Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 28

When Should a Company Order a Product Recall?
FACTS Walter Jones was feeding his five-month-old daughter Millie plums from a jar of Winkler baby food when she suddenly began to choke on a piece of aluminum foil that had come from the jar. Walter rushed her to the hospital, where more foil was found in her stomach. Although the amount of aluminum found was not in itself deadly, Millie was nauseous for several hours, and her parents had trouble getting her to eat for many days thereafter.
Walter sued Winkler. A number of similar incidents involving Winkler products had occurred at about the same time. Although the incidents covered a wide geographic area, their total number was not great, and the Food and Drug Administration (FDA) decided not to require a recall of the baby food. Winkler faced two choices: (1) to do nothing and settle the cases as they arose or (2) to recall all jars of the same lot to protect other children from the possibility of ingesting foreign substances.
Social, Policy, and Ethical Considerations
Would the first option be good for business? Who eventually bears the cost of the lawsuits or recalls? Who should bear the cost?