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February 18, 2011 07:24 PM UTC

HB 11-1190 - "The Vitamin Cottage Poison Peanut Butter Bill" - UPDATED

  • 20 Comments
  • by: (((JADodd)))

( – promoted by Colorado Pols)

UPDATE #2:  The House Judiciary Committee voted 10-1 to indefinitely postpone consideration of HB 11-1190 last night (2/22/11).

UPDATE:  When I explained products liability law, I forgot to mention a particularly salient part of the law.  If you have ever gone to a used car dealership, you will immediately know what I am talking about – the disclaimer.  A seller can avoid any responsibility whatsoever for the goods – including food – he sells by conspicuously posting a disclaimer of the implied warrantly of merchantablity or the warranty of fitness for a particular purpose.  In the case of food retailers – like Vitamin Cottage – this would mean posting signs at the door, by the cash registers and at strategic places around the store where food is sold, something like this:

Sold as is . . . .

All the food and products sold in this store are sold as is with all faults.  We do not warrant that the food we sell you is fit for human consumption.  Specifically, we do not warrant that the food is safe to eat or that it will not make you sick or kill you.

If we told you that we have determined that the food we sell you is “safe” or of the “highest quality available,” you cannot rely on those representations if you get sick.  If we told you that you could trust the products that we sell in this store – don’t believe us because this was just marketing and “puffing.”  We didn’t mean it.  We were lying.

“Who would shop at such a store?” you ask.  No one.  That is why HB 11-1190 is not only a license to poison, it is a licence to lie.

In an earlier post, I brought to your attention that Rep. Jerry Sonnenberg (R-Sterling) and Sen. Cheri Jahn (D-Lakewood) are sponsoring HB 11-1190 – a bill that would limit – no, eliminate – retailer’s liability for selling the public tainted food.  In that post I reported that according to Sen. Jahn this was being promoted by Vitamin Cottage and I would explain why. It is a story of greed and willful ignorance. But, more than anything else it is about what corporations learn and take away from human tragedies that they cause. This story is important, not simply because it explains Vitamin Cottage’s motivations for pushing this bill, but because it discloses exactly what the authors want the bill to do.  There will be no unintended consequences if you understand this history.

General products liability law says that the seller of a product – like food – warrants that the product is “fit for the ordinary purposes for which such goods are used.” In the case of food that means that it won’t make you sick.  This is called the implied warranty of merchantablity which makes everyone in the chain of production and sale liable to a customer who is injured by product found to be unsafe. Where the seller or manufacturer go futher to market their product as “healthy, safe and of the highest quality,” the seller has made the consumer an express warranty of “fitness for a specific purpose.”  If, in the case of food, the product makes you sick or kills you, the seller is liable to you for your injuries and your medical expenses.  The customer does not have to prove intent or even negligence – only that it was the product – used as it was intended – that caused the injury.

In Colorado, our legislature – in its infinite wisdom – has carved out an exemption to this rule for Colorado retailers – not just food retailers – all retailers.  Colorado retailers are exempt from liability if the consumer can sue someone higher up the chain like the manufacturer.  However, if the consumer can’t get at the manufacturer because it is in China or filed bankruptcy, the law removes the exemption and makes the Colorado retailer liable for the consumer’s injuries.

HB 11-1190 would carve out an additonal exemption for “food retailers.”  Unless the retailer tainted the food itself, it would not be liable to a consumer to whom it sold tainted food except where the retailer “knew” that the food was tainted. It would protect retailers who bury their heads in the sand and practice willful ignorance.  Under this standard, a retailer – say Vitamin Cottage – could tell its customers that “We only sell products that we have determined are safe and are of the highest quality available. You can completely trust the products that you buy from Natural Grocers by Vitamin Cottage.” *  But, after you to trust them and the food you buy from Vitamin Cottage makes you sick or kills you, they can say, “Oops, didn’t know. I don’t read newspapers – wouldn’t believe them if I did. You really believed us? Go away. Don’t bother me with your silly lawsuits and your medical bills. Not our problem.”  Because the retailer bought the food from China or a company that went bankrupt, you’re screwed.

Perhaps the best nickname for this bill should be the “Vitamin Cottage Poison Peanut Butter Bill.” You see, that’s where it comes from. Apparently, Vitamin Cottage got sued because it’s “organic” peanut supplier was Peanut Corporation of America.  Vitamin Cottage used salmonella tainted peanuts from PCA to make their in-store ground peanut butter.  Despite the fact that the contaminated peanut story was initially reported by the MSM in November of 2008 and PCA was identified as as the source of the contamination in late December of 2008, Vitamin Cottage did not recall the peanuts and peanut butter or inform its customers that it used PCA peanuts in its products until January 30, 2009. (Hey, Kroger pulled all of its PCA related products in early January and told its customers not to eat them.)  Even then, Vitamin Cottage professed that it’s peanut butter was safe.  Not until mid-February of 2009 did Vitamin Cottage finally acknowledge that it had used tainted peanuts to make and sell its peanut butter.  On February 13, 2009, the PCA filed bankruptcy so they couldn’t be sued by all of the people they had killed.  Vitamin Cottage got sued – in part, because they said that “they had determined” that their peanut butter was “safe” and “of the highest quality.” We could trust the products that we buy from them.

What was Vitamin Cottage’s response – “We didn’t know.”  More specifically, here is what Heather Isley, Executive Vice-President, told Congress on March 19, 2009.  Basically, she relied upon what PCA told her in the months between November 2008 and February 2009.  And what did that corporate miscreant PCA tell her?  “No problem.”  This is the same PCA which public records show had had problems with contamination of it products before in 2001 and 2007.  In fact, goverment inspectors had found that PCA had on these prior occasions intentionally shipped salmonella contaminated peanuts and peanut products.*  Had the executives at Vitamin Cottage exercised even a modicum of reasonable care or due diligence, they would have known they could not trust a thing that PCA said.   Keep in mind, Vitamin Cottage promises its customers that it has “determined” that its products are “safe and of the highest quality available.” If the Vitamin Cottage had lived up to their pledge, I hope that they would never have used PCA as a supplier in the first place.

If HB 11-1190 had been the law in 2009, the people who “trusted” Vitamin Cottage and got sick because of eating its peanut butter would have been SOL. The people in whom we entrust our fagile food suppy must understand that they will be held to a higher standard of care that those who merely sell us cars or shoes or computers. Yet, Vitamin Cottage is asking our legislators to lower the standard.  

In closing, I want to say that I don’t profess to be “fair & balanced” – at least not in the same way that the MSM acts.  Both, sides don’t have an equally valid positions – that is false equivalency.  However, that doesn’t mean that I haven’t carefully reviewed Vitamin Cottage’s position – I have. I just don’t buy it. So don’t expect me to spend a lot of time and space giving Vitamin Cottage’s position.  However, I will give you a link where you can read what they have to say for yourselves.  Testimony of Heather C. Isely, Executive Vice President, Vitamin Cottage Natural Food Markets, Inc. (“Natural Grocers”), Lakewood, Colorado before the Subcommittee on Oversight and Investigations U.S. House Committee on Energy and Commerce.  

I admit that I was hard on Vitamin Cottage – some of you may think unfairly so. I began my research with a relatively high opinion of Vitamin Cottage.  However, while researching this issue, I came across the Vitamin Cottage corporate manifesto: “What We Won’t Sell and Why.”  Here is what Vitamin Cottage wants its customers to believe this manifesto means:

What Natural Grocers by Vitamin Cottage Does Sell: We only sell products that we have determined are safe and are of the highest quality available. You can completely trust the products that you buy from Natural Grocers by Vitamin Cottage.

Yet, their behavior during the contaminated peanut crisis, their response to their customers’ law suits, and their support of HB 11-1190 belies a much different message. Buyer Beware! We can sell you poisoned food and it’s just your problem.

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20 thoughts on “HB 11-1190 – “The Vitamin Cottage Poison Peanut Butter Bill” – UPDATED”

  3. I personally love Vitamin Cottage Natural Grocers these creeps and shop there regularly — but I’ll find whatever alternative(s) I have to if this bill passes.

    Copies of your diary are now set for display at several local VCs NGs WTFs later today.

  4. because as you point out, there are really two warranties at play in their case.  The first is the implied warranty of merchanability that every retailer in the business of selling things makes, and the second is an express warranty that you highlight.  It is one thing to tinker with a warranty that arises by operation of law only.  It is quite another to tinker with a warranty that is expressly made by a retailer to a consumer.

    Another usual fact in the Vitamin Cottage case is that it is more than a retailer here.  It is engaged in the small scale “cottage industry” of manufacturing peanut butter at its particular stores.  Exempting a retailer or wholesaler from liability for selling Skippy peanut butter that arrives at and leaves their business in a hermetically sealed container is quite a bit different from exempting someone who actually makes the peanut butter from liability.

    As your example indicates, actual knowledge is also frequently problematic.  It requires proof perhaps from documents only privy to company officials regarding what someone actually knew — this can make it hard to bring a meritorious suit with a factual basis without a leak from the seller, discourages good record keeping, and encourages willful ignorance.  At the very least, one would want liability where someone “knew or should have known in the exercise of reasonable care.”  Strict liability, in contrast, greatly reduces the litigation costs involved and focuses on results, rather the processes, which is generally what we like to see in good forms of government regulation.  Strict liability allows retailers to take whatever steps really work to reduce risk without micromanagement, rather than focusing on hindsight from a jury on whether the steps taken which we know produced a bad result were reasonable — that liability regime can encourage “security theater” in which taking precautions that will look good to a jury matters more than taking precautions that will actually work.

    There is some merit in Colorado’s exemption of supply chain participants from liability when a defendant is further up the chain of liability.  Usually, just one company is at fault, the intermediate people in the supply chain have the ability to pass on the strict liability imposed upon them to the next person up the chain.  Given the indirect way that goods are distributed, this turns a simple lawsuit against one blameworthy party into a daisy chain of half a dozen lawsuits until the party at fault is reached, presumably leading to more litigation costs and lots of not particularly blameworthy defendants.  But, in a direct from manufacturer purchase from a retailer who makes express warranties beyond those it was required by law to make, it is hard to see why Colorado should change its laws.

    1. Thank you for your kind and thoughtful comments.

      However, I do not agree that the Colorado scheme has a whole lot of merit.  The complexity of our food supply chain and the fact that consumers do not know and cannot generally find out where their food comes from or how safely it is produced places a duty, I think, upon the retailer – who could get this information – to undertake steps to make sure that the food it sells is safe.

      A comparative responsibility – fashioned after the comparitive negilgence scheme used in tort law would seem to be better public policy to ensure food safety.  Everyone in the food chain shares responsibility for the damages and injuries caused by tainted food.  The only question is how much responsibility does each member of the chain bear.  In the absence of the bankruptcy, PCA would have borne the lion’s share.  Nevertheless, Vitamin Cottage would bear some significant reaponsibility for, apparently, failing to investigate PCA both when it originally contracted with them and once the crisis began.

      1. Frequently, the way you defend a personal injury suit is to say that someone else’s carelessness (perhaps the victim, perhaps some third party) was at fault rather than you.

        But, another defense is to say that despite the fact that everyone was careful, that sometimes shit happens and people get hurt anyway, so in the absence of any particularly blameworthy parties, the person who was hurt should just have to suck it up.

        Public choice theory suggests that permitting a “shit happens” defense only makes sense when it leaves the economic burden of the harm when on one’s fault can be proven, on the person in the best position to prevent the harm.  Thus, the question when looking at HB 11-1190 is whether the customer or Vitamin Cottage was in a better position to prevent the harm.

        I agree with you that HB 11-1190 is a bad idea, because usually the retailer is going to be in a better position to prevent the harm than customers.  They are in a better position to monitor their vendors and to have some sense of how likely it is that their vendors will be financially responsible if the vendors that they buy from provide bad product.  They are in a better position to mitigate harm based on isolated customer experiences that other customers might not be aware of.  They are in a better position to buy insurance against the risk that food will be tainted (which should be cheaper in Colorado than elsewhere since liability arises only when the manufacturer is involvent) than the consumer.

        On the other hand, in the cases of inherently dangerous activites, like horse riding and skiing, Colorado’s tort laws that strength a “shit happens” defens may be appropriate because in this situations the person harmed may very well be the one in the best position to prevent the harm.

        1. A retailer can get a warranty from the vendor or an indemnity clause.  After all, there are more products clamoring to get sold than there is shelf space in even the largest of the super stores.

        2. In a sense HB 11-1190 represents the food retailers telling the public:  “We know the products we are selling you are not safe for you to eat. See, we’re not willing to stake our financial well being on it. But, we fully expect you to stake you personal well being and lives on it.”

  5. and I know there are ways to research it, but my experience there is limited. (I saw Safeway was “monitoring” it, but no mention of Vitamin Cottage at the Sec’y of State’s website.) So… do we know for sure that Vitamin Cottage is lobbying for this bill? It’s clear that they’ll benefit, but the headline implies they are actively seeking its passage. Is that the case?

    1. Yes, and Sen. Cheri Jahn, one of the sponsors of the bill, personally confirmed this, as well as three sources up at the capital who wish to remain confidential.

      As I point out in the beginning of my post, this is a followup to an earlier post.  I address this matter at length in the updates at the end of the post and in a Comment titled “I’m not saying . . .” where I address why Kirsten Thomson and Vitamin Cottage are not listed a lobbyists on the bill.  The Secretary of States list is only as good as the good faith and honesty of the lobbyists.  This is particularly true since the election.

    1. Turns out Rep. Sonnenberg is even less concerned with the health of consumers than he is with the privacy of medical marijuana patients. At least he pretended that he wanted to help medical marijuana patients, before he got his nose out of joint.

  8. to provide exactly what they advertise. Yeah, I know the Supremes have said that lying is okay. But it’s still wrong.

    And the same businesses bristle at any hint of “government regulation”. What horseshit. What is this bill, but a regulation? On us, on consumers, on citizen persons (as opposed to so-called citizen corporations)–what we persons can or cannot do.

    Very good diary and excellent reportage.

  10. I heard from the grapevine that when Cheri heard about the problems with the bill she got the trial lawyers and the proponents to sit down and talk about it when the committee was hearing other bills. They couldn’t come up with an immediate solution, despite her best efforts to broker a deal, so they decided to find another way to deal with it.  That’s when Sonnenberg and Jahn decided to drop the bill.  She deserves a lot of credit for being willing to walk away from it.

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