Legal Liability and its Economic Impact on the Food Industry

Problems in food processing or foodservice that lead to spoilage, illness or contamination by pathogens or extraneous matter can be costly in terms of legal settlements to the companies involved. Although industry and public health officials have been aware of these risks, the extent and types of costs involved are not usually publicized. This paper gives examples of seizures, fines and settlements. The type of amounts given may depend on severity and length of illness and also whether or not the settlement is determined by Workers' Compensation Board, court or out-of-court action. In court cases, these settlements represent an average of about two-thirds of the total costs, the other amounts being for legal and court expenses. Because some of these awards are becoming prohibitively high for industries, insurance companies and the taxpayer, there are government moves to limit these to $100,000 and prevent excessive legal fees. The opposition to this will probably be strong enough to prevent any rapid change to the settlement system, and legal action will remain an important component in the economy of the food industry.