Ice cream maker Blue Bell Creameries has found itself in a sticky situation that underscores the importance of a having a comprehensive and robust compliance program, even for companies who do not manufacture consumer products.
Blue Bell sells its ice cream throughout much of the United States and numerous foreign countries. It is reportedly the third highest-selling ice cream brand in the United States. Unfortunately, according to documents released as part of a Food and Drug Administration investigation, Blue Bell is also reported to have known of listeria in its Oklahoma plant as early as March 2013 but failed to issue any recalls or warnings or halt production until this year after the products were publicly linked to listeria illnesses, which resulted in three deaths in Kansas.
In a recent statement, Blue Bell acknowledged that it did not adequately improve its cleaning and manufacturing practices even after it learned that its machinery was testing positive for listeria. The FDA’s investigation report cited many shortcomings of Blue Bell’s compliance program. In April, Blue Bell recalled its products and halted all sales. Extensive employee layoffs and furloughs followed, along with considerable negative media attention.
Comprehensive compliance programs include not only provisions that adopt industry standards and good manufacturing practices for day-to-day operations, but also processes for properly investigating potential compliance failures. A conflict-free individual is designated to receive compliance concerns and then report them to management, who then would insure that an independent, thorough, and complete investigation is conducted. The internal investigation gathers and preserves the relevant evidence, assesses the extent of any failures, analyzes potential criminal and civil liability, and may propose remedial measures. The results are sometimes memorialized in a report, although it is not always appropriate to do so.
Compliance programs may provide for management to decide whether outside counsel will be retained to conduct the internal investigation. One critical factor in that decision is whether future criminal or civil litigation, or a government investigation is likely, since maintaining the confidentiality of the investigation is greater if it is conducted by outside counsel.
Done early and properly, an internal investigation may best position a manufacturer to avoid a costly, public crisis that has the potential to devastate sales, damage the brand’s reputation, trigger Government investigations and sanctions, foster resource-draining class action lawsuits, and cause management and other employees to lose their jobs.
This is true for all manufacturers, not just those who make consumer goods like Blue Bell.
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