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FMG Law Blog Line

Mission: Impossible – Rogue Onions

Posted on: August 20th, 2015

By: Seth Kirby

After trailing the tractor-trailer from the shipyard to the warehouse facility, the surveillance team scrambled to obtain a view of the unloading process. Using their sophisticated camera equipment they hoped to be able to record evidence that the billionaire and his henchmen had been adulterating this precious commodity. Peering through the darkness, the lens captured what they had all feared. The horror…

No, this is not the opening scene of the next installment of the Mission Impossible move franchise, but rather my overly dramatic summary of a recent agricultural enforcement action here in Georgia concerning of the State’s most revered commodities, the Vidalia onion. While I have taken some dramatic license in retelling the story, the essential facts are entirely accurate.

“The Vidalia onion is a sweet onion that, by federal law, can be grown and packaged in only one region in Georgia.  Celebrity chef Bobby Flay wrote that Vidalia’s are not just the most famous onions in the world: I think they may be the only famous onions in the world.”  It is estimated that the annual market for Vidalia onions exceed $150 million.  Vidalia’s are the champagne of the onion world, and their growers have every reason to protect their exclusive brand.  The action movie script set forth above is based on the actual efforts of Vidalia farmers to prove that a Georgia farm owned by non-other than Bill Gates was attempting to pass off Florida grown yellow onions as prized Vidalia’s.  Indeed, competing farmers began tracking shipments of onions from Florida to Gates’ Georgia farm and tipped off state authorities with videos and photographs of the shipments.  This prompted an investigation by the state which uncovered irregularities in how the farm was storing the different varieties of onions and resulted in an order placing the farm under probation.  While no evidence was uncovered that the yellow onions had been improperly shipped as Vidalia’s, the improper comingling of the produce in the same facility seemed suspicious.  In the delay caused by the investigation, over $100,000 worth of onions spoiled.  The agricultural authorities felt that the spoilage “was discipline enough” for the violations, but future violations could cause the farm to lose its license.

This cloak and dagger story is a sharp reminder of how sophisticated and complex our modern economy has become, and the resulting challenges that are created for businesses and their insurers.  In this example, Onion farmers were compelled to take steps preserve the integrity of their brand and did so through corporate espionage.  While their conduct seems to be have been warranted under these circumstances, consider the risks that the farmers encountered as a result of their efforts.  Their surveillance attempts could have resulted in a lawsuit alleging invasion of privacy or trespass.  People could have been injured and property could have been damaged during the effort.  Their reporting to the authorities could have resulted in a claim for liable, slander or malicious prosecution.  Taking such risks may have been worth it to stop the violations, but I must question whether the farmers actually considered these risks before engaging in the mission.  Moreover, I doubt that their insurance underwriters considered these risks in pricing their insurance.  Fortunately for the farmers, these hypothetical claims might be entitled to coverage under common general liability policy terms.

Most recent discussions over emerging risks faced by businesses and insurers focus on cyber risk and new technology.  Such discussions are warranted as emerging technologies will undoubtedly change the way certain industries conduct business and expand their risk profiles.  But in focusing on the new, we should not forget that unanticipated risk can be generated any time a business strays from its typical activities.  When considering side projects, prudence dictates that businesses should evaluate whether the new venture exposes the business to risks that fall outside the scope of their insurance coverage.  By the same token, insurers would be wise to inquire about whether new ventures are planned by their insureds and price their products accordingly.

 

 

 

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