Mitigating Risk After the Egg Recall: Steps Companies in the Distribution Chain Should Consider

The national media has been abuzz the last week with news of a very large recall involving over 500 million eggs shipped from two Iowa producers.

This recall has received attention from the highest levels of the federal government, including the FDA, USDA, and Congress. An event of this magnitude presents a panoply of issues not only for the producer, but also for companies throughout the distribution chain.

Consequences of a food recall for stakeholder companies include risks of a legal nature, as well as public relations and business relationship risks. Facing the critical task of appropriately managing these risks—in both the short and long term—companies in the distribution chain may wish to consider the following strategies:

1. Create a core team within your organization to manage the issues.
   
2. Gather all documents relating to distribution of the product, both above and below you in the distribution chain.
   
3. Beware of your reporting requirements under the FDA's Reportable Food Registry, including the 24-hour deadline for submission.
   
4. Be prepared for the FDA or USDA to knock on your door.
   
5. Manage your brand to prevent reputational loss, e.g., pay close attention to how your trademarks are being used.
   
6. Review your insurance policy and contact your insurer as appropriate.
   
7. Check your contracts with both upstream vendors and downstream customers for warranties, guarantees, and indemnifications.
   
8. Prepare for the possibility the producer may soon be insolvent.