeway-Albertsons merger would be nearly equal to Kroger’s 2,600-store chain.