The Case of Nutritional Foods (Product Liability)

THE CASE OF NUTRITIONAL FOODS (Product Responsibility) I.

Relevant Details •

Nutritional Foods, Inc. (NFI) – a US$50 million dollar manufacturer of healthful foods that produces natural or nonpasteurized foods in Western U.S. It is rapidly becoming the best known brand for natural nonpasteurized foods. Presently, they have two (2) operating facilities: (1) California Central Valley; and (2) Central California (coastal city). A new facility is being constructed in Central Valley. Fresh fruits and vegetables products from growing regions are shipped by NFI throughout the West to these two facilities for processing, canning or bottling.

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Nonpasteurized products – handling is critical because contamination could occur in picking, transporting or processing. Distribution is also critical. To ensure freshness, NFI distributes the products from facilities in company-owned refrigerated trucks.

II.

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Fred James – Chief Executive of NFI

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John Healy – Vice-President of NFI

Timeline: July 20, 2013 (Morning) – John Healy advised Fred James that reports had come in during the past hour of a possible link between acute food poisoning of a child and an unpasteurized apple by NFI. Reports came from two county health departments: (1) Seattle; and (2) Southern California. The health departments had not yet ruled out all other possible causes. Additional information and the batch numbers of the products in question were not available. July 20, 2013 (after the meeting) – Healy dispatched company managers to the two (2) counties to look into the matter. During this time, he received a third and fourth report from two new counties. He sent two more company managers to the new counties.

July 20, 2013 (mid-day) – The company managers returned stating that health officials in the four counties were virtually certain that NFI products were involved in the poisonings. Further, batch numbers from two cases were both from a single day’s productions. July 20, 2013 (end of work day) – three additional reports of possible food poisonings were reported from 2 newspapers. In one newspaper the culprit was identified as NFI, whereas in the second instance the product was from a different company. July 20, 2013 (late in the afternoon) – in an internet nutritional chat room it was being spread that NFI had a poisoning problem. July 20, 2013 (7pm) – NFI announced publicly through its retail network that it was pulling all batches of the unpasteurized product associated with all but one of the alleged poisoning. July 20, 2013 (late night) – July 21, 2013 (early morning) – 50 more calls reporting poisoning and five more reports from health professionals who stated they were treating possible poisonings. July 21, 2013 (9am) – 80% of the newspapers carry the poisonings in its frontpage. Calls alleging adverse reaction to many other products of NFI pour in. Two children who were part of the previous incident were reported to be in critical condition. Fred James convenes a meeting with the Crisis Action committee of NFI. III.

Assumptions Fred James as Chief Executive has the power to decide for NFI Reports linking poisoning to the product are not conclusive Move to pull out the products and any other attempts of damage control would devastate the company’s reputation and stock price. Showing concern to the affected consumers will show the public that they are admitting liability.

IV.

Moral Dilemma Perspective:

Fred James Chief Executive

NFI Timeframe:

During his meeting with the Crisis Action Committee

Moral Dilemma:

Whether present action is enough? - Recalling specific products in question - Publicly asking consumers to return all unused products to their local retailer - Asking retailers to stop selling and return all of the supply of the specific class of product reported to be the cause. Whether they should do more? - Should they recall all of their products? - Should they show concern to those reported? to have been made sick by their products? - What should they do those most affected?