Exposing Private Third-Party Food Safety Auditors to Civil Liability for Negligence: Harnessing Private Law Norms to Regulate Private Governance

Abstract

In many industries, companies rely on private third-party audits to monitor their suppliers’ adherence to various standards. These audits are frequently paid for by the entity being audited, which creates a conflict of interest that incentivizes auditors to reduce the burden of audits by cutting corners and inflating audit scores. This article presents a case study of food safety audits in the fresh produce sector. It explains why large commercial buyers of fresh produce rely on private third-party audits paid for by growers despite the conflict of interest, and it argues that exposing auditors to civil liability for negligence would improve the rigor and reliability of these audits. The article concludes with a more general analysis of how the private law norms of duty and reasonable care imposed by civil liability can improve private governance.

Keywords: regulatory governance, private standards, risk regulation, food safety, standards conformity, certification, health & safety regulation, private law

JEL Classification: I19, K13, K23, L51, L66, Q02, Q18