In November, Bill Marler and Denis Stearns co-taught a one-credit course at the University of Arkansas School of Law, in its Food and Agricultural Policy LL.M program.  The course was called “Unsafe Food & Product Liability, and they taught it over three days, with Stearns lecturing the first day on the history and development of product liability law, and Marler leading the students through an examination of several case studies over the next day and a half.  At the end of the semester, the students had an essay exam in which they had an hour to write an answer to the exam-question below.  In grading the exams, Marler and Stearns selected one answer they thought was “Best in Class.”  The answer was written by Ben Thomas, and Marler and Stearns thought it impressively good.  We decided to publish it on Food Safety News.  — editor’s note


Exam Question:

Being sure to consider, reference, and use one or more of the ideas, concepts, or questions-raised in or by the Galanter (Marc Galanter, Why the “Haves” Come Out Ahead: Speculations on the Limits of Legal Change, republished in THE CANON OF AMERICAN LEGAL THOUGHT, edited by David Kennedy and William W. Fisher III (Princeton Univ. 2006), pp. 495-536.) and Stearns (Denis Stearns, On (Cr)edibility: Why Food In the United States May Never Be Safe, 21 Stanford Law & Policy Review 245, 2010.)  articles, and the “real-life” faces and stories of clients that Bill Marler presented on day-two of the course, please write an essay that addresses following:

Understanding the term “revolutionary” to mean, among other things, “a sudden, radical, or complete change,” something that fundamentally alters a whole host of previously-existing rules, perspectives, and assumptions, and that requires not only a thorough-going reevaluation, but a change of strategy and tactics, please discuss how, and in what specific ways, including short- and long-term impacts, the USDA’s decision to declare E. coli O157:H7, when present in raw meat, an “adulterant” within the meaning of the Federal Meat Inspection Act, and the subsequent upholding of that declaration by a federal court in Texas Food Industry Ass’n v. Espy, 870 F. Supp. 143 (W. D. Tex. 1994), were events as revolutionary (or not, if you would like to so argue),  as Judge Benjamin Cardozo’s ruling in MacPherson v. Buick Motor Company.


Please also briefly discuss, perhaps by way of your essay’s conclusion, whether you agree or disagree that revolutions like these are necessary to achieve rapid or significant improvements in product quality or safety that would not otherwise be achieved as a result of market forces or economic incentives. 

Judge Cardozo’s opinion in Macpherson v. Buick Motor Company (“Macpherson”) fundamentally altered the duties of manufacturers (in various respects) to insulate consumers from injury from their products.  Where quality assurance measures, self regulation, and sound safety practices fail to adequately prevent that harm, Macpherson extends the responsibility of the manufacturers to compensate injured consumers, whether or not there is traditional privity between the consumer and the manufacturer.


In Texas Food Industry Ass’n v. Espy (“Espy”), the court affirmed the authority of the United States Department of Agriculture (“USDA”) to regulate E. coli O157:H7 as an adulterant.  This decision allows the primary federal agency responsible for meat safety to take further measures to test for a particularly dangerous bacteria that sickens thousands annually and kills many.


Together, the Macpherson and Espy decisions provide powerful incentives for food producers to adopt production, storage, and distribution measures that adequately protect consumers from injury from O157, and they provide a groundwork for the USDA to be responsive to further developments of E. coli and other bacteria.  On one hand, an effect of Macpherson is that food producers are not only responsible for their own practices, but also for the safety of their ingredients, whether or not they have any direct control over the production of those ingredients.  On the other hand, retail stores and meat packers must also re-formulate risky cutting and packing practices that lead to the contamination of meat.

The Macpherson decision was certainly revolutionary in that it immediately required manufacturers to compensate injured consumers, but the structural impacts were even more profound.  The costs associated with compensating consumers for injuries traceable to third-party components provided a powerful economic incentive for the manufacturers themselves to assure the quality of those components and to build relationships with those partners as a means of controlling defects at the source.  By removing the traditional doctrine of privity from the common law of product liability, the decision likewise fundamentally changed the relationship between manufacturers/producers and consumers.


The Espy decision, however, could potentially have much less of a lasting impact.  The decision is not binding on future considerations of E. coli O0157:H7 by the USDA.  The court held that the move to test for O157 was a procedural rule, and not substantive, and thus the USDA did not violate the Administrative Procedure Act by failing to engage in notice-and-comment rulemaking – which can be (and usually is) enormously time-consuming, a particular concern when there is an issue of public health.  The court also held that 1) the decision was not arbitrary and capricious, and 2) the USDA had statutory authority, but not a duty, to test for E. coli as an adulterant.


Because of the limited holding of the court, after Espy, the USDA may test for E. coli, but is not required to do so.  There is a growing, but for now limited, pressure against government regulation in all areas.  That political pressure could extend further into food safety under the idea that the market players, under threat of liability, will act rationally and take proper safety precautions of their own initiative.  This, of course, ignores that 1) O157 is contributing to a serious and expensive issue of public health; 2) the market players already are liable to consumers for E. coli contamination, but of course, only to the extent those consumers (or their attorneys) are financially able to take on expensive and lengthy litigation, and have a sufficient incentive to do so; and 3) despite these two facts, there has been an insufficient market incentive for retailers and packers to prevent E.coli sickness and death, as evidenced by the simple fact that outbreaks continue to this day.


So, because the statutory authority allows for the regulation of adulterants, but does not require the regulation of all adulterants, the affirmation of the USDA’s determination that E. coli fits within the definition of adulterant, by itself, is not revolutionary, in part because it does not ensure that testing of O157 will continue.  The market incentive to freely test, then, would only rely on the economic pressure of litigation and public/consumer pressure, which are demonstratively insufficient to prevent E. coli contamination.  But to the extent O157 testing and enforcement by the USDA continues under Espy’s authority, the force of institutional regulation that spurs responsive and effective changes by the relevant parties has the potential to be truly revolutionary, but only if those measure are truly efficacious in reducing O157 outbreaks.

Just as I look at evidence of the millions of starving Americans as proof that charity cannot be relied upon to end domestic hunger, I see the thousands of sick and dying American consumers that the market has failed to fully protect against food-bo
rne illness.   However, the markets are adaptive, and public policy can provide powerful incentives for normal and beneficial market responses to create near-immediate structural and industry-wide improvements in food safety.  The Macpherson decision, for example, has appropriately forced the market to adapt to a new avenue of liability, and the shifting of that responsibility has internalized injury costs that burdened unfortunate consumers.  The regulation that was the subject of Espy will presumably also force an analogous change and will likewise pull externalities back into the price with increased costs to retailers and producers, but, ideally, less costs to harmed individual consumers.


Without legal revolutions like Espy and Macpherson, consumers must rely on a market reaction without institutional involvement, which, as mentioned, has so far been insufficient in food safety.  Some may argue that the market is adapting, but those changes have not been revolutionary.  Reliance on slow reactions based solely on costs of litigation and public pressure at the expensive of deathly and costly outbreaks is unfair to those consumers who reasonably rely on our food system, and it is too unclear when those mechanisms will finally result in a safer food supply.  The slow reaction time of the industry is exacerbated by the fact that price competition may prevent some producers from taking costly measures to improve food safety.


Alternatively, changes in our system of regulation and the legal framework for that regulation has the potential to force changes, with the costs of those changes distributed between the public at large, through the taxes that support the regulatory framework, and through the entire consumer base, through the price increase due to industry changes.  Moreover, through the process of broad rule-making authority that is tempered by scrutiny by the public and the courts, the regulatory bodies can be responsive to developing threats to public health, with a minimal threat of the costly impact of over-regulation.  And, as long as any regulation is sufficiently broad and targeted, no individual producers will worry that the costs will prevent those producers from competing, because those costs will be shared by competitors.