Another Recall From a Company That Does the Right Thing
The FDA announced a recall of fresh tuna steaks distributed to Shaw's, Star Market and Big Y grocery stores by North Coast Sea-Foods Corp. of Boston and New Bedford. The alleged problem was increased levels of histamine that might cause scombroid poisoning. The tuna was removed from sale on June 24, but consumers who might have frozen the steaks were told to return them to the stores for a full refund. We again assume that North Coast (and its insurers) will be funding the refunds.
What made me write about this recall was a rather silly poll in DailyKos. The question was whether the increase in recalls was due to the food supply becoming less safe or that the FDA was getting better. Like many online polls, this so oversimplified the situation that I thought I should write about it, and the North Coast tuna recall seemed as good a vehicle as any.
The three reported cases of scombroid poisoning associated with this tuna would presumably have been reported to local public health officials in New England, not the FDA. Or they might have been reported to the markets, which in turn would have easily been able to identify the source of the tuna and reported to North Coast (scombroid poisoning occurs almost immediately, so there isn't the usual problem of figuring out what food might have caused a delayed reaction). Both the markets and North Coast will have significant food safety programs. Some of this will be the result of government action, and some of it the result of simply caring about their customers. There is no indication that this outbreak was the result of anyone's inattention or failure.
It took me awhile to identify that I had the right North Coast Sea-Foods Corp., because their name is spelled differently in the release. In doing my research, I discovered some nice things about them, such as that they had argued strenuously against a Department of Defense initiative to buy cheaper, and potentially more hazardous fish for our troops, on the grounds of food safety. Another thing I learned was that they had installed solar power at their Boston facility, and considered wind power at their New Bedford facility. We at Stoel are not just committed to renewable energy, we literally wrote the book on it. So, similar to the Fat Duck and Nestle, even those committed to doing the right thing can sometimes be the subject of a food recall.
Why Are Food-borne Organisms Associated with Beef?
USDA’s Be Food Safe Twitter Feed circulated its Fact Sheet titled “Beef . . . from Farm to Table.” First published a few years ago, this might be of interest to businesses involved in the sale, marketing, labeling, and/or packaging of beef. The article is a helpful primer on the history of beef, current industry practices, USDA’s role in inspection, consumer trends, cooking times, storage times, and food-borne illnesses associated with beef.
Captain Crunch Suit Dismissed: Court Finds No "Actual Fruit Referred to as Crunchberry"
Yes, someone has actually filed a putative class action on the basis that she was “mislead by the packaging and marketing, which she argues convey the message that the Product contains real, nutritious fruit.” U.S. District Judge England in the Eastern District of California dismissed the complaint captioned as Sugawara v. Pepsico, Inc.
Though Sugawara seems purely frivolous, the claim follows predictably from the Ninth Circuit’s decision in Williams v. Gerber discussed previously on this blog. In Williams, the Ninth Circuit reinstated a putative class action that alleged labeling on “fruit juice snacks” (1) constituted misrepresentation and breach of warranty under California common law and (2) violated California’s statutes on unfair competition and consumer law. The district court had granted a motion to dismiss under Rule 12(b)(6), finding that statements on the label “were not likely to deceive a reasonable consumer, particularly given that the ingredient list was printed on the side of the box.”
Judge England distinguished Sugawara from Williams, writing that
while the challenged packaging contains the word “berries” it does so only in
conjunction with the descriptive term “crunch.” This Court is not aware of, nor has Plaintiff alleged the existence of, any actual fruit referred to as a “crunchberry.” Furthermore, the “Crunchberries” depicted on the PDP are round, crunchy, brightly- colored cereal balls, and the PDP clearly states both that the Product contains “sweetened corn & oat cereal” and that the cereal is “enlarged to show texture.” Thus, a reasonable consumer would not be deceived into believing that the Product in the instant case contained a fruit that does not exist.
Even lawsuits as unmerited as alleging that consumers believe Crunchberries grow on trees are expensive to deal with. As we said following the Williams decision, the sad state of affairs is that the only way manufacturers can mitigate against these types of putative class actions is to directly involve lawyers in the marketing and labeling process.
Avoid Unnecessary Labeling Claims - Ensure That Cooking Instructions Are Adequate
Bill Marler funded independent research at the University of Idaho to study the adequacy of cooking instructions found on the packaging on various retail brands of frozen ground beef patties. The research was published this month in Food Protection Trends.
The study found that three of the packages included cooking instructions that “would be inadequate to produce a safely cooked patty.” Most of the issues raised in the article center on the variability in cooking techniques, e.g., pan frying, using a propane grill, or preheating, and variability in cooking temperatures. Suggested solutions for improved cooking instructions are included in the study.
For food sellers trying to minimize or avoid claims, adequate cooking instructions are a good thing. Even if food-borne illness claims cannot be avoided, the scope of the claims and damages can be limited by providing adequate, "bullet-proof", cooking instructions.
Kudos to Bill Marler for “putting skin in the game” and funding this study.
Energy Drink Maker Sued Over Alleged Health Risks
The maker of Redline energy drinks has been sued in federal court in California. The plaintiff, Zack Aaronson, is seeking class action status for his lawsuit against Vital Pharmaceuticals, Inc. (operating under the trademark VPX).
The plaintiff claims that VPX failed to adequately warn consumers of potential side effects and health risks associated with consuming VPX’s Redline energy products. Among other things, the plaintiff alleges that consumers have reported adverse side effects including chills, excessive sweating, vomiting, convulsions, chest pains, and rapid heartbeat.
According to VPX’s website, Redline is available as energy drinks and gel caps. The company touts the products as “the first physique-transforming matrix to coax your body to burn fat through the ‘shivering response.’”
The case is Aaronson v. Vital Pharmacetucals, Inc., S.D. Cal. Case No. 09-1333. A copy of the complaint is available here.
When A Food Borne Illness Insurance $0 Sublimit Does Not Mean $0 Of Coverage
Restaurant owners recently scored a victory against an insurer, who was looking to limit its exposure for lost sales from the fallout from a food-borne illness outbreak. Middlesex, New Jersey Superior Court Judge Lewis Paley ruled in favor of restaurant franchise owners suing for coverage under a Trade Name Restoration, Loss of Business Income and Incident Response Insurance for Food Borne Illness (“TNR”) policy to compensate for lost sales from a well-publicized E. coli outbreak associated with their national franchise name.
While a victory, the policy language was problematic for the restaurant owners. The case is a good case study why food sellers need to be vigilant in their review of insurance as it relates to food-borne illness.
The outbreak was associated with lettuce supplied to certain franchises. The TNR insurance policy, issued by Lloyd’s of London and Professional Liability Insurance Services (“PLIS” or “Underwriters”), included a “Sublimit” for “losses . . . from the operations of any product supplier. . . .” The declarations page for the policy listed the sublimit as “$0.”
PLIS denied coverage on the basis of the $0 supplier’s sublimit.
Despite the $0 sublimit, the court still found in favor of the restaurant owners, concluding that “an average, reasonable insured would expect coverage for the outbreak.” The court latched onto the term "product supplier," finding ambiguity. The court reasoned that the lettuce supplier may not have been a “product supplier” because “a reasonable insured would conclude that an ‘ingredient’ is a component of a product, not the product itself.”
The court also appeared disturbed that the franchise owners previously maintained through PLIS Food Borne Illness coverage (“FBI”). Evidently, the FBI policy for which PLIS received similar premiums covered lost profits from food-borne illness caused by suppliers. The court found that the “TNR insurance may differ from FBI insurance, but there is no evidence that the Franchisees were told that earlier coverage was being reduced.”
The New Jersey court expressed sympathy for the restaurant owners' plea in the face of what the court perceived as a harsh policy limitation. My experience is that not every court would "stretch" to protect commercial insureds. More important, a restaurant insured should always prefer clear policy language providing the coverage it wants over litigation and a gamble that a court will find ambiguity in a policy that would otherwise seem to preclude the coverage expected.
Trademarking Green/Eco-Friendly Food - What You Need To Know
By Guest Blogger Jere Webb
It is evident that virtually every business now is trying to position itself as being “green”. For a discussion of restrictions on “green advertising”, particularly the FTC’s green ad guidelines (the “Green Guides”), and similar efforts at the state level, see “Green Claims Advertising – What You Can Say and What You Can’t”. The FTC is reviewing the Green Guides and likely will amend them in the near future. For comments submitted in the review process and additional information, see Green Guides.
The newer arena is green trademarks. The United States Patent and Trademark Office is now routinely rejecting, based on descriptiveness, multiword trademarks, that start with or contain the word GREEN. An example is the mark GREEN JOURNEY for hybrid cars. But in the same application, the applicant sought to register for clothing, and the Trademark Office accepted the mark, but with a disclaimer of the word GREEN. It found that the two word mark was merely “suggestive” of clothing, not “descriptive”. See "Green" Trademarks Face Hostile Climate in USPTO.
For an example of a green mark that passed muster, the Trademark Trial and Appeal Board (TTAB) recently reversed an examining attorney’s descriptiveness refusal for the mark GREEN INDIGO for clothing, finding it to be an “incongruous” term for clothing and therefore merely suggestive and not descriptive. The case is In re Jones Investment, Inc. (TTAB Jan. 21, 2009.)
The lesson is: If you want to include the word “GREEN” in a trademark, some careful review and advice from a trademark lawyer is in order.
Want to read more? See “Eco-Friendly Claims Go Unchecked” (USA Today June 22, 2009). The FTC’s brochure “Sorting Out Green Advertising Claims” can be found here.
Participate in USDA Governance in Your County
The Stoel Rives Agribusiness Group has sent out an alert reminding farmers and ranchers of the USDA's program that allows you to participate at the county level in discusssions relating to agricultural decisions in your community. The link to the website with materials needed to submit nominations (which opened on June 15) is here.
Ken, Bryan and I are all members of the Agricubusiness Group, along with lawyers experienced in all manner of topics related to agriculture. You can subscribe to its alerts here.
Sustainability and Consumer Confidence in Food Safety
For food sellers interested in promoting a “sustainable” brand and inspiring food safety confidence in their consumers, meet Food Alliance. Food Alliance “is a nonprofit organization that certifies farms, ranches and food handlers for sustainable agricultural and facility management practices.” It bills itself as “the most comprehensive certification program for sustainably produced food in North America.”
I’ve recently joined the Food Alliance Board of Directors (in fact, I’m headed to Portland today for a board meeting). My hope is to assist Food Alliance in becoming more widely accepted and mainstream. Credible third-party certification, such as Food Alliance provides, offers a transparent pathway to sustainability of our food supply and consumer confidence in food safety.
Food Alliance takes a holistic approach that is broader and more dynamic than organic certification, which does nothing to address food contamination from pathogens such as Salmonella, E. coli, and Listeria (in fact, many experts believe that organically grown food may be more likely to be contaminated by these pathogens). By way of example, Food Alliance certification standards, among other things, address “soil and water quality,” “ensure the health and humane treatment of animals,” “conserve energy and water,” and “ensure quality control and food handling safety.”
For more on why a holistic, independent third-party certification correlates with food safety (and accompanying consumer confidence), I’d suggest reading this op-ed piece co-authored by Food Alliance Executive Director Scott Exo, which was written earlier this year in the wake of the PCA peanut recall.
Melamine in Pet Food and the Limits of the Law
Ken's blog post about taking the time to figure out what insurance limits are right for you resonated with me as I was reading about the plea agreement in the melamine pet food debacle. This was the likely last act in a tawdry story of greed and fraud that led to the deaths of thousands of cats and dogs and placed nearly every pet owner in fear. Stephen S. Miller and Sally Qing Miller, owners of ChemNutra, Inc., pled guilty to two misdemeanors in federal district court on June 16, and the prosecutors have recommended two years of probation and fines of $5000 for each of the Millers and a $25,000 fine for the company. The Chinese companies indicted at the same time remain outside the reach of the U.S. justice system.
Pet food companies had previously settled with pet owners for $24 million. That settlement was presumably funded by insurance, and according to one news report, ChemNutra contributed to the settlement in some way (more contemporary news accounts differ). Menu Foods, the pet food supplier in the eye of the storm, sued ChemNutra and acording to a news report at the time:
Menu Foods, which is based in Canada, acknowledged that it has been using wheat gluten from two suppliers in the United States and Europe for many years, but had not experienced any problems until it also started buying the ingredient from ChemNutra.
"Last fall, (Menu Foods) added a third supplier, ChemNutra, and the issues we have experienced date to that time," the spokesman said.
I have been unable to find more about Menu Foods' lawsuit, but it is unlikely Menu Foods was made whole for all of its damages.
What has been alleged is a scheme by the indicted but unpunished Chinese companies, Xuzhou Anying Biologic Technology Development Co. and Suzhou Textiles, Silk, Light Industrial Products Arts and Crafts I/E Co., to use melamine to fraudulently increase the apparent protein level of wheat gluten. This in turn led to pet deaths.
Bryan has previously blogged about EMA,. or economically motivated adulteration. And Ken listed among his five New Year's Resolutions:
- Review and Revise Supply Chain Agreements,
- Reassess Suppliers; and
- Increase Scrutiny Against Fraudulent Imports
This is of course excellent advice. I would simply add another one:
- Recognize the Legal System Can Only Do So Much
By all accounts, the Chinese suppliers were fooling everybody: Chinese authorities, U.S. authorities, the importers and everyone who bought from them. ChemNutra may have had a great contract with them, placing on them the duty to comply with all laws and the duty to indemnify ChemNutra if anything went wrong. Menu Foods, in suing ChemNutra, which was a new supplier for it, indicated it had the same provisions in its contract. The other pet food manufacturers, distributors and retailers in the chain down to the ultimate pet owners--as well as owners of animals raised for food who had to destroy poultry and livestock that may have ingested melamine, to keep it out of the food chain--all may have had great contracts, too.
They were all, however, left holding the bag for the wrongs of people who were beyond the reach of the law. The Millers' guilty plea indicated that they continued to deny any intentional wrongdoing and the government apparently didn't believe it could prove otherwise. The lesson, then, is, as Ken suggested at the end of last year, know your supplier, know their supplier, visit plants, check out food safety programs, and avoid doing business with people you can't check out.
