The case describes the 2006 E. coli outbreak in the California spinach industry. The case unfolds over a period of about one month, with four separate eventful days described in detail. At the end of the narrative for each day, the reader is asked to decide how he or she would respond to the events and justify his or her decision.business ethics, communication, crisis management, spinach, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Teaching/Communication/Extension/Profession, Q10, Q13,

Baker, Gregory A.

Hanson, Kirk O.

English

Research Papers in Economics

 
International Food and Agribusiness Management Review 
Volume 12, Issue 1, 2009 
 
Greene Gardens 
 
Gregory A. Baker aL and Kirk O. Hanson b
 
a a Professor of Management and Director of the Food and Agribusiness Institute, Leavey School of 
Business, Santa Clara University, Santa Clara, CA, 95053-0396, U.S.A. 
b Executive Director of the Markkula Center for Applied Ethics and University Professor of 
Organizations and Society, Santa Clara University, Santa Clara, CA, 95053, U.S.A. 
 
 
 
Abstract 
 
The case describes the 2006 E. coli outbreak in the California spinach industry. The 
case unfolds over a period of about one month, with four separate eventful days 
described in detail. At the end of the narrative for each day, the reader is asked to 
decide how he or she would respond to the events and justify his or her decision. 
 
Keywords: business ethics, communication, crisis management, spinach 
 
 
 
 
 
 
 
 
 
                                                           
LCorresponding author:   Tel: + 408 554-5172   
 Email:  gbaker@scu.edu  
Other contact information: K. O. Hanson: kohanson@scu.edu  
 
IAMA Agribusiness Case 12.1 
 
This case was prepared for class discussion rather than to illustrate either effective or ineffective handling of an agribusiness 
management situation. The author(s) may have disguised names and other identifying information presented in the case in 
order to protect confidentiality. IAMA prohibits any form of reproduction, storage or transmittal without its written 
permission. To order copies or to request permission to reproduce, contact the IAMA Business Office. Interested instructors at 
educational institutions may request the teaching note by contacting the Business Office of IAMA. 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  101Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
Greene Garden
1
(A) First Reports -  Day 1 
 
Sam Greene sat in front of his computer and read with alarm a news story 
indicating that the Food and Drug Administration (FDA) had issued a warning to 
consumers to avoid eating fresh bagged spinach. The report indicated that an 
outbreak of E. coli in eight states had resulted in the death of one person and the 
illness of 49 others (U.S. Food and Drug Administration, 2006a). The outbreak 
involved E. coli 0157:H7, a virulent strain that may lead to bloody diarrhea, 
dehydration, kidney failure, and, in rare instances, death. See exhibit 1 for 
additional information on E. coli 0157:H7. 
 
Greene was a large grower of fresh vegetables headquartered in California’s Salinas 
Valley. His company, Greene Gardens, produced broccoli, cauliflower, Brussels 
sprouts, cabbage, lettuce, and spinach on several ranches. He was a contract grower 
for a large processor, GRT Salads, which harvested about 80% of the product grown 
on his ranches and marketed the product under many labels. He sold the remainder 
of his produce to a smaller processor, Tossed Fresh, under a similar arrangement.  
 
The Salinas Valley, located in Monterey County, is the largest producing area in the 
U.S. for fresh spinach. There were several major processors of fresh leafy vegetables 
located in Salinas Valley. GRT was one of the larger processors. It sourced product 
from several producers, with about 20% of its production coming from Greene 
Gardens. See exhibit 2 for a map detailing the location of the production areas and 
the reported illnesses. 
 
The news story went on to report that the first reported case had occurred three 
weeks earlier. However, only recently did health officials determine that spinach 
was the likely problem. When patients are diagnosed with food poisoning, they are 
routinely interviewed to determine what they have eaten. The only food eaten in 
common by all of the patients affected by the recent E. coli outbreak was bagged 
fresh spinach. While tests on the product would be needed to determine if spinach 
was in fact the cause, no other products had been implicated. When asked whether 
consumers should avoid bagged salads, an FDA health official said that there was 
no information at this time to indicate that bagged salad was contaminated. Exhibit 
3 provides information on food quality assurance in California and the U.S. 
 
 
 
 
 
1 The scenarios in this case are realistic and based on factual accounts. Although, the facts related to the E. coli 
outbreak in spinach mirror the actual outbreak and press releases, the firms discussed in the case are fictitious.  
 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  102Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
Questions 
 
1.  If you were Sam Greene, how would you respond to the first reports of 
contaminated spinach? Be specific as to the actions you would take. 
 
2.  What factors would you consider and how would you make your decision? To 
whom are your primary obligations? 
 
(B) The Search Narrows – Day 9 
 
Greene sat again at his computer and read an update from the FDA. The total 
number of cases of E. coli infection had risen to 166 people in 25 states (U.S. Food 
and Drug Administration, 2006b).  See exhibit 4 for an updated map of the reported 
illnesses. The FDA was working closely with the Centers for Disease Control and 
Prevention (CDC) and the State of California to isolate the source of the outbreak. 
Information collected to date implicated fresh bagged spinach grown in three 
California counties, Monterey, San Benito, and Santa Clara. The statement went on 
to indicate that spinach grown in the rest of the U.S. had not been implicated. 
Furthermore, other produce grown in the three California counties had not been 
implicated. Health investigators were continuing to work to further narrow the 
source of the contamination. 
 
To date, three companies had voluntarily recalled products containing fresh 
spinach, including GRT Salads. Because of the uncertainty surrounding the E. coli 
contamination in spinach, sales of bagged spinach throughout North America had 
virtually stopped. 
 
Questions 
 
3.  How would you respond to this new information?  Be specific as to the actions 
you would take. 
4.  What actions would you take regarding the spinach products you market 
through Tossed Fresh? 
5.  What actions would you take in regard to the other crops you produce? 
 
(C) Processor Identified – Day 16 
 
It was now 15 days since the first announcement by the FDA of contaminated 
spinach. Greene had become accustomed to checking his computer more frequently 
than was usual for him as he awaited the almost daily FDA update on the unfolding 
spinach crisis. Most of the statements simply updated the number of cases of E. coli 
contamination caused by fresh bagged spinach. However, today’s statement was 
different. The FDA announced that all of the spinach implicated in this recent 
outbreak had been traced back to one processor (U.S. Food and Drug 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  103Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
Administration, 2006c), GRT Salads, the processor that bagged and marketed 80% 
of all of the vegetables grown by Greene Gardens.  
 
The FDA made this determination based on laboratory findings of product samples. 
The analysis of 10 product samples in 8 states had confirmed the presence of a 
strain of E. coli O157:H7 (U.S. Food and Drug Administration, 2006c). All of these 
product samples had been processed by GRT Salads. 
 
A total of 187 cases of E. coli O157:H7 infection due to fresh bagged spinach had 
been reported in 26 states and Canada. The contamination had been linked to one 
death (U.S. Food and Drug Administration, 2006c). See exhibit 5 for an updated 
map of the reported illnesses. 
 
Although Greene was troubled that the FDA had pinpointed GRT Salads as the 
source of all of the contaminated spinach, he knew that they (GRT Salads) sourced 
product from many different growers. Furthermore, the FDA also indicated that the 
source of the E. coli contamination had not been traced to a specific field. 
 
The latest statement said that “there has been a long history of E. coli O157:H7 
outbreaks involving leafy greens from the central California region.” The statement 
went on to state that “… FDA and the State of California expect the industry to 
develop a comprehensive plan which is designed to minimize the risk of another 
outbreak due to E. coli O157:H7 in spinach grown in central California. While this 
plan is under development, FDA and the State of California reiterate our previous 
concerns and advise firms to review their current operations in light of the agency’s 
guidance for minimizing microbial food safety hazards,” (U.S. Food and Drug 
Administration, 2006c). 
 
Questions 
 
6.  How would you respond to this new information?  Be specific as to the actions 
you would take. 
 
7.  Given the increasing likelihood that the source of the contamination may be 
from Greene Gardens’ spinach, what would you do in regard to the other 
products you grow and to the fresh bagged spinach marketed through Tossed 
Fresh? 
  
(D) Source Identified – Day 29 
 
Today, Greene did not have to check his computer for an update on the spinach 
outbreak. He received a late morning call from an official at the FDA informing him 
that samples collected by California officials from a field on one of his ranches had 
tested positive for the strain of E. coli O157:H7 responsible for the recent outbreak. 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  104Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
The FDA suspected that cattle feces might be the cause of the contamination, but 
contaminated feces had not been found in Greene’s field . 
 
In a statement issued later that day, the FDA announced that they and the State of 
California were reporting laboratory results indicating that the strain of E. coli 
O157:H7 found in contaminated spinach had been found in four different fields on 
four ranches in Monterey and San Benito counties. The statement went on to say 
that “Samples of cattle feces on one of the implicated ranches tested positive based 
on matching genetic fingerprints for the same strain of E. coli that sickened 199 
people,” U.S. Food and Drug Administration, 2006d). 
 
Questions 
 
8.   What actions would you take in response to the FDA and State of California 
findings? 
9.  How would you respond to the FDA and State of California statement that the 
industry should develop a plan to minimize the risk of another E. coli O157:H7 
outbreak? What should be done to ensure the safety of processed produce in the 
future? 
 
 
References 
 
U.S. Food and Drug Administration, “FDA Warning on Serious Foodborne E.coli 
O157:H7 Outbreak,” September 14, 2006a, 
<http://www.fda.gov/bbs/topics/news/2006/new01450.html>, (5 November, 
2008).   
 
U.S. Food and Drug Administration, “FDA Statement on Foodborne E.coli O157:H7 
Outbreak in Spinach,” September 22, 2006b, 
<http://www.fda.gov/bbs/topics/NEWS/2006/NEW01462.html>, (5 November, 
2008). 
 
U.S. Food and Drug Administration, “FDA Announces Findings From Investigation 
of Foodborne E.coli O157:H7 Outbreak in Spinach,” September 29, 2006c, 
<http://www.fda.gov/bbs/topics/NEWS/2006/NEW01474.html>, (5 November, 
2008).  
 
U.S. Food and Drug Administration, “FDA Statement on Foodborne E.coli O157:H7 
Outbreak in Spinach,” October12, 2006d, 
<http://www.fda.gov/bbs/topics/NEWS/2006/NEW01489.html>, (5 November, 
2008). 
 
 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  105Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
Exhibit 1.   
Background information on E. coli 0157:H7 
 
Escherichia.coli (E. coli) is present in the intestines of people and animals. Although 
most strains of E. coli are harmless, E. coli 0157:H7 is a virulent strain of the 
bacterium that can cause severe illness, including bloody diarrhea, dehydration, 
kidney failure, and, in rare instances, death. Transmission of the bacterium 
typically occurs through ingestion of contaminated feces. Animal products, 
including dairy and meat products may be contaminated with E. coli, although 
proper cooking (or pasteurization, in the case of milk) will kill the bacterium. Fruits 
and vegetables may be contaminated with E. Coli., often due to the presence of E. 
coli in irrigation water. Cleaning the fruit or vegetable with a disinfectant or 
cooking will make the food safe to eat. A definitive diagnosis of E. coli poisoning is 
typically made by conducting a stool culture. 
 
There have been several major outbreaks of E. coli 0157:H7 in the U.S., with many 
of the outbreaks in meat, primarily hamburger meat, and fresh produce, including 
lettuce, melons, and alfalfa sprouts, among others. 
 
Exhibit 2.   
Map of Production Locations and Timeline of Reported Outbreaks, Day 1  
 
 
Exhibit 3.   
Food Safety Assurance 
 
The safety of fresh produce is largely the responsibility of producers and processors. 
The Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA), 
and California Department of Food and Agriculture (CDFA) have little jurisdiction 
over farms and little enforcement authority. The FDA is largely restricted to issuing 
warnings and requesting voluntary recalls. The major incentive producers and 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  106Baker and Hanson / International Food and Agribusiness Management Review Volume 12, Issue 1, 2009 
 
processors have to ensure that the products they produce are safe is the reputation 
of their firms and brands, as well as the legal and financial liability they incur when 
they sell contaminated products.  
 
Exhibit 4.   
Map of Production Locations and Timeline of Reported Outbreaks, Day 9. 
 
 
Exhibit 5.   
Map of Production Locations and Timeline of Reported Outbreaks, Day 16. 
 
 
© 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.  107

Greene Gardens

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