Introducing the Essential Nutrition Law Blog
Our colleague Mike Mangelson and a team of Stoel Rives lawyers spanning numerous practice specialties have recently launched the Essential Nutrition Law Blog. Stoel Rives attorneys work closely with companies engaged in the research, development, production, and sale of dietary and nutritional supplements, energy and nutrition beverages, herbal supplements and functional foods, and the Essential Nutrition Law Blog will be an excellent resource for interested parties to look to for the most recent legal developments in the field. We at the Food Liability Law Blog are happy to add another member to our blogroll, and are looking forward to learning from and working with our colleagues at the Essential Nutrition Law Blog to deliver timely and consequential reports on the hot topics in our fields.
Froot Loops Litigation: An Endless Loop for Kellogg's?
Just over forty years ago, Crosby, Stills, Nash & Young came out with their Déja Vu album. Attorneys at Kellogg USA are undoubtedly thinking, “We have all been here before.”
Froot Loops pre-dated Crosby, Stills, Nash & Young. I remember taking the Kellogg's factory tour in Battle Creek and being handed an individual-sized packet at the end of the tour, even before they hit the market. I was seven years old, but I knew they were cereal not fruit. Apparently, some other people think otherwise.
Ken has already blogged about the related, and dismissed, Crunchberry lawsuit. At the ABA Business Law Section Spring Meeting last weekend, my friend Teresa Harmon Wilton mentioned the Crunchberry case in her annual round-up of commercial law cases, and mentioned that the decision was based on the prior Froot Loops case. I looked down at my Blackberry, and that's when I realized there was an old Froot Loops case but I had just got notice of a new one.
Two old ones, actually.
In 2007, the United States District Court for the Central District of California dismissed a claim against Kellogg USA for violations of various California statutes and common law causes of action based on the claim that Froot Loops do not contain fruit.
In 2009, the United States District Court for the Eastern District of California dismissed a claim against Kellogg USA for violations of various California statutes and common law causes of action based on the claim that Froot Loops do not contain fruit.
On April 19, a complaint was filed in the United States District Court for the Northern District of California against Kellogg USA for violations of various California statutes and common law causes of action based on the claim that Froot Loops do not contain fruit.
There is clearly a pattern here. I would note that there is only one other federal court district in California, the Southern District in San Diego. Unless I missed a case there.
In the McKinniss case, the court dismissed claims for:
- Violation of the California Unfair Competition Law
- Violation of the California False Advertising Law
- Violation of the California Consumer Legal Remedies Act
- Negligent Misrepresentation
- Breach of Express Warranty
- Unjust Enrichment
In the Videtto case, the court dismissed claims for:
- Violation of the California Unfair Competition Law
- Violation of the California False Advertising Law
- Violation of the California Consumer Legal Remedies Act
- Intentional Misrepresentation
- Breach of Implied Warranties
In the Werbel complaint, plaintiff seeks damages for:
- Violation of the California Unfair Competition Law
- Violation of the California False Advertising Law
- Violation of the California Consumer Legal Remedies Act
- Intentional Misrepresentation
- Breach of Implied Warranties
Each complaint referenced a study by the Strategic Alliance for Healthy Food and Activity Environments that found that foods it claimed suggested the presence of fruit did not in fact contain fruit. The courts have so far not cared much for this study, which doesn’t in any way demonstrate that anyone could be misled by the actual advertising on the package.
Raise your hand if you’re surprised at the fact that the same attorneys brought all three cases. Under our justice system, a plaintiff is not bound by the decision of a court to which he or she was not a party. An attorney is held to a different standard under Rule 11 of the Federal Rules of Civil Procedure. It will be interesting to see if there is anything that comes from expecting the same conditions to lead to a different outcome.
FDA Seeks Public Comment Regarding FOP Labeling
This post also appears on the Essential Nutrition Law Blog.
In an April 28 release, the Food and Drug Administration (the “FDA”) asked for comments and information from the public and other interested parties about front-of-pack (“FOP”) nutrition labeling and shelf tags in retail stores. The FOP is the part of the package label that is most likely to be examined under customary conditions of display for retail sale.
According to the FDA release, the FOP nutrition labeling effort aims to “maximize the number of consumers who readily notice, understand, and use point-of-purchase information to make nutritious choices for themselves and their families.” Specifically, the agency is seeking to learn more about:
• the extent to which consumers notice, use, and understand nutrition symbols on FOP labeling of food packages or on shelf tags in retail stores
• research that assesses and compares the effectiveness of particular approaches to FOP labeling
• graphic design, marketing, and advertising data and information that can help develop better point-of-purchase nutrition information
• how point-of-purchase information may affect decisions by food manufacturers to reformulate products
The FDA is accepting comments on this issue until July 28, 2010. Further information is available in a notice from the FDA and the Department of Health and Human Services announcing the establishment of a docket to obtain the data and other information that will be utilized in the FDA’s deliberations.
These recent developments did not appear out of thin air. As noted by our colleagues at the FDA Law Blog, in a March 3 letter to industry, the FDA said it is working to devise a front-of-pack labeling system that consumers can understand and use. In the meantime, the FDA announced plans to issue new draft guidance relating to front-of-pack calorie and nutrient labeling. The agency is also planning to issue draft guidance that would recommend nutritional criteria for foods that make “dietary guidance” statements (such as “Eat 2 cups of fruit a day for good health”) in their labeling. Dating back even further, in an October 2009 letter to the industry, the FDA said it was working on developing a regulation that would define the nutritional criteria that would have to be met by manufacturers making broad FOP or shelf label claims concerning the nutritional quality of a food.
Dr. Hamburg also noted that the FDA is in the process of notifying numerous manufacturers that their current labels are in violation of the law and subject to proceedings that will remove their misbranded products from the marketplace. Thus it appears the FDA is willing to back up this position with action. Given the increasing number of headlines such as this one regarding the ability of the armed forces to find able-bodied servicemen and women, the issue of how manufacturers communicate to consumers with respect to nutritional content is likely to be a subject of FDA scrutiny for the foreseeable future.
Preserving the Brand and Avoiding Media Backlash During a Crisis
I'll be moderating and speaking on a panel at the upcoming ACI's Advanced Summit on Food Safety Regulatory Compliance in Chicago, June 28-29. Scott Rickman from Del Monte, public relations professionals and I will be presenting on "Effectively Responding to Negative Media Coverage: How to Avoid the Backlash" (If you plan to attend, register soon and contact me for a conference discount).
In my practice, I abide by two principles when involved with a case that has potential for negative media coverage:
1. Preservation of the Brand May Trump the Litigation: Even the most serious food-borne illness or consumer fraud claims may not be as significant as preservation of the client's brand. And what may seem like a smart litigation strategy may not be in the best interest of the brand.
For example, ownership of a crisis may be the best way out for a company faced with a widespread food-borne illness outbreak. The 2008 Maple Leaf foods outbreak is a prime example. Maple Leaf foods is one of the largest food companies in Canada and was faced with a deadly nationwide listeria outbreak linked to deli meat processed at one of its plants. Its CEO, Michael McCain, famously took immediate ownership of the crisis, which lead to restoration of both the brand's name and its stock value. Mr. McCain was quoted post mortem as saying:
“Going through the crisis there are two advisors I’ve paid no attention to. The first are the lawyers, and the second are the accountants . . . . It’s not about money or legal liability, this is about being accountable for providing consumers with safe food.”
In other cases, a strategy that "sacrifices" a single product line or a single restaurant for the good of the chain or other product lines may be the right strategy.
Though right for the client, either strategy might be uncomfortable for the litigation team as it constitutes something close to an admission of liability. As one communications expert has said:
“[L]awyers need to understand that legal liability isn’t the only factor to consider in a crisis. But that’s not an easy pill for many lawyers to swallow. They believe future litigation is prejudiced if a CEO makes an apology . . . .”
Which leads me to my second principle:
2. Call the Communications/Public Relations Experts: Lawyers are multi-talented. However, lawyers are not experts in public relations. As illustrated above, the right strategy for a branded food business may prioritize a public relations strategy. The only way to formulate the best strategy for the client is to involve and listen to the entire crisis response team, including the communications/public relations experts.
CDC Sees "Sustained Decline" for 2009 in Reported Rates of Food-Borne Illness, but Is This Real?
A somewhat surprising report out this week by the CDC reports for 2009 "sustained declines in the reported incidence of infections caused by Campylobacter, Listeria, Salmonella, Shiga toxin-producing Escherichia coli (STEC) O157, Shigella, and Yersinia." Only Vibrio seems on the rise. For E.coli O157:H7 infections, the CDC claims its "Healthy People 2010 target" was met.
The chart below shows the trend lines since 1996 in the reported incidence for many of these pathogens:
FIGURE 1. Relative rates of laboratory-confirmed infections with Campylobacter, STEC* O157, Listeria, Salmonella, and Vibrio compared with 1996-1998 rates, by year -- Foodborne Diseases Active Surveillance Network (FoodNet), United States, 1996-2009†
While the news sounds good,(see Rick Goldfarb's detailed analysis of the implications of the 2009 report for context) other factors could be at play that give only the appearance of a safer food system. One explanation can be found in a CDC report from 2009 that "in 2009, 10% fewer epidemiologists were working in state health departments than in 2006." The data the CDC has is only as good as the capacity the state health departments have on the ground to collect it. Fewer epidemiologists means fewer investigated food-borne illnesses. Fewer investigated food-borne illnesses means fewer reported food-borne illnesses. Fewer reported food-borne illnesses, therefore, does not necessarily mean the existence of fewer food-borne illnesses.
District Court to CSPI: No Standing Any Time
Standing is one of those basic concepts they teach everyone in law school. Courts, law students are told, are for the resolution of disputes between parties with a real stake in the outcome, not for the delivery of advisory opinions. Then, it being law school after all, you are taught a number of ways in which you can legally obtain standing and essentially get an advisory opinion. A single plaintiff with a small stake can bring a class action. A public official may agree that he or she will not sign a required document, and so be sued for a writ of mandamus; when the court decides whether the official can be forced to sign, it is also deciding on the constitutionality of the law the parties seek to have determined.
Although these and other methods of obtaining standing are recognized, it is not always possible to obtain a proper plaintiff. Two renowned securities fraud plaintiffs' lawyers spent time in prison for paying people to act as plaintiffs in their cases.
It would be so much easier, of course, for certain organizational plaintiffs if they could turn their organization's mission into standing. The Sierra Club, most notoriously, tried this in the seventies, and the Supreme Court smacked them down in Sierra Club v. Morton, a case notable for Justice Douglas claiming in dissent that the valley itself should have standing.
The Center for Science in the Public Interest appears to have tried it again, with, so far, the same result. The case was a drug case, not a food case, but the elements of the claim were not all that different from ones we've seen in the past. Bayer had made claims for its One-a-Day "Men's Health Formula" Vitamins that selenium in the vitamins would reduce the risk of prostate cancer. CSPI made public demand on Bayer to withdraw the ads and, failing that, sued, which brought it a lot of publicity. Only the case wasn't "John Smith who bought Bayer and was shocked that he wasn't getting prostate cancer protection v. Bayer," it was CSPI against Bayer. Like the plaintiffs in Sierra Club v. Morton, they made no claim of any injury to themselves or their members. Rather, they claimed standing under the California's Unfair Competition Law. But that statute contains its own express standing requirement, conferring standing on
a person who has suffered injury in fact and has lost money or property as a result of the unfair competition
CSPI didn't get within a mile of that standard, according to the District Court. In an opinion dismissing the case, federal district court Judge Jefrrey S. White held that CSPI was benefited, not harmed, by Bayer's alleged conduct. Citing to Sierra Club v. Morton, the court said,
An organization's mere interest in a problem is insufficient to demonstrate a cognizable injury sufficient to confer standing. Rather, the allegations as currently pled indicate that, in reaction to Bayer's alleged misrepresentations, CSPI as an organization reacted by disseminating information about nutritional science and by educating its members. This conduct, rather than causing CSPI to incur injury, fulfilled the espoused mission of the organization.
In other words, CSPI's mission was enhanced by Bayer's alleged actions. Thus, the action under the Unfair Competition Law was dismissed with prejudice. A similar claim under the Consumer Legal Remedies Act, which has a lesser standing requirement, was dismissed with leave to amend, but with the court expressing skepticism that CSPI would be able to meet the standing requirement there as well.
Denny's Sodium Claims in Illinois Tossed on FRCP 12(b)(6) Motion
As anticipated, the "sodium" claims against Denny’s asserted in federal district court in Illinois have been dismissed on a Federal Rule of Civil Procedure (FRCP) 12(b)(6) motion. A copy of the court’s order is here. As discussed previously in this blog, the Illinois action alleges claims of consumer fraud, breach of implied warranty of merchantability, unjust enrichment, accounting and breach of contract implied in fact.
State consumer fraud claims based on “deceptive conduct” were tossed because they require under FRCP 9(b)’s “heightened pleadings requirement” allegations of a specific “communication containing a deceptive misrepresentation or one with a deceptive omission.” Denny's made no deceptive misrepresentations or deceptive omissions (nor were any alleged). To the contrary, as discussed previously in this blog, Denny's discloses clearly on its website and in its restaurants sodium content of its meals.
Unjust enrichment and accounting claims were dismissed for largely the same reason as the consumer fraud claims.
The breach of contract claim was based upon the novel theory that the “bargained for” contract between class members and Denny’s required Denny’s to provide “a meal fit for human consumption.” The food sold, according to the plaintiff, “contained excessive amounts of sodium, such that it was not fit for human consumption.”
The contract claims were dismissed because there were no allegations that (1) a single meal that contains sodium in excess of the recommended daily maximum “is by itself unsafe” or (2) “Denny’s enters into an implied contract to sell only meals that contain less than a particular amount of sodium.”
Defective Cans of Fruit Deemed "Usable" by Insurer ... but for What?
Can products packaged defectively for consumer sale really be usable? According to a recent case adjudicating commercial general liabilty ("CGL") and commercial umbrella insurance policies, products packaged in defective cans are not necessarily unusable.
In Silgan v. National Union Fire Insurance Co., Judge Hamilton from the U.S. District Court for the Northern District of California, recently ruled against Silgan, a can manufacturer, seeking insurance coverage for a $6.5 million customer claim arising from a large-scale food packaging failure. Del Monte made a claim against Silgan for $6.5 million because of a failure of four-ounce pull-tab cans of fruit. Del Monte consumers increasingly complained in 2005 that the pull-tabs broke.
The case is notable for a variety of reasons, as the court granted summary judgment against Silgan on several bases, including that the loss of fruit constitutes neither “physical injury to tangible property” nor “loss of use of tangible property that is not physically injured.” Joseph A. Arnold at Cozen O’Connor has an article discussing the ruling in full.
Judge Hamilton ruled that there was no "loss of use" coverage because there was no proof that the fruit inside the defective cans was “unusable.” The judge ruled that
without proof that the fruit itself was unusable, rather than proof that Del Monte made a business decision not to expend money on re-packaging the cans, plaintiff has not satisfactorily discharged its burden to establish that Del Monte lost use of its tangible property, such that qualifying “Property Damage” under the National Union Policy
occurred.
But how can product canned for consumer sale not be unusable if the container fails? Implicit is a finding by the court that the fruit could have been repackaged for sale. But is it ever feasible to re-can fruit for sale? To answer this question I consulted nationally renowned food safety expert Gale Prince. As I suspected, Mr. Prince’s response was not consistent with the court’s ruling on usability:
If you open the containers you would have to reprocess the fruit. This would require heat. I would question the saleability of the reprocessed product after the addition[al] processing that would be required to achieve safety. The product would be expected to be mushy and discolored. You would expect a problem with organoleptic qualities. The economic cost of opening effective cans and processing [may] exceed the economic value of the resulting reprocessed fruit product.
Insureds can expect to see their carriers deny coverage coverage more frequently using National Union's "loss of use" argument. Though it may seem obvious how flawed the argument is, insureds cannot assume that either their insurers or the courts will see it that way. Retaining experts such as Mr. Prince and marshalling the case for unusability will be critical in securing coverage.
