The Ideal and Reality of Food Safety Class Action Lawsuits in Taiwan

By Patrick Marros Chu & David Tien

Posted: 27th April 2017 11:22

In recent years, owing to a series of food safety scandals in Taiwan, consumer protection groups initiated many product liability class action lawsuits. In May 2011, the Consumers’ Foundation, Chinese Taipei filed the first food safety class action lawsuit on behalf of 561 victims against dishonest food companies that added plasticizers into food sold to their downstream buyers, and demanded compensation of NT$2.5 billion (“Plasticizer Case”). In October 2013, the Consumer Protection Association of Taiwan (“CPAT”) was delegated by 3,772 consumers to file a lawsuit against a local edible oil producer that was found guilty of adulterating cheaper cottonseed oil into higher-end cooking oil to increase profits, and to claim NT$339 million in compensation (“Cottonseed Oil Case”). In July 2015, more than 20,000 teachers and students delegated the CPAT to file a lawsuit against several major local lard oil producers that were suspected of selling lard-based cooking oil made with animal feed oil or non-edible oil, and demanded a compensation of more than NT$3.7 billion (“Lard Oil Case”). In the Lard Oil Case, both the number of claimants and the amount of the accumulated claim shattered the previous record in Taiwan's judicial history.
 
However, in the Plasticizer Case, the court of first instance and the court of second instance awarded the victims just NT$1.2 million and NT$2.74 million, respectively. In the Cottonseed Oil Case, the court of first instance rendered a judgment ordering the dishonest producer to pay compensation of NT$91 million to 2,840 victims. To date, in the Lard Oil Case, the court of first instance has ordered one of the above-mentioned producers to compensate NT$9.36 million to 3,123 consumers, and has ordered another producer to compensate only 170 victims for NT$1.33 million. It appears that the court decisions have fallen short of the consumers' expectation.
 
In the Plasticizer Case, the judgment rendered by the court of first instance holds that as long as a food company blends into foods any additive that the central competent authority has not allowed for such blending (e.g., plasticizers), the victims would be exempted from the obligation to prove the existence of product defect. On the contrary, it is such food company's obligation to prove that its product has met and complied with reasonably expected safety requirements on the basis of contemporary, technical and professional standards. Having said that, the court states that each of the victims still has to prove the damage that he/she suffered and the amount of damages claimed. Furthermore, the claimants also have to prove the proximate causation between the damage and the product defect, unless the aforesaid damage is similar to the damage that the product defect usually causes (i.e., the theory of probable causation). Due to the difficulty in proving the existence of damage and the causation, the court of first instance dismissed most of the claims that the victims made.
 
Similarly, in the Cottonseed Oil Case and the Lard Oil Case, the court of first instance holds that as long as the oil producers were found guilty of adulterating any unacceptable ingredient or counterfeiting edible oil (including ingredients, place of origin, supplier, etc.), the victims did not need to prove that the product has not met or has not complied with the reasonably expected safety requirements on the basis of contemporary, technical and professional standards. Nonetheless, in the Cottonseed Oil Case, apart from the monetary damage that could be supported by the invoices and the compensation for non-monetary damage (NT$10,000 per person and punitive damages up to three times the amount of the claim for non-monetary damage were awarded), the court did not award any additional amount of damages to the victims. In the Lard Oil Case, since the victims did not have obvious symptoms as a result of consuming the adulterated or counterfeited lard oil and could not prove that any medical expenses had been disbursed, the court dismissed the claim for monetary damage, and awarded each victim only NT$2,000 as the compensation for non-monetary damage.
 
The cases concerning food safety incidents usually have the following characteristics: (i) difficulty in determining the number of victims and the amount of damages; (ii) uncertainty regarding whether damage exists; and (iii) the injury that a victim suffered is very light or cannot be easily proved. This is the reason why class action is highly necessary for victims to efficiently and economically claim for their injury. From the judgments above, we can see that the court was faced with the dilemma of maintaining the rules on the burden of proof on one hand, and providing compensation for potential damage to consumers on the other hand. The court managed to achieve the balance between ideal and reality by way of granting the compensation for non-monetary damage to victims.
 
Lee and Li's
 
Lee and Li is the largest law firm in Taiwan, with an abundance of expertise in all legal areas and the goal of providing a full range of services. Over the decades, Lee and Li has built one of the largest intellectual property right practices in Taiwan, and has been involved in the phenomenal growth of foreign direct investment since 1970s. Lee and Li was a pioneer in developing banking and capital market practice in the 1980s, and played a pivotal role in the formation of technology law practice in the 1990s. Lee and Li is also active in public construction and government procurement projects, and has built one of the strongest teams in litigation and ADR with respect to product liability, class action and white collar crimes. Lee and Li's services are performed by over 100 Taiwanese lawyers, patent attorneys, technology experts, and specialists in other fields.
 
Patrick Marros Chu
Lee and Li, Attorneys-at-Law
9F, 201 Tun Hua N. Road
Taipei 10508
Taiwan, R.O.C.
Tel: +886 2 2715 3300 ext. 2122
Email: marrosju@leeandli.com
 
Patrick Marros Chu is a partner at Lee and Li and is also an active member of the International Affairs Committee of the Taipei Bar Association. He has successfully represented domestic and international clients in handling numerous product liability, consumer dispute and government probe cases. Patrick is also active in diversified practice areas, such as dispute resolutions, knowledge-based economics, corporate governance, M&A transactions, telecom and media convergence, labour, anti-competition, investor protection and Japanese-related legal matters, etc. He is the co-author of the Taiwan chapter of the Encyclopaedia of International Commercial Litigation and participates in the Doing Business Report of the World Bank.
 
David Tien
Lee and Li, Attorneys-at-Law
9F, 201 Tun Hua N. Road
Taipei 10508
Taiwan, R.O.C.
Tel: +886 2 2715 3300 ext. 2287
Email: davidjtien@leeandli.com
 
David Tien is a senior associate at Lee and Li. His primary areas of practice include mergers and acquisition, corporate investment, product liability and general corporate matters. He has deep knowledge about the food, cosmetics and tobacco industry and is experienced in representing multinational companies on various regulatory issues with respect to food, health food, cosmetics, tobacco, and alcohol products. He had been seconded to Kraft Foods Taiwan for six months. David obtained his LL.B. from the National Taiwan University, and holds an LL.M. degree in international law from Columbia Law School and an LL.M. degree in global health law from Georgetown University Law Center. David is dual qualified in both Taiwan and New York.

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