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An E. Coli Outbreak At a Chain Restaurant: A Case Study on How Easily Legal Liability Can Spread to a Franchisor

By Denis W. Stearns

In early January 1993, the American public was introduced to a deadly pathogen that has remained in the news ever since: E. Coli O157:H7. Hundreds of people were injured and four children died in what is still referred to as the Jack in the Box outbreak, even though a primary cause of the outbreak was adulterated hamburger patties manufactured and sold to the restaurant chain by one of its longtime suppliers.

The litigation that resulted from this outbreak was widespread and took years, and tens of millions of dollars, to resolve. It involved not only personal injury lawsuits against the restaurant and its supplier, but also a shareholders' lawsuit and a lawsuit filed against Jack in the Box by its franchisees. And when the last of the lawsuits was finally over, there were still the sales to win back, and the need to repair a much-damaged brand name.

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