Learn About Who Is Setting Sustainability Standards and How to Make Good Sustainability Claims: Register for the 11/3 Sustainable Foods Webinar
If you haven’t already, register here for the second in a three-part webinar series on environmentally friendly sustainable food products, to be held at 9 am PT, Tuesday, November 3. This installment of the series will focus on sustainability standards, third-party certification and avoidance of “green-washing.”
The webinar will feature:
- FDA regulatory lawyer Ricardo Carvajal from Hyman, Phelps & McNamara;
- Roberta Anderson from Food Alliance, the nation’s leader in setting third-party sustainability standards for food production;
- Alison Dennis from Burgerville, a traditional quick-service restaurant on the cutting edge of sustainability; and
- Advertising lawyer Jere Webb from Stoel Rives.
The webinar is interactive, and those listening live will be able to submit questions. We will strive to answer all questions either during the broadcast or off-line directly with listeners.
If you missed the first installment, you can read about the take-aways and replay the webinar on demand here. The slide deck can be downloaded here.
The Table Is Set For Class Action Litigation Over the Use of Smart Choices Labeling
By Guest Blogger Troy Hutchinson
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In response to recent consumer complaints and state attorney general investigations that the use of the Smart Choices label is misleading and deceptive, food companies now face the threat of consumer class action litigation under state fraud and deceptive practices statutes.
Adding to the uproar, the Food and Drug Administration (FDA) announced that it will consider using its regulatory tools if front of pack nutrition labeling is not used in a common, credible way, it said in a letter to industry on October 20, 2009.
In a conference call with journalists, Margaret Hamburg of the FDA said that the FDA wants to work with industry, but that over time it “will take enforcement action for egregious examples.” Hamburg did not pinpoint specific products, but mentioned claims of “zero trans fats” on the front of packaging for products that have high levels of saturated fat, and said: “There are products that have got the Smart Choices check mark that are almost 50 percent sugar.”
At least one member of Congress has also weighed in on the issue. U.S. Rep. Rosa DeLauro announced that she is “very encouraged by FDA’s commitment to proceed with enforcement actions” against unauthorized claims. She went on to state that “[c]learly something is wrong when foods such as Froot Loops cereal, Cookie Crisp cereal, and Uncle Ben’s Instant Rice are designated as ‘healthy’ by these labeling systems.”
Responding to the FDA’s letter, president of the Grocery Manufacturers Association Pamela Bailey said in a statement that the organization is looking forward to working with the FDA “to determine what nutrition information is most useful in providing consumers with the tools they need to help them build a healthful diet.”
While companies who are using the Smart Choices program to promote legitimately healthy options should encourage FDA enforcement, that enforcement brings with it the risk of class action litigation. Whenever there are attorney general investigations or other regulatory enforcement action taken, class action litigation often follows. Food companies using the Smart Choices labeling should be strategizing on how best to defend these actions. Some private litigation may be preempted if the FDA has used its rule making authority. Where companies are legitimately using the Smart Choices label to promote healthier food options, those companies should encourage the FDA to use its rule making function to give clear rules on how companies can use the Smart Choices label.
Preemption v. Plausibility: Will There Be More or Fewer Successful Consumer Fraud Suits?
Products Liability Law360 ran a piece this week entitled “Suits Over Deceptive Food Marketing Likely To Increase” (unfortunately, this is a subscription-only site) authored by Liz McKenzie. The article discusses rightly how increased FDA enforcement action may lead plaintiffs attorneys to file “piggy-back” putative class actions. For example, it took just 13 days following the FDA’s warning letter to General Mills concerning Cheerios for the first putative class suit to be filed.
Compounding increased FDA enforcement, recent rulings from the Supreme Court and the Third Circuit, like the Snapple Decision, have made it more difficult to assert a preemption defense in food cases in the absence of formal FDA rulemaking.
But, what one hand giveth the other taketh away. The hope for food companies is that that the Supreme Court’s recent decisions in Twombly and Iqbal will negate the preemption decisions and effectively heighten the bar for consumer fraud claims related to product marketing. Dismissal for failure to meet the new “plausibility” pleading standard and not preemption is exactly how the District Court ruled in Wright v. General Mills. Wright involved a putative class complaint involving Nature’s Valley products sold as “100% Natural” “even though the products contained one or more non-natural or artificial ingredients such as high-fructose corn syrup (’HFCS’).”
In Wright, the court found defective, under the Iqbal/Twombly “plausibility” standard, the plaintiffs’ injury-in-fact allegation. The Wright court ruled that the injury-in-fact allegation “conclusory,” “sparse” and “defective.” The plaintiff alleged only that “Defendant caused Plaintiff and other members of the Class to purchase, purchase more of, or pay more for, these Nature Valley products.”
Following the Supreme Court's new standard of notice pleading and its application in the Wright case, query how any putative consumer fraud class complaint can survive a Rule 12 motion without having first completed market surveys or gathering of other evidence of consumer injury.
FDA's Searchable Widget for Fraudulent H1N1 (Swine) Flu Products
Ken has previously blogged about liability issues relating to H1N1 flu, also known as swine flu. Today, the FDA has issued a widget to allow employers, consumers and others to browse and search fraudulent H1N1 influenza products and report suspected fraud. The widget can be copied onto any other Web site or blog. The FDA had previously issued a similar widget for the peanut butter recall. Additional information can be obtained from the FDA's swine flu page or flu.gov.
This is the widget:
Jim Prevor Deconstructs CSPI's List of "Ten Riskiest Foods"
The Center for Science in the Public Interest has released its list of "Ten Riskiest Foods Regulated by the FDA." The list has gotten a lot of publicity, particularly because some unexpected foods like potatoes made the list.
Our friend Jim Prevor, the Perishable Pundit, has written a Special Edition of his newsletter that pretty much says everything about the list that we would say, so I'm just linking to his article. The only thing I'd add is that Stoel Rives were co-sponsors of the conference he mentions in the article, along with Bill Marler. Otherwise, thanks for doing the good work, Jim.
UPDATE: Being the total gentleman that he is, within hours of Friday's post Jim emailed me that he would add a credit to Stoel Rives on his entry. And of course he did.
Comment On Recent New York Times E. Coli and Beef Article: How Retailers Can Protect Themselves
Co-Authored By Guest Blogger Scott Hansen
According to its website, last Sunday’s New York Times article on E. coli and beef is among the most widely read pieces published by the newspaper this week. The article tells the story of a 22-year-old Minnesota dance instructor who was left paralyzed after being infected with a strain of E. coli in an “Angus Beef Pattie” she ate in fall of 2007. The article traces the story of her burger, points out the many limitations in the current system, and calls eating beef a “gamble.”
While the article is clearly targeted at meat producers and processors, food retailers selling beef products, such as grocery stores and restaurants, are also at risk. This piece is a reminder of the need for retailers to take steps to ensure proper systems and procedures for tracing food to its source (according to yesterday's statement by Secretary Vilsack, retail traceability of ground beef is soon to be a USDA requirement). The Times lauds Costco, which it says is one of the few big producers that tests trimmings for E. coli before grinding.
Retailers should also be mindful of the utility of supplier agreements sufficiently tailored to limit liability or to procure insurance coverage. The greater protections afforded by well-drafted supplier agreements and carefully placed insurance are the best way to mitigate exposure.
Some may choose strong indemnification provisions and additional insured provisions. Another route, not yet the prevailing trend in the industry but perhaps in the near future, involves wrap-up insurance covering the entire supply chain, accompanied by covenants of cooperation between members of the supply chain.
Wrap-up insurance/covenants of cooperation approach has the advantage of potentially avoiding expensive and reputation-damaging litigation between members of the supply chain. Wrap-up insurance is also more likely to result in sufficient coverage to protect the retailer or restaurant chain.
No matter the path chosen, thoughtful placement of insurance coverage and confidence in supply chain contracts can help a food company weather the storm of a food-borne illness outbreak.
Environmentally Sustainable Foods: Dispelling Fear and Understanding That Sustainability Must Be Good for Business
Stoel Rives is proud to sponsor an upcoming webinar series on legal and business aspects of bringing sustainable food products to market. Industry representatives will talk among other things about what sustainable food products are, help dispel the fears of traditional food companies, discuss strategies for minimizing business and litigation risks, and underscore the importance of sustainable foods as a profit-making enterprise.
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The first session, October 20, will discuss what an environmentally sustainable food product is, how a company may need to rethink research and development and supply chain issues, and financing. Participants include Steve Rowe, Sr. V.P. and General Counsel from Darigold, Inc. and its parent Northwest Dairy Association, food supply chain consultant Monica Gelinas from Karp Resources, and business lawyers Joel Dahlgren and Duff Bryant from Stoel Rives.
The second session, November 3, will look at what the FDA and USDA may do to define sustainability, third-party certification issues and green washing. Participants include Alison Dennis, Director of Supply Chain from Burgerville, Roberta Anderson from third party certifier Food Alliance, FDA lawyer Ricardo Carvajal from Hyman Phelps and trademark lawyer Jere Webb from Stoel Rives.
The third session, November 17, will look at increased risks presented by sustainable food products and strategies to mitigate those risks. This panel will include Peter Truitt, CEO of Truitt Brothers; Steve Marinovich, insurance broker at Propel Insurance; advertising lawyer Anne Glazer from Stoel Rives and me.
Each session will be 60 minutes and feature an interactive, "rapid fire" roundtable format. The panels will also respond in real time to questions submitted by listeners. Registration is free. Contact me if you would like further information.
