See related story: Who takes the loss on romaine that got tossed? It’s complicated
Canada’s Fruit and Vegetable Dispute Resolution Corp. has received numerous calls from companies importing U.S. romaine regarding who’s responsible for losses in the E. coli outbreak in both countries.
U.S. and Canadian federal health agencies asked consumers, retailers and shippers to discard romaine on Nov. 20, a directive that remained until Nov. 26, when romaine from all areas except six counties in California was deemed safe. The Food and Drug Administration has since scaled that back to three California coastal counties.
In Canada, as in the U.S., companies in the supply chain, from distribution centers, truckers, processors and retailers, were left with questions regarding who was responsible for the loss of massive amounts of romaine lettuce.
At the DRC, questions continue to come in regarding the issue, according to a notice from DRC President and CEO Fred Webber to members. The Public Health Agency of Canada on Dec. 24 reported the outbreak there was over. The FDA has not reported the outbreak over; investigations into the source continue in both countries.
According to the Dec. 28 DRC notice, because the losses were beyond the control of companies in the supply chain, financial risk issues remain.
“While there will undoubtedly be cases where the sales will be linked to the source of infection and claims will be proven, however, the vast majority of cases will be decided based on who owned the product when it became unmerchantable,” according to the notice. “Most produce sales are made FOB shipping point, meaning title and risk pass to the buyer at shipping point.
“In general, and simply stated, in an FOB sale the shipper owns the loss before it gets on the truck, and the buyer owns the loss after the truck is loaded.”
The notice is the second from the DRC to industry members on this E. coli outbreak and the losses in the wake of the government’s decision to purge romaine products from the market.
“It is understandable that companies do not want to accept a loss they did not cause,” according to the DRC notice. “But in a case like this where neither party in the transaction is at fault, the decision must be made based on long-standing principles like the warranty of merchantability, Acts of God, or force majeure.”