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A Reportable Food Registry Toolkit
This article was first published on August 27, 2010 in Food Chemical News as part of its "On the Front Burner" series.
In its first year, the FDA’s Reportable Food Registry has proven itself to be a high-stakes game changer. The ticking of the RFR's 24-hour reporting deadline forces a company to make snap decisions that might affect its entire business (not to mention the health of its customers). Once a report is submitted, FDA will promptly alert your customers of the "reasonable probability" that your product will result in "adverse health consequences or death." While RFR reports can be amended or withdrawn based on new information, in the world of food products, the bell can almost never be unrung.
On the other hand, the civil and criminal consequences of failing to report when obligated to do so can be devastating. Companies that fail to comply with RFR requirements (even without intention not to comply) can be charged with felonies, and subject to fines and jail time for their executives. Those violating the RFR with intent are subject to greater penalties.
Assuming your company is a "responsible party" (meaning an "owner, operator, or agent in charge of a domestic or foreign facility" required to register under 415(a) of the FD&C Act) and already follows a HACCP plan, a GMP, GAPs, etc., what else can it do to prepare for and, if possible, prevent an RFR report? The answer is a lot. At minimum, here's what should be in any food company's RFR toolkit/standard operating procedures (SOPs):
Continue Reading...Consumers and Gulf Shrimp: Watch What We Do, Not What We Say
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The quote, "Watch what we do, not what we say," is attributed to John Mitchell, Nixon's first attorney general. It can apply, however, to the behavior of consumers with respect to shrimp from the Gulf of Mexico, and that will be watched carefully everyone from shrimp fishers to the owners of your local fish market. The FDA says flatly, about Gulf shrimp, "the public should not be concerned about the safety of seafood in stores at this time." Not surprisingly, a coalition led by the Natural Resources Defense Council, while not going so far as to advise anyone not to eat Gulf shrimp, thinks higher standards and more testing is appropriate, and has so advised both the FDA and NOAA.
Shrimpers themselves are of course worried about the backlash if any tainted shrimp are consumed. Similar to the dialogue I had with Jim Prevor a few months ago, there is often a difference between what we might think of as rational behavior and how consumers in fact react. Every year, a certain percentage of shrimp turn bad for reasons unrelated to oil spills; in 2010, it's likely a consumer who gets a bad shrimp will first blame it on the oil spill.
According to an AP article reprinted in today's Wall Street Journal, however, the reality on the ground in fish stores is less grim. It quotes the supplier to Hapuku Fish Shop, an upscale store in the Rockridge District of Oakland, as saying, "the shrimp has been nothing less than spectacular lately." The shop itself is selling about as much of the shrimp as it did before the spill.
President Obama also has put his stomach where his mouth is, serving Gulf shrimp at his birthday party.
As with any seafood, consumers of Gulf shrimp should handle it properly and apply their own smell test before cooking and before eating.
The Great Egg Recall of 2010: Another Review of Lessons Already Taught
You have probably heard about the great egg recall of 2010, which has required Wright County Eggs of Galt, Iowa to recall an ever-growing number of shell eggs because of fears of salmonella enteriditis.
An interesting issue here is the non-overlapping jurisdiction of USDA and FDA over eggs in the shell. According to the FDA:
Generally, USDA is responsible for egg safety at what are called breaker plants or egg products processing facilities. In these facilities eggs are broken and pasteurized. FDA is responsible for shell egg safety and egg products once they leave the breaking facility.
Interestingly, while this outbreak is easily found on the FDA's website and at FoodSafety.gov, there is nary a word on the USDA home page.
The FoodSafety.gov page about safely handling and dealing with eggs is a good place to start for consumers worried about their own eggs.
We also repeat the advice we have collected from previous outbreaks:
- Have a crisis management plan in place.
- Know what you will do when the investigators knock.
- Double check the language in your insurance policy to ensure that it covers the particular facts of a recall. In 2008, Ken blogged about this issue after the tomato outbreak and in 2009 after the peanut recall.
- If you know your products are not affected by the outbreak, publicize this appropriately and ask your trade organization to help with that as well.
- If your products are involved, consider getting criminal law advice as well as advice about civil law responsibilities.
- Reconsider how you choose your suppliers, and what you do to qualify them.
- Publicize whatever is happening on your web page; consumers who hear about your product being recalled may check your web page and don't want to see a sales pitch for the very product subject to recall.
- Review your supply contracts to ensure that you have recourse against someone selling you tainted product, but remember that such entities are unlikely to have adequate resources to make you whole; that is what insurance is for, and also what prevention is for.
- Consider how to publicize the situation to consumers who use different languages.
5-Hour Energy v. 8-Hour Energy: Monopolization Claim Flops
In an unfair competition suit under 15 U.S.C. § 1125, the king of the two-ounce energy shot, 5-Hour Energy, is suing the makers of 8-Hour Energy in the Eastern District of Michigan, claiming that 8-Hour Energy falsely associates itself with 5-Hour Energy. 8-Hour Energy has tried to strike back with a monopolization claim, arguing that 5-Hour Energy has engaged in a number of anticompetitive tactics to drive away competitors like 8-Hour Energy, and 6-Hour Energy, which 5-Hour Energy sued in 2008.
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Anyone who has recently set foot in a convenience store or watched late night cable television knows how valuable the energy drink business has become. To get an idea of how this market has grown, take a look at the wall of energy drinks displayed at the screamingenergy.com product review web site. Perhaps the most valuable spot in that market is in the two-ounce “energy shot” space, on the counter next to the cash register, where customers are willing to pay $3.50 for two ounces of an elixir that will “help you feel sharp and alert.” (By comparison, a consumer will seldom pay more than 99 cents for a 12 ounce can of caffeinated cola.) And the consensus is that 5-Hour Energy dominates this category.
The 8-Hour Energy defense team may have a good argument that 5-Hour Energy is the king of the convenience store counter, but the Eastern District of Michigan issued an Order last week slapping down 8-Hour Energy’s monopolization claim. 8-Hour Energy argued that 5-Hour Energy engages in anticompetitive tactics to control the market, but failed to convince the court that those tactics actually harm 8-Hour Energy. For example, the court noted that anything 5-Hour Energy did to exclude 6-Hour Energy from the market couldn’t have harmed 8-Hour Energy. Ultimately, 8-Hour Energy should be able to argue that any anticompetitive conduct is relevant to prove that 5-Hour Energy has harmed competition – this may be an issue that 8-Hour Energy can exploit on appeal.
The court’s order provides a good example of the risks associated with raising antitrust counterclaims. Here, the Eastern District of Michigan dismissed 8-Hour Energy’s monopolization counterclaim for failure to convincingly plead the claim. If 8-Hour Energy somehow revives the claim, the next hurdle will be definition of the relevant market. Is there an exclusive market of 2-ounce energy drinks? If Red Bull, Coca Cola, or coffee are reasonable substitute “energy drinks,” 8-Hour Energy’s monopolization case doesn’t have a chance.
"I Can't Believe It's Not Implausible" - Iqbal/Twombly Doctrine Does Not Result in Dismissal of Yumul Claims
As our own Ken Odza recently blogged, the plausibility pleading standard articulated by the Supreme Court in the Iqbal and Twombly cases resulted recently in the FRCP 12(b)(6) dismissal of misrepresentation claims against Unilever. That ruling seemed to indicate that consumer fraud claims would be vulnerable to motions for dismissal. However, in an order granting in part and denying in part the defendant’s motion for dismissal in Yumul v. Smart Balance, Inc., the U.S. District Court for the Central District of California did not apply the plausibility pleading standard as stringently as the court in the Unilever decision, lending some question as to precisely how far Iqbal and Twombly will reach.
In Yumul, the plaintiffs alleged Smart Balance violated the California Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. These exact same violations were alleged in the Unilever case. In Yumul, the plaintiffs alleged that Smart Balance misled consumers with its marketing of Nucoa margarine as “cholesterol free” and “healthy,” despite the presence of artificial trans fat in the product.
In addressing Smart Balance’s motion for dismissal, the court noted the plaintiffs’ reliance on the delayed discovery exception in support of its assertion that tolling of the statute of limitations was appropriate. Stating the applicable law, the court offered that:
A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.
In its order, the court directed the plaintiffs to specify the manner of discovery (how and when the plaintiffs actually discovered the fraud or mistake) within 14 days of the July 30 order in an amended complaint. The court denied Smart Balance’s motion to dismiss on all other grounds. While this is no guarantee of success for the plaintiffs by any means, the decision of the court not to dismiss the allegations in Yumul on the basis of the plausibility pleading standard under Iqbal and Twombly stands as an example of the type of inconsistency we may see as courts attempt to apply the standard. We will continue to closely follow this case.
ACI Food-Borne Illness Conference in Chicago October 27 - 28, 2010
American Conference Institute (“ACI”) will hold its 4th National Conference on Food-Borne Illness Claims in Chicago, October 27 to 28. Highlights of this year's conference will include:
• Appearances by a number of current and former high-level regulators such as Dr. Arthur Liang from CDC, Dr. David Goldman from USDA, Dr. David Acheson formerly of FDA, Dr. Bob Brackett formerly of CFSAN, Jack Guzewich from FDA, Dr. Bill Keene from Oregon Public Health Division and Benjamin Miller from Minnesota Department of Agriculture
• Mock witness examination of a testifying epidemiologist
• Insights from of the nation's top in-house and outside food-borne illness counsel
The complete conference brochure can be linked here.
Unfortunately, my schedule won't allow me to join the conference this year (I've spoken at the first three ACI national conferences on food-borne illness). But I can arrange for a conference discount. Just give me a call (206-386-7595) or send me an email.
Product Liability - Protect Yourself and Your Business
This is the title of a presentation I'll be giving at the American Cheese Society's (ACS) annual meeting in Seattle. I'll be speaking along with Marc Baker and Jill Perucca from the Elliott, Powell, Baden & Baker insurance agency at 3:30 p.m. on August 27. The slide deck I intend to use can be found here.
Michael Pollan and Laurie Demeritt keynote the ACS event that unites the nation's cheese makers in the Emerald City for four days (August 25-28).
Equally as compelling as the keynotes (and our presentation on product liability avoidance) will be presentations by other Stoel Rives lawyers:
Anne Glazer on Trademarks: The Legal Perspective on the Care and Feeding of Your Brand (1:30 p.m. on August 27); and
Peter Serrurier and Ryan Steen on Water, Water, Waste Water Everywhere (10 a.m. on August 27)
If you are at the ACS conference and can pull yourself away from the concurrent presentations on various cheese making topics, stop by and meet the best food business lawyers in the Pacific Northwest.
Variations of Organic Labeling
By Guest Blogger Elaine Albrich
This post also appears on the Alcoholic Beverages Law Blog
Figuring out what information must be on your wine label can be tedious. Adding terms like "organic" or "sustainably-grown" can be even more challenging. Extra steps are required for adding organic certifications or claims to a wine label, although the regulation of such claims under the Alcohol and Tobacco Trade Bureau ("TTB") Certification/Exemption of Label/Bottle Approval (COLA) process has been made more clear with the Memorandum of Understanding between the TTB and the USDA concerning organic labeling and adverting. The MOU clarifies and delineates the enforcement responsibilities of each agency with respect to labeling and advertising of alcohol beverages produced under the Organic Foods Production Act of 1990 (OFPA).
The USDA has authority over domestic and imported agricultural products to be sold, labeled, or represented, as organically produced. Under OFPA, the USDA has established the National Organic Program (NOP). Agricultural products that are sold or labeled as organically produced must be produced and handled in accordance with NOP. Any use of the term "organic" on a wine label or in adverting of wine must comply with the USDA's NOP regulations. Now, with the adoption of the MOU, it is clear that TTB has the regulatory authority to determine whether proposed labels are consistent with NOP.
The Advertising Labeling and Formulation Division (ALFD) of the TTB has guidance for organic labeling applicants. The guidelines provide a step-by-step process of what is required to obtain label approval, including the need for proof of USDA-accredited certifying agent (ACA) preview, a certification statement, a sulfite statement, an ingredient statement, the USDA seal, and so on. The guidelines also contain an organic label quick reference sheet that explains the requirements for the various organic claims, like "100 percent organic," "organic," or "made with organic (specify ingredient)." Additional TTB guidelines on variations of "organic" labeling are available at www.ttb.gov/pdf/wine.pdf.
For fun, I looked at four different bottles of wine that made some claims for "green production." The first was a NSA Organic, USDA certified wine from the Columbia Valley. The bottle was blazed with the "organic" nature of the wine, from the foil marked with "NSA Organic" to the "certified organic vineyard" on the "back" label. The USDA Organic stamp was also featured. Comparatively, an Oregon pinot from Eola-Amity Hills was simply marked with a small "made with organic grapes" statement and certified organic by Oregon Tilth. Then there was another wine from Columbia Valley that, while not having any "organic" claim, was described as a "wine of sustainable and environmentally friendly farming." Finally, the fourth was an Austrian wine certified "Demeter," a biodynamics certification. However, notably many wines that are known to value biodynamic or sustainable farming practices do not make such claims on their labels. Recognizably, this allows for more flexibility and avoids the extra steps of having to prove organic label claims.
How Virgin is Your Olive Oil?
The Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture is finally revising its standards for olive oil, promulgated way back in 1948, to bring them in line with the International Olive Council (IOC), an organization established under United Nations auspices that represents 98% of the world’s olive oil production, nearly all in the Mediterranean basin (the U.S. is not a member). It is doing so at the behest of the California Olive Oil Council (COOC), which is the trade association of U.S. olive oil producers, essentially all of whom are in California.
The new regulations, which are effective on October 25, can be found here, and here is a release the AMS put out describing them. Pretty clearly, terms like "U.S. Fancy" are quaint and obsolete with respect to how olive oil is marketed, and standards for what the terms "Extra Virgin" and "Virgin" olive oil mean are important for olive oil producers, distributors, retailers and consumers.
COOC was also a funder of a study, which has received much press attention, about the accuracy of olive oils labeled as “extra virgin” in advance of the effectiveness of the new AMS regulations. The study has resulted in headlines like, “Olive Oil Study Questions ‘Extra Virgin’ Claims” and the even more provocative, “Olive Oil Study Questions Claims of Virginity.”
The study showed, among olive oils purchased by the researchers in three parts of California (the Bay Area, Sacramento and Los Angeles County) a difference in the accuracy of “extra virgin” labeling between domestic and imported olive oils. Using tests that are used by IOC and in the AMS regulations, as well as other tests used by the German Fat and Oil Society and Australian Olive Association (neither Germany nor Australia being IOC members), there was a distinct difference in the quality of the oils tested, with the domestic olive oil coming off better.
The study makes no claim to any statistical significance for its findings, which is not surprising considering they only examined 14 imported and five domestic brands, buying one of each imported brand in three different places in California and one of each domestic brand in two. Equally unsurprisingly, the North American Olive Oil Association (NAOOA), which represents olive oil importers, has questioned the study's conclusions, which they say are not in line with the results of their own periodic tests of their members' products. Both groups appear to be supportive, however, of the AMS regulatory action.
One thing in the NAOOA press release about the new regulations struck me, however.
But the practice of labeling lower-quality olive oil as top-end — and charging a premium for it — is technically legal in the U.S.
The reason is simple: There are no federal rules that define what is — or is not — "virgin" or "extra virgin" olive oil, said Vito S. Polito, professor of plant sciences at UC Davis and co-chairman of the school's Olive Center, a research group.
I suppose we can all have our own definition of "technically legal." Something could be thought of as technically legal if doing it does not result in criminal sanctions, or result in the product being forcibly recalled from store shelves. In those senses, I suppose selling something as "extra virgin" olive oil would be, until the AMS regulations come into effect in October, "technically legal." But if one took it to mean there are no adverse legal consequences, may I beg to differ? Readers of this blog will remember the implied warranty of merchantability contained in Section 2-314 of the Uniform Commercial Code. One key provision of that warranty is that the goods "conform to the promise or affirmations of fact made on the container or label if any." It doesn't require federal standards to say what extra virgin olive oil is; any form of evidence of a standard, such as, say, the IOC standards, would presumably be admissible into evidence to show what the common understanding of the term is. If the goods sold do not conform to the standard found by the court or jury, then damages under Article 2 will be available.
For consumers, it should be even easier. If you buy something labeled extra virgin olive oil and the bottle, when opened, smells rancid, take it back to your retailer. If it smells delicious, enjoy one of nature's true wonders.
