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Food and Beverage Companies Beware: New Risks Associated with Whistleblower Protections Under the Food Safety Modernization Act

Posted in Labor Law

The FSMA is the most extensive change to the U.S. food safety system in more than 70 years. Signed into law in 2011, the FSMA directs the U.S. Food and Drug Administration (FDA) to issue numerous regulations directed toward enhancing food safety and minimize the risk of foodborne illnesses. As with almost every law nowadays, the FSMA contains a whistleblower provision to ostensibly “advance the broad goals” of the new law.

Section 402 of the FSMA includes “employee protection” whistleblower provisions. Section 402 prohibits an employer from discharging or otherwise discriminating against an employee for engaging in certain protected activity, including reporting concerns to his or her employer, the federal government, or a state attorney general. To be protected under the new provision, an employee must only have had an objectively reasonable belief that the employer’s practices were violating a provision of the Federal Food, Drug, and Cosmetic Act or any order, rule, regulation, standard, or ban issued by FDA. In other words, the employee must not necessarily be correct in their assertions of a violation.

Now comes the first round of lawsuits under Section 402 of the FSMA. On June 6, 2013, one of the first whistleblower complaints was filed in the U.S. District Court by a former employee of Brothers International Food Corporation. Colin Chase, the former Brothers Director of eCommerce, alleges that the food and beverage company violated the FSMA when it terminated his employment following his complaints about food safety practices.

Chase claims that he was terminated in July 2012 in retaliation for raising a variety of concerns about the re-dating and sale of expired food products. Chase also alleges that, after raising these concerns with company management, he was directed to lie to customers about the reasons for the re-dating of packages. The company is also alleged to have asked him to “prove his loyalty” by signing a nondisclosure/noncompetition agreement. When Chase refused to sign the agreement without first reviewing it with his attorney, Chase alleges that he was immediately terminated. As specifically permitted under Section 402 of the FSMA, Chase is seeking compensatory and “special damages,” back pay and front pay, and attorney fees.

Brothers asserts its defense under the retaliation statute and claims that Chase was terminated for lawful, legitimate reasons that are unrelated to his complaints. Brothers further states that “[a]ny insinuation by Chase that Brothers’ products were defective is patently false. There has never been any finding of any kind of defective products.”

The addition of the FSMA and its corresponding retaliation provision have a broad impact on California’s Food and Beverage Industry. Whistleblower actions in court tend to be very public. The dissemination of private confidential and proprietary information has an increased likelihood of being disclosed during these court actions. In addition, an increase in whistleblower actions has additional regulatory and enforcement implications. The whistleblower information will likely be shared with FDA, potentially resulting in additional inspections and enforcement actions by the FDA.

Companies must keep in mind the new business risk posed by the FSMA. Solid policies and procedures to handle internal complaints regarding food safety, the investigation process, and that prohibit retaliation following a complaint should be a starting point for any Company in the Food & Beverage Industry. For more information on strategies to address this new threat, contact any employment attorney at Weintraub Tobin.