Crop risks weighed as dust settles from customers’ lawsuits

Chains sue vendors in wake of produce-linked epidemics: crop risks weighed as dust settles from customers’ lawsuits

Alan J. Liddle

Sodexho USA, O’Charley’s and the defunct Chi-Chi’s dinner-house group are among several companies nationwide that were forced to defend themselves recently from the costly legal fallout of numerous customer ailments and deaths linked to produce-related outbreaks of food-borne illness.

But lawyers for some of those outfits, including Sizzler sibling Pat & Oscar’s, say they now will focus increasingly on lawsuits of their own, targeting produce suppliers that the operators allege caused the multiple outbreaks in late 2003.

“Pat & Oscar’s has resolved its claims against certain suppliers and is continuing to pursue action against others,” explained Frederic Gordon, an attorney for the 22-unit, San Diego-based chain. Gordon is pursuing a similar sue-the-vendor strategy on behalf of Louisville, Ky.-based Chi-Chi’s and contract feeder Sodexho USA of Gaithersburg, Md.

Many food-borne illness outbreaks in the past were tied to poor food-handling practices or sick restaurant employees. But several outbreaks at the tail end of 2003, including those involving Gordon’s clients, were linked to produce believed to have been contaminated before it arrived at restaurants.

Seattle attorney William Marler, a courtroom nemesis of Gordon’s, believes lawsuits like those filed by Chi-Chi’s, Pat & Oscar’s and Sodexho could serve to build, not diminish, public confidence in the produce supply chain.

“The goal is to put financial pressure on the entity most likely to solve the contamination problem before it starts,” said Marler, whose Marler Clark law firm represents consumers suing all three of Gordon’s clients over food-borne illness injury claims.

The safety of produce entering restaurants is an increasingly critical issue, especially because some of the industry’s largest operators are generating hefty increases in sales of salads made with precut, prewashed, and bagged lettuces and vegetables marketed as “ready to eat.”

Produce industry sources say sales of fresh-cut lettuce have more than tripled during the past decade, to $3 billion a year. That is not surprising given that McDonald’s reported selling 300 million salads from 2003 through 2004 and casual-dining leader Applebee’s Neighborhood Grill & Bar reportedly describes its Mandarin Chicken salad as the chain’s top seller.

Among the adulterated-product outbreaks of late 2003 was a hepatitis A incident involving green onions used by a mall-based Chi-Chi’s in Monica, Pa., near Pittsburgh. That incident, reportedly the largest hepatitis A outbreak in U.S. history, claimed three lives, sickened more than 660 people and filled medical clinics and doctors’ offices with thousands of consumers seeking retroactive protection through immune globulin shots.

Also linked to a tainted-scallion outbreak were two units of the 221-unit, Nashville, Tenn.-based O’Charley’s dinnerhouse group. In that hepatitis A outbreak one man died, more than 80 were sickened and hundreds sought injections of immune globulin. At least 57 lawsuits have arisen from the outbreak, O’Charley’s executives have said in reports filed with government agencies.

According to public-health officials, employees of Chi-Chi’s and O’Charley’s could not have prevented the outbreaks because the green onions from Mexico that had been delivered to the restaurants were contaminated in the field with a difficult-to-detect virus that was impervious to washing.

Investigations by California’s Department of Health Services, or DHS, into the Pat & Oscar’s-linked E. Coli 0157:H7 outbreak in 2003 underscored the need for operators to conduct their own inspections of purveyors’ farms and processing facilities. National Restaurant Association officials and industry pundits in recent years have urged operators to craft detailed contracts spelling out the food safety responsibilities of vendors. Such experts also recommend that restaurant companies use only producers and distributors that permit on-site inspections and can provide evidence of third-party audits of facilities and procedures related to food safety.

Gold Coast Produce of Oxnard, Calif., was the processor of the purportedly ready-to-eat lettuce implicated in the outbreak that sickened about four dozen Pat & Oscar’s patrons in Southern California. DHS investigators found that Gold Coast had failed to register with the state as a food processor, as required by law, that it did not have a hazard analysis critical control points, or HACCR plan, and that it did not pay for third-party audits or conduct in-house testing to confirm cleaning and sanitation procedures.

Both the U.S. Food & Drug Administration and California’s DHS investigators who inspected Gold Coast’s facilities and operations noted “insanitary” conditions, such as standing puddles of water in food processing areas and lack of adequate toilet and hand washing facilities. The officials also detailed numerous situations that could foster cross contamination of finished and raw products.

In a registered letter to Gold Coast owner Jaime Montiel in December 2003, FDA officials cited 13 problem areas within the company’s facilities and procedures. They said the operation violated federal codes because its products were “adulterated” and “prepared, packed or held under insanitary conditions whereby they may have become injurious to health.”

Gold Coast and distributor F.T. Produce Inc. of Anaheim, Calif., which does business as Family Tree Produce, jointly agreed to pay Pat & Oscar’s a settlement totaling more than $5 million, attorney Gordon said.

The inquiry by the DHS into the Pat & Oscar’s incident also listed as a possible “contributing factor” floodwaters from Santa Rita Creek in Monterey Country, Calif. They may have carried E. coli 0157:H7 into a nearby Chinn Ranch farm field believed to have been one source of the lettuce supplied to Gold Coast. But the agency also cited as “contributing factors” the absence of procedures and systems to deter cross contamination of the lettuce during growing, harvesting and cooling. Also pointed out was that trucks used to haul raw manure were used without cleaning or sanitizing to haul the finished compost to growing fields.

According to Gordon, Pat & Oscar’s still is pursing legal action against the companies that grew, harvested, packed or shipped the lettuce used by Gold Coast Produce, including Diamond Produce LLC and River Ranch Fresh Foods LLC, both of Salinas, Calif.

Diamond Produce officials said the company has a policy of not discussing pending litigation.

Bob Jenkins, chief executive of River Ranch, said his company plans to “vigorously defend” itself in court. River Ranch and other Salinas Valley companies investigated by the state and subject to review by a local agricultural task force believe they ultimately will be vindicated, he added.

“There has been an ongoing investigation that has continued to support our collective position that this did not happen at these ranches or at any of these harvest groups–that this [problem occurred] when the product was downstream being processed,” Jenkins said.

After being named in the Pat & Oscar’s litigation, Diamond Produce and River Ranch filed legal claims against Monterey County, refuting the lawsuit and disputing findings of the DHS report. Through their claims to the county, the producers are seeking compensation from its water resources agency, which they contend is responsible for maintenance of the reportedly E. coli-tainted Santa Rita Creek.

The Monterey County Board of Supervisors has rejected the claims, paving the way for the suppliers to pursue their allegations in court.

Chi-Chi’s, which survives as a corporate entity in part to pursue litigation against implicated produce suppliers, sued several suppliers last year over the Mexican scallions linked epidemiologically to the hepatitis A outbreak. Those suppliers were Castellini Co. of Wilder, Ky.: Sysco Corp. of Houston; and one of Sysco’s subsidiaries, Sygma Network Inc. of Lakewood, Colo. A Sysco spokesman was quoted as calling the illnesses “regrettable” but saying the company had “followed all applicable standards and FDA requirements” in supplying the scallions.

“Chi-Chi’s could see $30 million on supplier-side settlements,” Gordon speculated.

But the attorney might have his work cut out for him in the Sodexho case, as a California Department of Health Services investigation into that 2003 E. coli outbreak revealed “no likely sources of contamination” for the ready-to-eat bagged spinach implicated in the matter. DHS conducted its probe following the deaths of two elderly women and sicknesses contracted by at least a dozen other residents of The Sequoias, a Portola Valley, Calif., retirement community.

Sodexho provides foodservice at The Sequoias. The DHS report noted that Sodexho employees had not washed the spinach before placing it on a buffet, but it indicated that investigators found no evidence suggesting that the workers were the source of the contamination.

Although questions have arisen about whether supposedly ready-to-eat, vendor-washed produce items should be rewashed by restaurants, some operators and food safety specialists have concluded that in-restaurant rinsing of such products actually may increase their chances of contamination.

Investigators in the Sodexho-linked outbreak did mention that one of the implicated spinach growing fields, a Chinn Ranch plot, is adjacent to Santa Rita Creek and that others are near the Salinas River, which attracts large populations of feces-dropping wildlife, including boar and coyote.

“Because Chinn Ranch was determined to be the source of lettuce in two previous outbreak investigations, further investigation of this ranch is needed,” DHS analysts concluded in their written report about The Sequoias incident.

Sodexho and South San Francisco, Calif.-based produce wholesaler Lee Ray-Tarantino in recent weeks reached unspecified settlements with Sarah Ish and the family of Alice McWalter, 85, during pretrial mediation in California. McWalter was one of the women who died after being exposed to E. coil-tainted spinach at The Sequoias, and Ish was sickened there.

“We are pleased that the situation has been resolved to the satisfaction of all parties,” Sodexho USA representative Stacy Bowman-Hade said following the settlements. “We are confident in our stringent food safety practices at Sodexho, and we are pleased it was determined that there is no suggestion that Sodexho was the cause of the situation.

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