China Law Blog

Good post. When I was in Beijing a few months ago I had the opportunity to give two lectures to law students on how our civil justice system works in the US in food poisoning cases. I have been also heartened to see a few of the melamine infant formula cases more a bit forward in the courts. I am proud of those lawyers - many of whom I met in 2008.

very helpful...

Dan: Food safety cannot be enforced through government supervision and administrative sanction.

Government supervision and administrative sanction is part of the mix. The *main* deterrent function in most countries consists of governmental and administrative agencies, and of the major industrialized powers, only the US has a system of large tort awards for this sort of thing.

Even in cases where the courts are used, it's often an administrative agency that sets up the lawsuit.

The problem with using civil sanctions only is that

a) someone has to get sick or die before anything happens, and

b) if you have a near bankrupt company with low capital, they aren't going to be deterred by civil lawsuits or large punitive damage awards. Large corporations *are* deterred by these sorts of things, but if you have a large corporation, then you can use secondary regulation.

c) I should point out that even in the absence of massive tort lawsuits, you had mass bankruptcies in dairy farms. I think they are deterred.

d) You don't have to monitor a billion farmers. Food safety is a consequence of industrial processes, and you can do the monitoring at the choke points.

I'm also very skeptical of "single solution" claims that X won't work, and you must do Y. There are usually a dozen solutions to a problem, and things are rarely either/or (i.e. why can't we have *both* government regulation and an effective tort system.) Also things usually work best when you try everything that you can think of and see what works and what doesn't instead of guessing ahead of time.

I agree that civil litigation is one branch of an effective food safety regime, and consumer pressure is another. However, consolidation of the food industry is also important. If you have hundreds of thousands of small scale enterprises, legal measures are less effective as few people can pay damages, and thus there is little incentive to bring cases to court. They also don't have the money to invest to raise standards, as this would price them out of the market.

I'm sure there are other factors too.

One should point out that I don't know of any country in which tort law is used as the primary mechanism for enforcing food safety, and in most countries, the courts are explicitly forbidden from using private tort law and damages to enforce public policy. Most civil law nations explicitly reject the idea of punitive damages, and the United States is the only common law country that routinely uses private civil law punitive damages in a way that the article describes. Even in the US, food safety is primarily the responsibility of administrative agencies.

Let me provide an example that graphically illustrates *why* tort law is unlikely to be the main mechanism to enforce food safety. Suppose I see someone putting cyanide in the rice. I cannot use private tort law to prevent this or to punish the wrongdoer. I have not been damaged by this, so I have absolutely no grounds for a lawsuit. I can't even get an injunction because I have standing to sue for one. Since I am not planning on eating rice I know has cyanide in it, there's no grounds for me to get an injunction.

Now I can call the police and alert the news media. But neither of these involve private tort law. Also in both situations there is a conflict between private tort law and either criminal law or reputational sanctions. In any private tort law case, the strategy is to keep the case quiet and get a settlement, which is precisely not what you want to happen.

Even where there are damages, in a private tort law case there is a fundamental conflict between the interests of the damaged party and the general public. Suppose I eat the poison rice and get sick. I sue the rice maker. The rice maker offers me a huge amount of money, but I have to sign a piece of paper saying that I don't hold the rice maker at fault and I agree to tell no one that they are still putting cyanide in the rice.

As a damaged party, this settlement is very clearly in my interest, since I'm never going to eat that rice anyway again. But it's very clearly not in the public interest. This sort of settlement in which everyone agrees to keep quiet about what happened is not in the interest of the person that will be the next person to get poisoned by the rice, but this is not surprising since they are not represented at all in the lawsuit, which is precisely the problem with using private tort law as the main mechanism to deal with these sorts of things. There are interested parties that are not in court.

In large mass tort situations, things get even more complicated, because you have even more interested parties that aren't part of the lawsuit. Employees of the affected companies that can lose their jobs. People that have been damaged but don't know it. Also, if the lawsuit is large enough, you have conflicts between people with damages. If you havea a finite pool of money, then more money for plantiff A means less money for plantiff B. Mass tort situations are a total nightmare, which is why it's important to put the emphasis on preventation rather than on compensating for damages.

Now you can create mechanisms by which people who have not yet been damaged have there interests represented. But at that point things really start looking like an administrative solution rather than a private tort solution.

Interesting article, do you know where I can find the list of approved additives?

"Chinese farmers and herders are poor and uneducated. Most operate at a loss and only survive by supplementing their income through nonagricultural activities. The same is true of most food processors, who sell into a partially price controlled market and who are frequently on the verge of bankruptcy."

From a business standpoint, why do food processors continue to operate if there is little hope to turn a profit? Are these state owned and thus kept open at the behest of the state? This just doesn't make sense. I understand that government price controls can depress the market to some extent, but how could food products, with such an incredibly high demand, be such an economic loser?

I think it's more likely that the farmers are indeed poor, but the processors are wealthy and just like any other company in a sector with lax regulation, they skirt the rules to make more money. Probably akin to Chinese coal mines being very profitable but the miners themselves are dirt poor.

What I see as a problem with Glen's analogy of coal miners and poor farmers is that while the poverty of miners has little implication for the quality of the product, the extreme poverty of farmers and herders do. When subsistence is a pressing issue, it outweighs conscientious concerns and lead to all kinds of "creative" ways of saving on costs.

The vast number of extremely poor people being part of the big food production chain in China means that things could go wrong at so many points that to have management, corporate or government, cover all bases is simply unthinkable, even if there're strong incentive and skills on the part of corporate managers and government.