Food safety is a hotly debated issue. While food nourishes, sustains, and enriches our lives, it can also kill us. At any given meal, our menu comes from a dozen different sources. Without proper incentives to encourage food safety, microbial pathogens can, and do enter the food source—so much so that according to the Centers for Disease Control and Prevention (CDC), each year roughly one in six Americans (or forty-eight million people) gets sick, 128,000 are hospitalized, and 3,000 die of foodborne diseases. What is the optimal way to prevent unsafe foods from entering the marketplace?
Safety in the food system emerges from a delicate interplay of several sources—direct regulation, legal liability, and market response. And yet food safety is a largely unexplored area in legal scholarship. This Article fills this void by examining the contribution of legal liability first as an economic signal to deter firms from producing unsafe food and then as an indirect regulator promoting food safety. Two parts follow.
Part I examines the efficacy of legal liability to deter firms from producing unsafe food. I estimate an empirical model using all (320) publicly recorded foodborne illness settlements and verdicts in the U.S. from 2000–2011, to determine factors that influence the plaintiff win rate, resolution time, and plaintiff recovery.
Statistically significant results include: Plaintiffs who sue for foodborne illness injuries win more often and win more monetary damages when they settle. Cases are resolved faster and damages are higher when the plaintiff’s attorney is ranked and an expert in the field. Interestingly, in states where punitive damage limits are in place, plaintiffs resolve their cases faster, they are more likely to win, and they collect more damages in general. When the plaintiff suffers the gravest injury (death), the case takes longer to resolve and damages are higher. Plaintiffs also win more damages when the injury takes place in a state that has an efficient public health reporting system.
The results suggest that as a cost of doing business, foodborne illness litigation sends a strong signal to firms to increase food safety practices—but only when cases settle and not necessarily when they reach a jury trial. The way in which the results highlight the existence of market failures in providing food safety—the transaction costs and the information costs preventing plaintiffs from suing in the first place and from recovering fully—presents valuable information for regulators.
Part II contributes to the understanding and active debate surrounding the interplay between legal liability and food safety regulation, suggesting the optimal way for these two deterrence mechanisms to interact. My solution is for regulation to be responsive to foodborne illness litigation. This Article advocates for empirically informed regulation and contributes to the literature of tort law, law and economics, and food safety. The new Food Safety Modernization Act (FSMA), promulgated by the U.S. Food and Drug Administration (FDA), has the potential to aid plaintiffs in overcoming causation and traceability concerns with their claims. Concrete recommendations seek to inform an audience of regulators currently drafting the final rules.