Are You Ready To Address Whistleblower Complaints? Preparation Is Key
By John T. Shapiro
Since the enactment of the Food Safety Modernization Act (FSMA) in 2011, industry personnel, consumers and commentators alike have questioned whether the government would allocate sufficient resources to fully implement the food safety preventative measures that FSMA embodies. FSMA is complex. It comprises approximately 50 new regulations, guidance documents and reports to Congress. FSMA is expensive. The cost to implement FSMA is estimated at more than $1.4 billion. FSMA presents a fundamental shift in the manner in which the U.S. Food and Drug Administration (FDA) polices food safety, focusing on prevention of, rather than reaction to, food borne illnesses. And, FSMA shifts to food companies the responsibility for utilizing science-based processes that ensure the food products they manufacture, transport, handle and sell are safe for consumption. Given those dynamics, including limited government resources, some have questioned whether food companies will be able to operate under the radar of FSMA and FDA.
Congress, however, built into FSMA a powerful deterrent for any food company that might consider skirting the preventive processes for which FSMA calls or otherwise placing unsafe food into the supply chain. That is, FSMA encourages employees to blow the whistle on their employers’ unsafe food practices. FSMA Section 402 prohibits a company from discharging or otherwise discriminating or retaliating against an employee who refuses to participate in activity that the employee reasonably believes violates FSMA or who reports to his employer or to the government a violation of, or any act or omission that the employee reasonably believes to be a violation of, FSMA.
The full deterrent effect of Section 402 remains to be seen. According to the U.S. Department of Labor (DOL), which is charged with investigating FSMA-related whistleblower complaints, employees only filed 40 complaints during 2011 and 2012, and the DOL completed 22 of those cases. Surely, the whistleblower provision has yet to have the regulatory impact Congress intended. But, as the food industry progresses under FSMA, and employees become increasingly aware of their rights under the whistleblower provision, it is likely that the number of whistleblower complaints to the DOL will increase.
Moreover, whistleblower complaints do not necessarily end with DOL action. In some circumstances, employees may pursue their grievances in court. The first such litigation commenced this past June 2013. Entitled Chase v. Brothers International Food Corporation, and pending in the U.S. District Court for the Western District of New York, a former Brothers International Food Corporation employee claims that Brothers International terminated him in retaliation for raising with Brothers International food safety concerns regarding the company’s re-dating and sale of expired food and the potential for bacterial contamination in the company’s rehydrated apple crisps. Further, Chase claims that following his complaints to Brothers International the company required him and others to sign a nondisclosure agreement, that the company treated him less favorably in conjunction with that agreement and that he was terminated when he refused to execute the agreement without first having the ability to consult his attorney.
Brothers International denies Chase’s claims and has filed a motion to dismiss Chase’s complaint at the pleadings stage, without further investigation into Chase’s allegations. Therein, Brothers International contends that Chase’s complaint is fatally defective because he pleads no fact allegation that he engaged in protected activity within the ambit of FSMA. Further, Brother International argues that Chase did not alleged facts demonstrating that he possessed a reasonable, objective basis to believe that Brothers had violated FSMA. To that end, Brothers International includes in its motion publicly available information that Brothers International contends exonerates it from any contention that it violated applicable standards and of which Chase should have been aware prior to making his allegations and filing suit. It is not surprising that in his opposition to the motion, Chase disagrees with Brothers International’s take on the applicable standards, asserts that his claim is viable, and asks the court to allow the parties to proceed with the litigation.
On September 18, 2013, the court took Brother International’s fully-briefed motion to dismiss under advisement. (As of the date on which the author submitted this article for publication, the Court had yet to rule on Brother International’s motion.) As an initial matter, the Court will need to decide whether Chase has met federal pleading standards for asserting a claim. In addition, the Court will have to decide what legal standard applies to a claim for violation of FSMA’s whistleblower protection provision. Congress included no such standard in the provision itself.
Regardless of its outcome, the Chase v. Brothers International litigation underscores the need for companies governed by FSMA to properly prepare for the possibility of employees blowing the whistle, whether an employee is well intentioned or not. Even if a company has done nothing wrong, a whistleblower complaint may take on a life of its own and tarnish a company’s brand and reputation. In a similar context, industry members need only look to the cautionary lessons the recent controversy over “pink slime” provides for food companies that operate in the information age. Facts regarding the safe nature of manufacturing and handling processes and the safe nature of a food product may not resonate with individual consumers and consumer advocates. In short, the viral uproar regarding “pink slime” and the resulting damage to the manufacturer of the lean finely textured ground beef demonstrates the need for food companies to be proactive in establishing policies that promptly address the concerns of whistleblowers.
How may a food company prepare for whistleblower claims? For starters, food companies should educate their employees on FSMA, and the programs and processes by which the company intends to comply with FSMA and its implementing regulations. Simply stated, FSMA compliance in the first place is the best way to ward off employee complaints. Even so, whistleblower claims may be inevitable. Companies thus should craft and employ a whistleblower policy that provides a clear procedure by which employees may report known and suspected violations without fear of discrimination or retaliation. Education is essential to the success of any such policy. That is, employees, supervisory personnel, human resource administrators and leadership all should be informed of the policy, and management should receive training on how to implement and audit the efficacy of the policy. Through proper and prompt consideration of whistleblower complaints, companies may be able to reduce the likelihood that a whistleblower complaint will be filed with the DOL or pursued in court, let alone limit the harm to brand and reputation that often accompanies government investigation and litigation.
John T. Shapiro is partner and member of the Food Industry Team at Freeborn & Peters LLP (Chicago).