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China Food Safety. Don't Blame Legal.

By Dan Harris and Steve Dickinson

Thought provoking post over at TwoFish's Blog, entitled, "Best and the worst ? The Sanlu Settlement." The thesis is that China's handling of payments to those injured by the Sanlu dairy food poisonings was handled better than would have been the case had Sanlu been in the United States and been subject to a class action suit. TwoFish makes some valid points, which points are certainly more sophisticated than some commentators who fly over to China for a week and come back proclaiming that if only China allowed tort claims (it does) just like in the United States, all (or at least nearly all) food safety problems would be solved there. TwoFish says China handled Sanlu "quite well" and he challenges those who are "critical" to "explain what the Chinese government could have done better:"

As I said above, as far as the actual settlements and consequences, I do think that the Chinese government handled things quite well, and I?d like for people that are critical of the legal aftermath to explain what the Chinese government could have done better. Yes, one could argue that the payouts where low, but as it was, it totally bankrupted the company responsible. If you mandate US-style damage awards, then the whole thing becomes a lottery, in which people that are the first to file or who have particularly good lawyers get the bulk of the money, and everyone else spends years fighting over the scraps that remain. (What happened with asbestos.) Also if you have a long nasty class action lawsuit, then most of the money ends up with the lawyers (there is an entire industry devoted to asbestos lawsuits). In the mean time, honest dairy farmers and dairy workers who weren?t involved in the scandal are hurt because the company gets pounded into dust.

China did handle Sanlu pretty well, but in large part, that was because that case received so much publicity, China almost had to handle it well. As much as I agree with TwoFish that a class action where the plaintiffs' lawyers get rich and the plaintiffs themselves get a pittance is no solution at all, I do not believe top down remedies can work consistently.

Full post as published by China Law Blog on August 22, 2009 (boomark / email).