FSMA: Consumers are not protected when the FDA’s rules are “stuck in review.”

On March 19, 2012, the Consumer Federation of America announced that its members voted to support a resolution urging the Obama Administration to issue four proposed food safety rules, which have been delayed for over two months. 
 
“On behalf of CFA’s nearly 300 members, we urge the Administration to immediately issue these important food safety proposals,” said Chris Waldrop of CFA’s Food Policy Institute.  “The longer these proposals are delayed, the longer it will take to fulfill the promise of the Food Safety Modernization Act, which is intended to better protect consumers from foodborne illness.”  Simply put, “consumers won’t be adequately protected if the FDA’s proposals are stuck in review.”  See CFA Press Release.
 
Being in the trenches with my food industry clients on a daily basis, I can confirm that the CFA’s position is well aligned with the industry’s current thinking.   However, I would like highlight the importance of the food industry’s comment period and the FDA’s attention to our collective voice.   As we all know, it is critical for the food industry to speak up and use comment opportunities to help shape the very rules that govern our business operations. 
 
To rush this process and force a potentially premature closure to the FDA’s listening period (e.g. when FDA uses the industry’s comments to further modify the proposed rules prior to issuance) invites future litigation to resolve issues of fairness, application, constitutionality, language interpretation, etc.   Although accountability is critical, I always urge people to look at all sides of any given position.
 
With that said, we are all waiting for the FDA to issue its long overdue food safety rules.   

Words produce buyers should NOT rely upon…

Use of words such as “work out the load“or “sell the product and we will settle at a later date” by the seller are NOT sufficiently specific to constitute an authorization that the buyer handle the produce on consignment.  Granada Marketing, Inc. v. Jos. Notarianni & Co., Inc., 47 Agric. Dec. 329 (1988); Royal Packing Co. v. William D. Class, Jr. d/b/a W.D. Class & Son, 42 Agric. Dec. 2077 (1983); B&L Produce of Arizona v. Mim’s Produce, 37 Agric. Dec. 201 (1978).

Similarly, “do the best you can” does NOT constitute permission to handle on consignment.  Relan Produce Farms v. Rushton & Co., 38 Agric. Dec. 1636 (1979); B & L Produce, Inc. v. Harry Becker Produce Co., 36 Agric. Dec. 913 (1977); Barkley Company of Arizona v. Ifsco, Inc., 31 Agric. Dec. 279 (1972).

Nor does:

“the buyer should work it out.” See Frank Gaglione & Sons v. Theron Hooker Co., 30 Agric. Dec. 528 (1971).

or “handle best possible” or “handle to best advantage.” See Ralph Samsel v. L. Gillarde Sons Co., 19 Agric. Dec. 374 (1960).

or “handle” or “open.”   See Ronnie Carmack v. Delbert E. Selvidge, 51 Agric. Dec. 892 (1992).

or respondent “should keep the shipment, [and] do with it what respondent could. . ..”  See Chiquita Brands, Inc. v. Joseph Williams, Jr. Co. Inc., 45 Agric. Dec. 374 (1986).

Still further, the phrase “customer will keep + Work Out” did NOT signify an agreement that the load could be handled on a consignment basis.   See The Lionheart Group, Inc. v. Sy Katz Produce, Inc., 59 Agric. Dec. 449 (2000).

Buyer’s Obligation to Modify Agreement or Reject Produce

When a buyer is seeking permission from the seller to sell a troubled load of produce on a price after sale (“PAS”) basis the buyer must take steps to ensure that the parties’ fixed price agreement (e.g. the invoice) is modified.

To convert a fixed price term agreement to PAS terms, the buyer must obtain clear, definite and unequivocal authorization from the seller.  Absent such authority, the Seller may successfully enforce the terms of its fixed price invoice and they buyer may have lost the opportunity to properly reject the produce or otherwise protect itself.

Video Presentations from Freeborn & Peters’ SOLD OUT Food Safety Event

For those of you who could not attend our recent food safety event at the Federal Reserve Bank in Chicago, IL on March 1, 2012, please follow the link below to see take look at the video recordings of the keynote speakers and panel discussions.  

Opportunities and Challenges in Food Importation Event Video Library

This sold out event provided some VERY important and timely information about the Food Safety Modernization Act, the FDA’s food traceability pilot programs, and the current thinking of industry leaders.

FSMA (Section 107): What triggers the facility reinspection fee?

The FDA may assess fees under Section 107 of the FSMA whenever the FDA, or its agent, inspects a domestic or foreign facility and the final classification of the facility is:

            1.         Official Action Indicated, and

            2.         The non-compliance was “materially related to food safety.”

The fee will be assessed for a reinspection of domestic and foreign facilities to determine whether corrective actions have been implemented and are effective and compliance has been achieved to FDA’s satisfaction. 

What does the FDA mean by: “reinspection”?

Domestic Facilities: Reinspection means one or more inspections conducted under the FD&C Act subsequent to an inspection that resulted in a final classification of a facility as OAI and where the non-compliance was materially related to food safety.

Foreign Facilities: Reinspection means one or more inspections conducted by officers or employees duly designated by the Secretary subsequent to an inspection which identified non-compliance materially related to a food safety requirement under the FD&C Act. 

What does the FDA mean by: “materially related to food safety”?

Some examples of non-compliant conditions or practices that “materially relate to food safety” include, but are not limited to:

  • Food borne pathogens in ready to eat products
  • Pesticide residues on food or feed products above established tolerances
  • Failure to declare the presence of a major food allergen in product labels
  • Lack of adequate hazard controls (HACCP)

Who Pays the Facility Reinspection Fees?

The party responsible for paying the Facility Reinspection Fees include:

  • The responsible party for a domestic facility
  • TheU.S.agent for a foreign facility
  • Each importer subject to reinspection

How much will a reinspection fee cost my company?

Rates: For Fiscal Year 2012, the hourly rate per FDA inspector participating in a reinspection is $224.00 per hour if no foreign travel is required and $325.00 per hour if foreign travel is required.

Number of FDA employees or agents assigned to a reinspection: The FDA will make this determination on a case-by-case basis.  Relevant factors for this decision include the size of the firm, number of products, number and nature of the violations observed in the initial inspection and the amount of expected resources needed to evaluate the firm’s corrective actions and current state of compliance with respect to the items identified in the initial inspection.   

Billable Activities: conducting the reinspection at the facility, making preparations and arrangements for the reinspection, traveling to and from the facility, analyzing records, analyzing samples, preparing reports or examining labels and performing any other activity deemed necessary to determine compliance with the regulation or statute found to be violated in the initial inspection.

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 15, 2012, a civil action was filed in New York against Carlos Bonilla d/b/a Carlos Food Center in an effort to collect approximately $22,000.00 in alleged PACA debt.  The Plaintiff also moved the Court for the entry of a Temporary Restraining Order.

Please check your A/R to see if this case affects you.  If it does, please do not wait to assert your rights.

Is Unloading Produce an Act of Acceptance?

As a general rule, the unloading or partial unloading of the transport is an act of acceptance.  UCC 2-606(1) (c).  See also 7 C.F.R. 46.2 (dd)(1).

M. J. Duer & Co., Inc. v. The J. F. Sanson & Sons Co. and C. H. Robinson Co., 49 Agric. Dec. 620 (1990); Jim Hronis & Sons v. M. Pagano & Sons, Inc., 46 Agric. Dec. 1010 (1987); Harvest Fresh Produce, Inc. v. Clark-Ehre Produce Co., 39 Agric. Dec. 703 (1980); Crown Orchard Co. v. Mid – Valley Prod. Corp., 34 Agric. Dec. 1381 at 1385 (1975); Theron Hooker Co. v. Ben Gatz Co., 30 Agric. Dec.1109 (1971); Conn & Scalise Co., Inc. v. Frank J. Crivella & Co., Inc., 20 Agric. Dec. 415 (1961); Charles P. Tatt Fruit Co. v. Mac’s Produce, 9 Agric. Dec. 802 (1950).

Where tomatoes were unloaded prior to inspection, and Respondent, after seeing the results of the inspection, notified Complainant that the load was being rejected, it was held that Respondent’s attempted rejection was illegal and ineffective because the unloading of the tomatoes amounted to an acceptance.  J&J Produce Co., Inc. v. Weis-Buy Services, Inc., 58 Agric. Dec. 1095 (1999).

Where Respondent gave notice of rejection following the unloading of produce the rejection was ineffective, and the load was deemed to have been accepted. The Lionheart Group, Inc. v. Sy Katz Produce, Inc., 59 Agric. Dec. 449 (2000).

WHEN UNLOADING IS NOT AN ACCEPTANCE

Where Complainant was notified prior to unloading and specifically requested an unrestricted inspection.  Under limited circumstances such as unloading for the purpose of inspection or to retrieve other produce from the nose of the truck, and where the product is then placed back on the truck within a reasonable time, unloading will not be deemed an acceptance.  Pope Packing & Sales v. Santa Fe Veg. Growers Coop. A’ssn., 38 Agric. Dec. 101 (1979).

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 7, 2012, a civil action was filed in New Jersey against Depiero’s Farm, Inc. in an effort to collect approximately $85,300.00 in alleged PACA debt. 

On March 7, 2012, a civil action was filed in Washington against Cascade Ag. Services, Inc. d/b/a Pleasant Valley Farms in an effort to collect approximately $175,780.00 in alleged PACA debt. 

On March 8, 2012, a civil action was filed in Florida against Top Tomato Company in an effort to collect approximately $95,345.00 in alleged PACA debt. 

On March 8, 2012, a civil action was filed in New York against Produce Express Corp. in an effort to collect approximately $94,700.00 in alleged PACA debt. 

On March 14, 2012, a civil action was filed in Nevada against Lombardo Imports, Inc. d/b/a Lombardo Produce in an effort to collect approximately $726,161.42 in alleged PACA debt. 

On March 15, 2012, a civil action was filed in Illinois against J&S Produce Corp. in an effort to collect approximately $746,160.00 in alleged PACA debt. 

Please check your A/R to see if these cases affect you.  If they do, please do not wait to assert your rights.

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 2, 2012, a civil action was filed in Ohio against Meduri Brothers Produce, Inc. in an effort to collect approximately $30,000.00 in alleged PACA debt. 

On March 2, 2012, a civil action was filed in Maryland against German Town YK Group LLC d/b/a Super Q Mart in an effort to collect approximately $86,000.00 in alleged PACA debt. 

Please check your A/R to see if these cases affect you.  If they do, please do not wait to assert your rights.

FSMA – The FDA’s new records access authority

FDA’s INCREASED RECORDS ACCESS AUTHORITY  

Section 101 of FSMA amends the FD&C Act to increase the FDA’s authority to access and copy records.  Prior to the passage of FSMA, the Food Drug & Cosmetic Act (FD&C) provided the FDA access to records relating to food reasonably believed to be adulterated and presents a threat of serious adverse health consequences or death to humans or animals.  FSMA expands this access to records beyond those relating to a specific suspect article of food to records relating to any other article of food the FDA reasonably believes is likely to be affected in a similar manner. 

This new grant of authority permits FDA inspectors to significantly expand the scope of their investigation as they are no longer confined to specific articles of food identified in a complaint as being potentially adulterated.

When the FDA may access and copy records:

Under FSMA, the FDA may access and copy records from domestic and foreign food companies who manufacture, process, pack, transport, distribute, receive, hold, or import food in either of the following two situations: (1) the FDA has a reasonable belief the food, and any other food articles likely to be affected in a similar manner, are (i) adulterated, and (ii) presents a threat of serious adverse health consequences or death to humans or animals; or (2) the FDA believes there is a reasonable probability that the use or exposure to an article of food, and any other article of food likely to be affected in a similar manner, will cause serious adverse health consequences or death to humans or animals. 

Importantly, FSMA grants the FDA access to the records of both the domestic importer and its foreign supplier.  This is consistent with FSMA’s goal of making importers responsible for ensuring food from abroad is as safe as any of our domestic products. 

To be more clear, FSMA’s enlargement of FDA authority to access and copy records extends to those records required to be kept by law (e.g., FD&C Act, Bioterrorism Act, etc.), as well as any other records related to the manufacture, processing, packing, transportation, distribution, receipt, holding, or importation of the suspect food.  This applies to records maintained by or on behalf of the company in any format and at any location.  Examples of records the FDA can access include raw materials receipts; customer distribution lists; manufacturing, test, and recall records; and complaint and adverse event records.

Records the FDA may NOT access and copy:

Notwithstanding FSMA, the FDA may NOT access and copy the following types of records:

  • Records from farms, which include facilities that pack, hold, or manufacture/process food, provided all food used in such activities is grown, raised, or consumed on that farm or another farm under the same ownership
  • Records from restaurants
  • Records relating to food that is within the exclusive jurisdiction of the Secretary of Agriculture
  • Recipes, which are defined as formulas that include: (i) ingredients; (ii) quantities, and; (iii) instructions necessary to manufacture a food
  • Financial, pricing, personnel, or research data
  • Sales data (other than shipment) regarding sales

Privacy protection

The FDA may lawfully obtain information under FSMA that includes non-public confidential or trade secret information. This reality must be reconciled with those laws that govern the FDA’s disclosure of information to the public. For example, can third parties gain access to non-public confidential information provided to the FDA with a Freedom of Information Act request?  The answer: YES… It could happen.  As it stands now, the FDA will only confirm that its personnel will comply with all applicable protections, procedures, and legal requirements that are intended to protect against the unauthorized or accidental disclosure of nonpublic information. 

Refusing to turn over records to the FDA

A refusal to permit the FDA access to or copying of records is prohibited by FSMA; in response, the FDA may initiate a regulatory, civil, or criminal action in connection with the records access request, refuse admission of food offered for import into theU.S., etc.  Separate and apart from a records access request, the FDA may also pursue actions such as suspension of a food facility’s registration (preventing imports/exports or selling food domestically), administrative detention or seizure of food, issuance of a mandatory recall order, or an injunction against the company.

PACA Trust Litigation Alert

 
PACA Trust Litigation Alert
PACA Trust Litigation Alert

On March 1, 2012, a civil action was filed in Tennessee against Turnip Truck Urban Fare, LLC in an effort to collect approximately $128,300.00 in alleged PACA debt.

On February 29, 2012, a civil action was filed in California against G.D. Fresh Distribution, Inc. in an effort to collect approximately $21,400.00 in alleged PACA debt. 

On February 29, 2012, a civil action was filed in Miami against Cardile Brothers Mushroom Packaging, Inc. in an effort to collect approximately $22,600.00 in alleged PACA debt. 

Please check your A/R to see if these cases affect you.  If they do, please do not wait to assert your rights.