Ninth Circuit Approves California Ban on Slaughtering Nonambulatory Animals Against Preemption Challenge
Chief Judge Alex Kozinski of the Ninth Circuit Court of Appeals may be the best-known lower court judge in the United States. He has wide-ranging tastes and accomplishments. Nearly every lawyer has a favorite Judge Kozinski quote, such as the opening line in Mattel, Inc. v. MCA Records, Inc.: "If this were a sci-fi melodrama, it might be called Speech-Zilla meets Trademark Kong."
Today, Chief Judge Kozinski authored the opinion in National Meat Ass'n v. Brown, upholding California's statute rendering it illegal to slaughter non-ambulatory ("downer") animals against the claim the statute was preempted by the Federal Meat Inspection Act. The case specifically involved pigs, apparently because cattle in that condition must be labeled "U.S. Condemned" and disposed of outside the food supply.
The plaintiffs made two claims, one for express preemption and one for preemption by implication. The court was having none of it. With regard to express preemption, the statute expressly preempts state laws relating to "premises, facilities and operations." On the other hand, the statute expressly permitted state regulation of slaughterhouses. Two other circuit courts had reached the conclusion that regulating the kind of animal that may be slaughtered was not preempted. In his typical fashion, Chief Judge Kozinski said that the analysis in one case involving horse flesh "made horse sense." Then, in dealing with the district court's analysis about how a pig turns into pig meat no matter what its condition before slaughter, he wrote this one word rebuttal: "Hogwash."
In dealing with the implied preemption argument, the court concluded that it was physically possible to comply with both the FMIA and the California statute. Wrote Chief Judge Kozinski,
But these regulations don't require the slaughter of downer animals; no slaughterhouse operator would be fined by federal authorities if he gave nonambulatory animals medical care and put them up for adoption as pets.
And less flippantly:
Federal regulations require inspection if downer animals are to be slaughtered . . . . Whether they may be slaughtered is up to the states.
(emphasis original). The court similarly dismissed an argument that release of the animals to be euthanized would require permission from federal officials, because there was nothing in the record to suggest that this permission would not be routinely granted. Similarly, the claim that euthanized downer animals would need to be inspected by federal officials for disease was met with the fact that the California statute did not prohibit such inspection so long as the animals were not slaughtered for food.
One part of the California statute, Section 599f(e), which deals with the transportation of nonambultaory animals, was found to be preempted. This was because the federal statute expressly authorized certain means of moving downer animals that were prohibited under the California law. The court found, however, that no showing of irreparable harm had been demonstrated in the lower court, which was necessary to a preliminary injunction, and thus vacated the injunction in full, without prejudice to a later showing before the lower court of such irreparable harm on this one issue.
The Food Labeling Provisions of the Health Care Bill: Preliminary Thoughts
You've heard the phrase "buried in the bill," of course. Section 4205 of the "Patient Protection and Affordable Care Act," the health care reform bill President Obama signed on March 23, 2010, is contained on pages 1206-1214 of a 2407 page bill. It could hardly be more buried than that.
In very technical terms, Section 4205 inserts a new subclause (H) into Section 403(q)(5) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 343(q)(5), and adds a proviso (referring to the new subclause (H)) in Section 403(q)(5)(A). Section 403 is entitled "Misbranded Food" and clause (q) is entitled "Nutrition Information." Previously, subclause (5)(A) has exempted both restaurant food or takeout food from federal nutritional labeling requirements.
The new statute creates a new regime for labeling, in essence only requiring caloric and other information to be provided by restaurants covered by the act, by vending machines owned by persons covered by the act, and by those who opt in to the act.
The covered restaurants are those "part of a chain of 20 or more locations doing business under the same name (regardless of the type of ownership of the locations).and offering for sale substantially the same items." This appears to be intended to cover chain restaurants even if they are franchised, or held in separate subsidiaries.
The substance required to be disclosed is actually quite discrete. It must be:
- In a clear and conspicuous manner
- Adjacent to the name of the standard menu item
- Clearly associated with the standard menu item
- Of the number of calories contained in the standard menu item as usually prepared and offered for sale
In addition, there must be posted prominently on the menu "designed to enable the public to understand, in the context of a total daily diet, the significance of the caloric information provided on the menu." This would include information about a recommended daily calorie intake.
Finally, all of the standard information required under clause (q)(1)(C) and (D), meaning the standard information on calories derived from fat, plus total fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, dietary fiber and total protein, must be provided somewhere in the restaurant and a prominent, clear and conspicuous sign stating this fact must be on the menu or menu board.
The caloric disclosure also applies to a salad bar, buffet line, cafeteria line, or similar self-service line, "adjacent to each food offered," on the basis of per displayed food item or per serving.
Food establishments are required to have a reasonable basis for their nutrient content disclosures.
There will be regulations on how to deal with different flavors or combinations (such as soft drinks from a fountain with many choices or pizza with different toppings). Regulations can also add to the list of nutrients required to be disclosed.
Exceptions to the disclosure requirements include items not listed on the menu, such as condiments, daily specials not on the menu for less than 60 days per calendar year, and food that is part of a customary marketing test but for a period of less than 90 days.
Food from vending machines where the machine does not allow the nutrition facts panel to be seen prior to purchase is required to have "in close proximity to each article of food or the selection button" a clear and conspicuous statement of calories in the article. Vending machines are covered if they are operated by a person who is in the busienss of owning or operating 20 or more vending machines.
The Secretary of Health and Human Services has one year to propose regulations.
An important aspect of the law is its preemption of inconsistent state laws. This applies to the establishments required to be included, and any others that choose to opt into the program. Thus, a smaller chain that crosses state lines where the two states have differing disclosure rules can choose to follow the federal rule and thus be able to print and display consistent menus,as well as train their personnel on only one set of rules. The preemption does not apply to labeling requirements in the nature of warnings concerning the safety of food, presumably including the California warnings about alcohol during pregnancy.
Until the rules come out, of course, the devil will remain in the details.
PepsiCo Developing "Designer Salt" in Effort to Reduce Sodium Content
Sodium content issues continue to be a hotbed of activity in the food industry. Hot on the heels of the New York City-led National Salt Reduction Initiative (which we blogged about here), an article in the Wall Street Journal gives us an indication on how one major brand is responding to the pressure to reduce the sodium content in its products.
PepsiCo Inc., which manufacturers the popular Lay’s brand potato chips, is developing a new “designer salt” with crystals shaped and sized in a way that reduces the amount of sodium consumers ingest while snacking. PepsiCo’s hope is that this innovation will cut sodium in its Lay’s Classic brand by 25%, and perhaps even more in its seasoned chips. This move is also consistent with PepsiCo’s stated goal of reducing the sodium in its snack products by 25% by 2015. PepsiCo anticipates it could take up to two years before the new salt is introduced in the marketplace.
This effort reflects a growing recognition within the food industry of the pressure to reduce salt content. According to the Centers for Disease Control and Prevention, most Americans consume more than twice their recommended daily limit of sodium. Excessive salt intake has been linked to a litany of health problems, including high blood pressure and heart disease. The challenge for food manufacturers (specifically those who manufacture processed foods, which are the source of most of the sodium Americans consume), as the Wall Street Journal points out, is that any adjustments to sodium content will have an impact on the overall taste profile of the product. Thus, manufacturers must strike a delicate balance between health concerns and the marketability of their products to target consumers. With new U.S. dietary guidelines due to be released this year and rumblings that sodium intake recommendations will be lowered by a significant degree, we will continue to monitor this issue.
The Great HVP Recall of 2010: A Review of Lessons Already Taught
As Ken noted last week, there has been a widespread recall of products containing hydrolized vegetable protein (HVP), a flavor enhancer, after salmonella Tennessee was discovered in product manufactured by Basic Food Flavors of North Las Vegas, Nevada. Consumers, who may have been unaware of the existence of HVP, are starting to learn how pervasive an ingredient it is in packaged and processed foods. The FDA has a handy list of products so far affected by the recall. There's a widget, too.
So far, no one has been reported to have been made sick or died as a result of this outbreak.
The FDA warns consumers "Remember to follow cooking instructions on all foods", except that many of the foods that contain HVP are not ones consumers cook. Included are salad dressings, ready to eat meal products, sauce and marinade mixes and snacks. I don't think there's a way for a consumer to cook a pretzel.
This outbreak is a good excuse to reiterate some of our advice from prior outbreaks, like the 2008 tomato outbreak and the 2009 peanut and pistachio 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.
As Professor Moody would say, "Constant vigilance."
GAO Report Urges FDA to Improve GRAS Oversight
As we have discussed in recent postings (here and here), issues regarding the certification of food ingredients as generally recognized as safe (“GRAS”) by the Food and Drug Administration (the “FDA”) have been a hot topic in industry circles. Now, the Government Accountability Office (the “GAO”) has released a report encouraging the FDA to improve its oversight of GRAS food ingredients. Our colleagues from Hyman, Phelps & McNamara’s FDA Law Blog released an excellent post on this subject, so we will discuss the general findings and recommendations of the report here.
The GAO report includes findings that (1) the FDA’s oversight process does not help ensure the safety of all new GRAS determinations, (2) the FDA is not systematically ensuring the continued safety of current GRAS substances, and (3) the FDA’s regulatory approach allows engineered nanomaterials to enter the food supply without its knowledge. The report contains six specific recommendations for FDA action, encouraging the FDA to develop a strategy to:
- require any company that conducts a GRAS determination to provide the FDA with basic information about that determination;
- minimize the potential for conflicts of interest in companies’ GRAS determinations;
- monitor the appropriateness of companies’ GRAS determinations through random audits or some other means;
- finalize the rule that governs the voluntary notification program;
- conduct reconsiderations of the safety of GRAS substances in a more systematic manner; and
- help ensure the safety of engineered nanomaterials that companies market as GRAS substances without its knowledge.
Further, the report contains a general directive that if the FDA determines it does not have the authority to implement one or more of these recommendations, the agency should seek the authority from Congress. In its response to the report, the FDA, while not indicating any definitive posture on the GAO’s recommendations, was generally receptive to the findings and recommendations of the GAO. Given the prominence of the issue of GRAS certification as it pertains to a number of food and beverage products in the marketplace, we will continue to closely monitor this subject.
Difficult Week for the Food Industry (Good Week for the Plaintiffs' Bar): HVP Salmonella and FDA Warning Letters
The week of March 1 saw a double whammy hit food manufacturers.
I. Open Letter to Industry on Marketing Claims
First, on March 3, FDA sent warning letters to 16 food manufacturers concerning their labeling practices. FDA also issued an Open Letter to Industry warning against certain practices. For example, FDA warned that:
o Nutrient content claims that FDA has authorized for use on foods for adults are not permitted on foods for children under two. Such claims are highly inappropriate when they appear on food for infants and toddlers because it is well known that the nutritional needs of the very young are different than those of adults.
o Claims that a product is free of trans fats, which imply that the product is a better choice than products without the claim, can be misleading when a product is high in saturated fat, and especially so when the claim is not accompanied by the required statement referring consumers to the more complete information on the Nutrition Facts panel.
o Products that claim to treat or mitigate disease are considered to be drugs and must meet the regulatory requirements for drugs, including the requirement to prove that the product is safe and effective for its intended use.
o Misleading “healthy” claims continue to appear on foods that do not meet the long- and well-established definition for use of that term.
o Juice products that mislead consumers into believing they consist entirely of a single juice are still on the market. Despite numerous admonitions from FDA over the years, we continue to see juice blends being inaccurately labeled as single-juice products.
II. HVP Recall
A day later, on March 4, FDA announced a recall of hydrolyzed vegetable protein (HVP). As of noon on March 4, 56 products containing HVP have been recalled. Some have suggested that HVP is the "Next Peanut Butter.”
III. What Food Companies Can Do in the Wake of FDA's Warning Letters and HVP Recall
What do last week's FDA warning letters and HVP recall have in common? The answer is, of course, litigation and exposure of brand value.
The first thing any affected food seller should do is engage its crisis management team. While lawyers and public relations staff are critical in crisis response, management of the crisis should not be left solely in the hands of either. Decisions should be made holistically, examining legal, public relations, business, financial and public health implications.
As discussed previously in this blog, companies faced with putative class claims filed as a result of the FDA warning letters on labeling should develop strategies to challenge the merits of the claims and class certification at the earliest possible stage. The end game for the plaintiffs' class action law firms is to obtain class certification and use that "litigation blackmail" to enter into a settlement with a handsome payout of attorneys’ fees.
For those companies with products that include recalled HVP, the good news is that there are few, if any, reported illnesses. The bad news is that recalls are very expensive and, for some companies without recall coverage or sufficient resources, financially devastating. Many food manufacturers were driven out of business in 2009 after being overwhelmed with the expenses of recalling products that included ingredients manufactured by Peanut Corporation of America (PCA).
For those affected companies with recall coverage or financial means, proactive measures can pay dividends. For example, offering refunds to consumers mitigates against putative class claims. Setting up consumer hotlines and payment of medical expenses for persons with illnesses linked to recalled products mitigates against personal injury suits.
On the Horizon: TTB and FDA to Jointly Consider Additives to Alcoholic Beverages
Coauthored by Susan Johnson
As we have blogged about previously, the Food and Drug Administration (the “FDA”) has been closely monitoring the appropriateness of additives to alcoholic beverages, with a particular emphasis on caffeinated alcoholic beverages. A recent release from the Alcohol and Tobacco Tax and Trade Bureau (the “TTB”) indicates that the two agencies could be working together to address this increasingly prominent issue.
The TTB release emphasizes that (1) the issue of whether or not an ingredient added to an alcoholic beverage is generally recognized as safe (“GRAS”) is within the jurisdiction of the FDA; (2) due to uncertainty as to how FDA regulations would apply to such products and the need for the TTB to provide clear guidance to the industry, the TTB believes it is appropriate to partner with the FDA on this matter so forthcoming TTB guidance will be clear and correct; and (3) as a result of the current uncertainty in the field, the TTB has temporarily suspended consideration of requests from industry members seeking guidance about the addition of vitamins and other nutrients, whether directly or indirectly through a flavor, to alcoholic beverages.
While each added ingredient will be analyzed individually by the FDA to determine whether or not it is GRAS, the agency’s action in November 2009 with respect to caffeinated alcoholic beverages could be an indication of its future posture. As we noted in our discussion of that issue, the agency explained in letters to manufacturers of caffeinated alcoholic beverages and a press release detailing the rationale for its action that under the Federal Food, Drug, and Cosmetic Act, any substance intentionally added to food is deemed unsafe and is unlawful unless its specific use has been approved by an FDA regulation, the substance is subject to a prior sanction, or the substance is listed as GRAS. While caffeinated alcoholic beverages carry with them a number of specific health and public policy concerns, this recent action indicates that manufacturers of alcoholic beverages with added ingredients should be prepared to justify their rationale for inclusion.
Cleaning Up the Docket - Northern District of California Dismisses Lanham Act Claim Alleging Mislabeling of Personal Care Products
As we have blogged about, litigation regarding product labeling has been a hot topic within the food and beverage industry. A recent decision from the Northern District of California could hold interesting implications for Lanham Act claims centering on the labeling of products as “organic.” While the case, One God Faith, Inc. v. Hain Celestial Group, Inc., involved personal care products rather than agricultural products, the rationale used by the court in reaching its decision to dismiss the claims of the plaintiff is illustrative for the general category of “organic”-labeled products.
In One God Faith, plaintiff, a manufacturer of personal care and cosmetic products, including soap labeled as United States Department of Agriculture (“USDA”) certified “organic” or “Made with Organic” oils in compliance with USDA National Organic Program (“NOP”) standards, sued multiple defendants under § 43(a) of the Lanham Act alleging defendants falsely, misleadingly, and confusingly labeled and advertised similar products as “organic” even though they did not meet NOP standards for the designation, resulting in a loss of sales for plaintiff.
As we blogged about in our discussion of the POM v. Ocean Spray decision, pursuing a false advertising claim under the Lanham Act can be a difficult task for plaintiffs. When Congress enacted the Organic Food Products Act (“OFPA”) in 1990, the legislation that authorized the USDA to implement the NOP, it expressly declined to create a private right of action to enforce the statute or any of its implementing regulations. The plaintiff in One God Faith argued that the OFPA by its statutory language applies only to “agricultural products,” and the USDA has made clear that its comprehensive regulatory scheme governing the use of the term “organic” does not apply to personal care products, the category of products at issue in the case.
However, the court in One God Faith was not persuaded by this argument. While the court did find that it was undisputed that the USDA has declined expressly to impose the NOP standards on personal care products, this was not sufficient to justify the exercise of subject-matter jurisdiction by the Northern District. The court noted that the issue of amending existing regulations to include “organic” claims with respect to personal care products has generated significant recent discussion and that the USDA has asserted its authority over personal care products in other significant ways, including allowing producers and handlers of such products (including the plaintiff) to seek USDA certification under the NOP. As stated by the court, the mere fact that the USDA has not to date expressly imposed the NOP standards does not excuse plaintiff from exhausting available remedies under the USDA’s administrative appeal procedure. Consequently, the court held that granting the plaintiff its requested injunctive relief would negate the legislative bar on private actions and effectively enforce the NOP standards against defendants. As such, plaintiff’s complaint was dismissed for lack of subject-matter jurisdiction.
