Category Archives: Product Liability

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Tyson Foods Cited for Violations after Employee Finger Amputation

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Cited for multiple violations, Tyson Foods was fined $263,498 by the U.S. Department of Labor Occupational Safety and Health Administration after an employee’s finger was amputated in an unguarded conveyor belt, the DOL reported yesterday.

Inspectors found recessed drains and fire hazards resulting from improperly stored compressed gas cylinders, which exposed employees to slip-and-fall hazards due to a lack of proper drainage.

Established in 1935 and headquartered in Springdale, Arkansas, Tyson is the world’s Tysonlargest meat and poultry processing company, with more than $40 billion in annual sales. The company produces more than 68 million pounds of meat per week. OSHA gave Tyson 15 business days from receipt of its citations to comply, request an informal conference with OSHA’s area director, or contest the citations and penalties before the independent Occupational Safety and Health Review Commission.

“Tyson Foods must do much more to prevent disfiguring injuries like this one from happening,” Dr. David Michaels, assistant secretary of labor for Occupational Safety and Health, said in a statement. “As one of the nation’s largest food suppliers, it should set an example for workplace safety rather than drawing multiple citations from OSHA for ongoing safety failures.”

OSHA inspectors found more than a dozen serious violations, including:

  • Failing to ensure proper safety guards on moving machine parts
  • Allowing carbon dioxide levels above the permissible exposure limit
  • Failing to provide personal protective equipment
  • Exposing employees to an airborne concentration of carbon dioxide
  • Not training employees on hazards associated with peracetic acid and other chemicals.

OSHA also cited the company for repeated violations for not making sure employees used appropriate eye or face protection when exposed to eye or face hazards. The agency cited Tyson for a similar violation in a 2012 investigation at its Carthage facility. The company also failed to separate compressed gas cylinders of oxygen and acetylene while in storage – a violation for which OSHA cited the company in 2013 at its facility in Albertville, Alabama.

According to OSHA, the inspection falls under its Regional Emphasis Program for Poultry Processing Facilities.

The Dos, Don’ts and Maybes of Social Media

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Social mediaIt takes one second to send a Tweet or Instagram post onto the internet for all to see. But for companies active on social media, the legal ramifications of those 140 characters or that one photo can last a whole lot longer.

At a recent seminar in New York, lawyers and communications professionals representing some of the world’s most famous brands learned a lot about the dos and don’ts of social media for companies, specifically companies interested in pushing boundaries but avoiding lawsuits. Perhaps more importantly, they learned a lot about the maybe dos and maybe don’ts through several real-world examples.

“When you get it wrong, it comes with a lot of implications,” said Maggie O’Neill, managing director and partner at strategic communications firm Peppercomm, which recently co-hosted the event with Davis & Gilbert LLP.

Sue Me, Maybe?

O’Neill and her counterpart, Davis & Gilbert marketing and promotions partner Allison Fitzpatrick, brought up one of the more famous “maybe don’ts” in recent memory: Peyton Manning’s proclamation after Super Bowl 50 that his first order of business was to “drink a lot of Budweiser,” setting off a social media firestorm.

“This had the potential to really blow up into something legal,” O’Neill said. After all, Manning isn’t a spokesman for Budweiser, but he does own several Budweiser distributors. The appearance of “free” advertising if, say, an implicit agreement between the two parties was in place, would have been a no-no, and the fact that it’s not common knowledge that Manning owns those distributors makes it a “maybe no-no.” Adeptly, a Budweiser communications pro tweeted that, while the brewer was “surprised and delighted” at Manning’s off-the-cuff endorsement, “Budweiser did not pay Peyton Manning” for it. While that tweet doesn’t guarantee Budweiser’s immunity from a government lawsuit, it certainly represents a skillful handling of the situation.

Know Your Subject

Not all companies have been as adept, O’Neill and Fitzpatrick pointed out. The Duane Reade chain famously got sued by Katherine Heigl after tweeting an unflattering photo of the actress coming out of one of its pharmacies carrying bags. Heigl sued for $6 million, claiming the company violated New York State and federal laws that protect the use of a person’s likeness for trade purposes. She eventually dropped the suit, but it made the kind of headlines Duane Reade – and most companies – never want.

Fast-food chain Arby’s, on the other hand, got universal kudos for its tweet about the hat worn by rapper Pharrell Williams at the 2014 Grammy’s, which looked similar to the one on the Arby’s logo. “Hey @Pharrell, can we have our hat back,” Arby’s tweeted, with the hashtag #GRAMMYs. Pharrell was a good sport about it, and when he eventually put the hat up for charity auction on eBay, Arby’s announced via Twitter that it was the party responsible for the $44,100 winning bid.

“The best part is, Pharrell did not sue,” Fitzpatrick said at the panel. But, she added, “it doesn’t mean there’s no risk.” One quick and easy first step, according to Fitzpatrick, is to do a quick Google search to “see if they’re litigious or not.”

Copyright Law in the 21st Century

For brands active on social media, copyright law is another consideration. Being mindful of trademarks like “Super Bowl” and “NCAA” while tweeting about events can save companies a lot of money from potential legal woes.

For instance, when TGI Friday’s pushed boundaries by petitioning the International Olympic Committee to make bartending an official sport, lawyers were kept in the loop to make sure the campaign garnered media and public interest on traditional and social media but didn’t cross any copyright law lines.

What’s next?

With technology constantly changing and regulators scrambling to adapt to those changes, Fitzpatrick said the next frontier could be regulatory action against celebrity spokespeople. It’s generally known around the world that Nike endorses Tiger Woods, but what if a celebrity whose endorsement deal is lesser-known doesn’t disclose the relationship in a tweet? This could be the next major question the Federal Trade Commission starts asking.

Key Guidelines

Fitzpatrick offered a few general guidelines that companies can follow.

  • When using hashtags, be careful not to suggest an endorsement or association between your brand and the event, unless there actually is one.
  • The more the merrier. See if other brands are tweeting about the event. If they are, chances are your legal risks are lower.
  • There are a lot of work-related reasons to follow, a brand, on social media, so most experts think a simple follow is probably okay. A “like” or a “share” could be a little dicier.
  • When in doubt, research, confirm, and speak to legal.

U.S. Sues VW

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VW logo

The U.S. Justice Department on Monday sued Volkswagen in federal court in Michigan for illegally installing faulty emission control devices in about 600,000 vehicles. The lawsuit, filed on behalf of the U.S. Environmental Protection Agency (EPA), accuses VW of four counts of violating the U.S. Clean Air Act, including tampering with the emissions control system and failing to report violations.

According to a Reuters review of the U.S. complaint, VW could face fines of up to $37,500 per vehicle for each of two violations of the law, up to $3,750 per “defeat device,” and another $37,500 for each day of violation.

Risk Management magazine reported in December 2015 that the affected EA 189 diesel engines were installed in more than 11 million Volkswagen and Audi vehicles manufactured between 2009 and 2014. The company announced on Oct. 22 that it was also looking into whether the software might be in earlier versions of its latest EA 288 diesel engine, potentially adding millions more to the total.

Regulators across the globe, including in India, South Korea and Germany, are conducting their own investigations, as are attorneys general in all 50 U.S. states. The Justice Department has been seen as the only agency that might hold executives personally accountable, according to The New York Times.

The government is seeking a number of penalties against the company, including fines and further actions to mitigate the emission of harmful pollutants. A federal court will determine what actions the company must take to reduce emissions and a dollar figure for the penalty.

VW (VOWG_p.DE) shares fell as much as 6% to a six-week low on Jan. 5, the biggest drop yet on Germany’s blue-chip DAX index, Reuters said.

Balancing Risk and Compassion: Life Sciences Companies Face New Risks from Expanded Access

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Pharmaceutical companies operate with a singular objective: bring drugs to market. This is how they profit, how they ensure that their products help the most people, and how they maintain the resources to continue innovating.

The lifecycle of drug development can be complex and onerous, despite improvements to the regulatory approval process over the past several years. Now, a trend sweeping the industry is forcing many pharmaceutical companies to decide under which circumstances they’re willing to divert resources from their mission of helping the masses.

Expanded Access, or “Compassionate Use,” refers to the use of an experimental drug not yet approved by the FDA to treat a critically ill patient outside of a clinical trial. The FDA received more than 1,800 requests for access to experimental drugs last year and, over the last five years, it has approved 99% of these requests.

But ultimately, once requests are approved by the FDA, it’s up to manufacturers to provide the drug to these patients, many of whom are children, and many of whom have just months left to live.

Companies are then faced with a choice: to provide an unapproved drug to individual patients, which can delay the process of making the drug widely available, or to deny the request and risk backlash from the public, who see only a dying patient and the pharmaceutical company that could save them. In several cases, the latter has fueled social media campaigns demonizing companies for withholding potentially life-saving medicines.

How a company handles expanded access requests can affect its reputation and financial stability. Pharmaceutical executives often operate under a microscope, where patient outcomes are the key to keeping investors on board. As expanded access patients often do not qualify for clinical trials, they may be higher-risk candidates, so reporting their results to the FDA could potentially prolong approvals and market availability. On the other hand, a company that denies an expanded access request can face significant reputational damage and even legal action if investors believe that management decisions hindered the company’s progress.

Small and mid-size life science firms in particular may fear that they don’t have the resources to navigate expanded access cases. But requests for experimental drugs are on the rise: the FDA saw a 92% year-over-year increase in requests in 2014. Companies need to prepare their approach and policies before they find themselves in the throes of a difficult decision with pressures mounting from both sides. Here are four ways they can set themselves up to make informed decisions about balancing risk with compassion:

Monitor the Regulatory Environment

Over the last year, the FDA has been working to simplify the process for physicians requesting access to experimental drugs on behalf of patients. In February 2015, the agency streamlined the application form, which now requires physicians to submit just eight types of information, as compared with 26 types in the previous form.

The FDA has also been working with life sciences companies to find alternative solutions to expanded access when needed, such as designing expedited open-label trials for these patients.

Additionally, as of August 2015, 24 states have introduced right-to-try bills, which allow physicians to request experimental drugs without going through the FDA’s application process.

With both federal and state governing bodies paving the way for easier access to experimental drugs, the decision to provide these drugs falls squarely on the shoulders of corporate leadership at pharmaceutical companies. These firms also ought to keep in mind the need to prioritize building and maintaining relationships with the FDA, which can be key in developing a creative solution.

Update Your Crisis Management Plan

Crisis management plans are sometimes written in broad strokes. In preparing for expanded access cases, risk managers need to bring together leadership from various departments—senior management, investor relations, finance, human resources, etc.—to weigh in on the specific risks associated with experimental drugs. Many firms will seek outside counsel to guide the process.

At a basic level, a crisis plan should map out vulnerabilities across all risk areas. For example, companies need to consider the process for securing their facilities, fielding press inquiries, addressing social media backlash, managing investor concerns and navigating potential lawsuits.

Most importantly, companies need to develop the principles that will guide decisions in crisis situations. Rather than scrambling for direction in the heat of public scrutiny, companies should establish a clearly-stated policy and set of guidelines for participation in expanded access programs. This will serve as the foundation of a response if an issue arises. Management must then be prepared to defend that position to all stakeholders, including employees, investors, patients, physicians and potentially press.

Evaluate and Re-evaluate Your Insurance Policies

Organizations need to consider which financial risks they can transfer to their insurance policies. Not everything will be insurable, but a strong policy can provide protection if an expanded access case threatens a company’s financial stability.

This starts with a comprehensive review of a company’s insurance portfolio with the issue of expanded access in mind. Oftentimes, risk managers revisit their policy language through the lens of a specific issue and realize that their expectations for coverage don’t accommodate current events. This can be the case with expanded access.

When reviewing their policies, companies need to understand the intent of the language relevant to expanded access and work with their broker to make sure the coverages are as granular as possible.

Lead the Way

This year, Johnson & Johnson created a Compassionate-Use Advisory Committee composed of doctors, bioethicists and consumer advocates to evaluate expanded access requests and make recommendations to the company’s clinicians. While many have hailed this as a creative solution for maintaining ethical standards, smaller companies with fewer resources cannot as easily take such an approach. These firms have an opportunity to set the standard for managing expanded access cases by developing thoughtful policies, collaborating with regulators and academics and, of course, addressing risks to business from the onset.