Canadian Food Business
By Glenford Jameson and Cora James
Mistakes happen. With food manufacturing, mistakes can take the form of malfunctioning equipment or cross-contamination of ingredients. Sometimes a key, trusted player in the supply chain sources an ingredient from a new supplier to meet demand, and that new ingredient contains an undeclared allergen. Sometimes, despite rigorous testing and sampling procedures, salmonella finds its way onto the production line and contaminates a lot.
For most stakeholders in the food value chain, mistakes are terrifying. Mistakes signal lost product, lost revenue, lost time, and energy, but most importantly, lost trust with consumers who relied on the safety of a consumable. Mistakes can signal the need to enact a voluntary recall of product, and thus converse with the regulator — the Canadian Food Inspection Agency (CFIA) and/or Health Canada.
Under the Safe Food for Canadians Act (SFCA), regulated entities are required to prepare, keep, and maintain a recall procedure as part of their Preventative Control Plan (PCP). Further, regulated entities have to conduct recall simulations at least once every 12 months to test the viability of their recall procedure. These documents and drills are designed to prepare regulated entities for the probable: a mistake. And while they should serve to ensure corrective action in the face of a mistake, thereby eliminating the fear of judicial action, the reality is that any oversight or misstep in enacting a recall procedure can lead to court action, and in particular a class-action lawsuit.
With the 2023 decision of Bowman v. Kimberly-Clark Corporation, we learn that recall and refund programmes can be extensive and broad in application, but still not address alleged harm done to all parties affected by the recall. While this is not a food-related decision — it addresses bacteria found on flushable wipes in 2020 — Justice Matthews’ decision to allow a class-action lawsuit to proceed for the Personal Injury Subclass of claimants because they did not receive adequate notice of their right to make a claim for personal injury or adequate compensation demonstrates the need for regulated parties to engage all levels of the supply chain down to the consumer with their recall, and to document the process. An oversight in this case resulted in Justice Matthews’ decision to allow a class proceeding to commence in order to contemplate a wrong faced by those who claimed to suffer personal injury as a result of using the recalled lots of product.
It would be an understatement to stress the importance of being thorough with one’s recall procedure. Kimberly-Clark, for example, went to great lengths to ensure their contaminated wipes were isolated, destroyed, and generally removed from the market. Kimberly-Clark worked with the Food and Drug Administration in the U.S. and Health Canada to initiate a recall notice and issue it to retailers. They then followed up with retailers by phone to ensure affected product was removed from shelves. Following this, Kimberly-Clark set up a webpage dedicated to the recall with instructions for consumers. They posted about their recall on Facebook and Twitter. The recall was picked up by news channels across the country, and Health Canada published a notice on its recall website. Some retailers even sent recall notices to their purchasers on Kimberly-Clark letterhead. Consumers were provided with refunds, albeit undocumented in terms of quantum and rationale for quantum, through an expanded customer service team that Kimberly-Clark hired to deal with incoming inquiries and refund requests. And yet, these actions were not enough for Justice Matthews to find the non-judicial alternative of a recall to be sufficient in ensuring access to justice, judicial efficiency, or behaviour modification – the three objectives to consider when determining whether a class proceeding is the appropriate forum to redress a wrong.
The case of Kimberly-Clark is not an anomaly, though. A review of case law shows a history of class-action claims following an initiated recall. In 2018, for example, the Ontario Superior Court of Justice heard the case of Richardson v. Samsung, regarding a recall for defective cell phones. However, unlike in Kimberly-Clark, a class-action lawsuit did not proceed against Samsung Electronics. Judge Rady stated in the decision that “class-actions are an important vehicle to redress wrongs to those who would not otherwise bring action because it would be economically ill-advised.” Judge Rady determined that Samsung Electronics’ recall programme met the needs of access to justice, and therefore the corporation did not require behaviour modification. She wrote, “In my view, the defendant’s prompt response in concert with Health Canada to safety issues, the recall, the termination of sales, and the compensation package, demonstrates the response of a responsible corporate citizen. It is behaviour that should be encouraged rather than discouraged.” In other words, Samsung Electronics had implemented a recall programme broad enough to redress wrongs throughout the supply chain: from consumer, through to retailer, and up to distributor.
To utilize an example relevant to food, the case of Romero v. The Meat Shop at Pine Haven was heard in Alberta in 2022 to determine whether a class-action lawsuit was the preferable proceeding for claimants to claim damages for consumption of pork contaminated with E.coli. Ultimately, despite issuance of a recall notice and working with CFIA and Health Canada to address the contamination, a class-action proceeding was found to be a fair and efficient process for resolution of the common issues. Likewise, a case before the Supreme Court of Canada, in 2020 saw Mr. Sub franchisees pursue a class-action lawsuit against Maple Leaf Foods Inc. for reputational damage suffered during a voluntary recall of deli meats, as well as economic loss. In this instance, the food manufacturer (i.e., Maple Leaf Foods) had an obligation to ensure the safety of consumers, but also to mitigate the economic and reputational, loss of its supply chain.
With this myriad of case law related to deficiencies in recall, procedures, what should regulated parties do, then, when faced with mistake?
First, the preparation and maintenance of a thorough recall procedure, and more generally a PCP, is important to ensure that everybody understands their role when faced with mistakes, and steps are followed to correct them. Regulated entities can make both preventative and protective decisions related to their recall procedures to avoid greater cost and stress when mistakes arise.
If a regulated entity is unsure about its recall procedure or PCP, contact a legal professional to review what’s in place.
Second, if a regulated entity determines that voluntary recall is the appropriate action to ensure the health and safety of consumers, consider engaging a legal professional to negotiate with the regulator on your behalf. Have a legal professional guide you through this crisis situation, as sometimes the stress of a recall leads to oversight or misstep.
While a legal professional is not a guarantee against court action, engaging one could make the difference between a Kimberly-Clark and a Samsung Electronics. And while regulatory processes are generally preferred to judicial action in Canada, and courts provide a great deal of deference to the decisions of non-judicial bodies, class-action lawsuits will continue to exist as an option for classes of claimants that otherwise do not believe their concerns have been addressed or fixed. For regulated parties, this serves as a reminder to prepare for mistakes, and work to ensure corrective actions are implemented throughout the supply chain when faced with them and voluntary, or mandated, recall.
For assistance concerning food recalls and the steps that should be taken by organizations, G.S. Jameson and Company.
