The world’s largest food distributor, Sysco Corp., has entered into a settlement with the California Department of Public Health to resolve allegations that the company had engaged in unlawful food transportation and storage practices and had misrepresented its practices on the company’s website. 

The Department alleged that the company held “perishable food and other food products, including, but not limited to, dairy products, meats, poultry, frozen foods, seafood, canned food, dry food, produce, and beverages, in at least 22 unregistered public storage units” that lacked adequate temperature and sanitation controls. The Department further alleged that company’s employees were permitted “to transport perishable food and other food products from…unregistered sites to their customers in personal (non-commercial) vehicles without proper refrigeration during transportation, and under circumstances exposing such food to the risk of contamination.”  The Department alleged that the company had unlawfully mischaracterized its food safety practices on its website by characterizing the company’s commitment to “maintaining the most stringent standards in terms of food quality, consistency and food safety” and “providing the highest quality products,” and ensuring that its “state-of-the art distribution warehouses maintain the highest standards, often above and beyond government regulations.”

Notably, the complaint in the case alleged violations of the California’s Sherman Food, Drug, and Cosmetic Law (“little-FDCA”) and state consumer protection laws, seeking to enjoin the company from engaging in food safety violations, unfair and unlawful business practices, and false advertising. In an unsettling move by the state, the Department alleges that the statements made on the company’s website concerning food safety and quality were untrue and misleading, giving rise to violations under California law as false advertising. The Department’s complaint also illustrates how little-FDCAs and state unfair and deceptive practices laws can work together to enjoin food safety violations.

As part of the settlement, the company agreed to pay a total of $19.4 million, which includes a payment of $15 million in civil penalties.  The remaining settlement includes a $1 million food contribution to food banks throughout the state and $3.3 million to fund a 5 year state-wide-program aimed at helping help inspectors enforce food transportation laws.  Sysco is also required to develop a comprehensive food safety program to ensure that these practices are not repeated.

Notably, FDA currently is developing regulations that will impose more comprehensive food safety requirements on food distributors and transporters under the recent amendments to the  Federal Food, Drug, and Cosmetic Act (FDCA), which were made by the FDA Food Safety Modernization Act and Sanitary Food Transportation Act. FDA issued proposed regulations last year on concerning Hazard Analysis Risk Based Preventive Controls and Sanitary Transportation of Human and Animal Food.  The final regulations are scheduled for publication in August 2015 and March 2016, respectively. 

This historic settlement is a sobering reminder that as FDA continues its work to develop regulations implementing FSMA and SFTA, states have many enforcement tools under existing law which are available to address safety concerns related to food transportation and storage practices.