Senate Passes Food Safety Legislation, Will It Become Law?
Today, the United States Senate passed the food safety bill, S. 510. If this were to become law (and according to the New York Times , this is a big if), the legislation would impose the most sweeping changes to food regulation in decades.
Among many other things, the bill would allow the FDA to order mandatory recalls, impose new record keeping requirements on businesses and establish stricter import standards. As a consequence, virtually every FDA regulated food manufacturer would have to adjust its approach to food safety, record keeping, supply-chain contracting and government relations. If this legislation becomes law, stay tuned here for in-depth analysis.
"Sweet" and "Natural": Can One Word Have Meaning And One Not?
Two news items are our topic today: Ben & Jerry's removed the term "all natural" from its ice cream and was immediately sued by someone; and some people are labelling ordinary onions as "sweet" and charging a premium for them.
First, "natural." The FDA, of course, has declined to define "natural" outside of the context of flavorings (where its regulations are already lengthy). Here is what Tom Standage, bestselling author of "An Edible History of Humanity," has to say:
Accordingly, almost none of the food we eat today can truly be described as natural. Nearly all of it is the result of selective breeding--unwitting at first, but then more deliberate and careful as farmers propogated the most valuable characteristics found in the wild to create new, domesticated mutants better suited to human needs.
And further on in the same chapter:
The simple truth is that farming is profoundly unnatural. It has done more to change the world, and has had a greater impact on the environment, than any other human activity. It has led to widespread deforestation, environmental destruction, the displacement of "natural" wildlife, and the transplanting of plants and animals thousands of miles from their original habitats. It involves the genetic modification of plants and animals to create monstrous mutants that do not exist in nature and often cannot survive without human intervention. It overturned the hunter-gatherer way of life that had defined human existence for tens of thousands of years, prompting humans to exchange a varied, leisurely existence of hunting and gathering for lifes of drudgery and toil. Agriculture would surely not be allowed if it were invented today.
That's pretty profound, and obviously more than a little hyperbolic. But it points out the entirely subjective nature of the term "natural."
Continue Reading...FDA Issues Warning Letters to Manufacturers of Caffeinated Alcoholic Beverages
The following is authored by guest blogger Jake Storms, from the Alcoholic Beverages Law Blog.
In an update to an earlier blog post, the FDA issued warning letters today to four manufacturers of caffeinated alcoholic beverages. The FDA stated in the letters that caffeine added to malt alcoholic beverages was an “unsafe food additive ” and thus, such products are in violation of the Federal Food, Drug, and Cosmetic Act (“FFDCA”).
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Recipients of the letters, which included Charge Beverages Corp.; New Century Brewing Co., LLC; Phusion Projects, LLC (d/b/a Drink Four Brewing Co.); and United Brands Company Inc., have 15 days from receipt of the letter to respond to the FDA with their respective mitigation measures. Those companies may also challenge the ruling that their particular products are in violation. Failure to comply could result in enforcement actions by the FDA, including seizure of merchandize.
The FDA’s move was considered an almost certainty given the myriad of recent actions taken by a number of states to curb or ban the sale of caffeinated alcoholic beverages.
Arm Me with Knowledge: A Response to Ken Odza
Ken posted an entry with the title: “Can Business Lawyers Afford to Practice ‘Defensively.’” I’ve been a business lawyer for almost 30 years, so I think I have at least some perspective on that issue and I thought I’d contribute to the discussion with some historical observations. I apologize in advance if I sound like I’m suggesting that someone get off my lawn.
There are significant differences between legal practice today and when I began. You know longer hear the clack of typewriters at the secretaries' desks and I can communicate with a client in a foreign country as easily and quickly as I can one next door. We see our clients in the office less frequently and are less frequently physically on their premises. Yet we can watch a webcam of the construction of a project we’ve worked on, even though it’s thousands of miles away, 24/7 in real time.
But the difference I’d like to highlight is the slicing and dicing of legal work among firms. To be clear, I am not complaining about this. I get my share of clients who hire me for exactly my kind of expertise, whether in banking, agricultural, food law, Native American law or commercial law. I appreciate their business and would not recommend they use someone with less expertise somewhere else.
But there is a cost, and the cost can show up in exactly the situations Ken was describing in his blog entry.
When I first started out, the firm did all the legal work for four major clients, and everyone in the firm was indoctrinated into the ins and outs of dealing with these clients, from the CEO to the general counsel’s office and managers we would work with all the time. You quickly learned their risk profiles, which one wanted no stone left unturned and which ones didn’t want you to sweat the small stuff. It did not take long before it was second nature to translate for one client the question of “should we do this?” to “should we do this where we might have no risk of loss?” and for another as “should we do this so long as our chances of success are better than 50/50?”
All four of those clients are gone, one way or another: merged or retreated from the market or having chosen to send their legal business elsewhere. We still do have clients like that, although the firm is so large and diverse it is less certain that everyone will work for those clients. And it is hard to overstate how much easier it is to answer the kind of questions Ken is talking about for such clients.
When I do get hired on a one-time basis, I try as best I can to determine what the company’s risk profile is before I ever give any advice. There are many obstacles to this: my initial contact might be another outside counsel who is barely more clued in than I am, or it might be an inside counsel who hasn’t been with the company long, or the real decision maker is three steps up from my contact, and isn’t telling.
In terms of today’s jargon, the more transparency, the better the legal advice will match the client’s risk profile. The more opacity, the more likely I am to practice defensively.
FDA Issues Warning on Alcoholic Energy Drinks; States Move to Ban "Blackout in a Can"
Note: The following is authored by guest blogger Jake Storms, from the Alcoholic Beverages Law Blog.
Amidst rising incidences of hospitalizations in college and teenage drinkers linked to consumption of alcoholic energy drinks, the Washington State Liquor Control Board banned their sale effective tomorrow, November 18, 2010. The move came on the heels of a request by Washington Governor Christine Gregoire, whose office stated in a November 10 press release that they were “…particularly concerned that these drinks tend to target young people.”
The Liquor Control Board placed the ban in an emergency ruling which will last for 120 days. During that time, the Liquor Control Board will move to make the ban permanent. Liquor Control Board Chairperson Sharon Foster stated, “[t]he Board is acting in the public safety…the Board is acting now to ensure these products do not contribute to a tragedy before the Food and Drug Administration or Legislature can act.” Earlier this year, the Liquor Control Board had lobbied for State legislative action to ban the sale of caffeinated malt beverages in Washington but those efforts were unsuccessful. A list of particular products affected by the Liquor Control Board’s ruling can be seen here.
Washington’s ban is merely the most recent action in an ever increasing movement by states to control the sale of caffeinated alcoholic beverages. The Oregon Liquor Control Commission Chairman stated in an October press release that, “…alcoholic energy drinks should be removed from the market until further research isdone.” The OLCC also stated that it is currently looking into possible regulatory efforts with the state legislature and is reaching out to community organizations to warn them of the dangers of the beverages.
While California’s Department of Alcoholic Beverage Control has not yet made a statement regarding the drinks, Connecticut announced Monday that it had reached agreements with state distributors to voluntarily stop shipments of caffeinated alcoholic beverages starting December 10, 2010. Michigan has banned one particular brand of caffeinated alcoholic beverage, Four Loko. New York has reached an agreement with Phusion Projects LLC, the manufacturer of Four Loko, to stop sales in the state until “…emerging science, regulatory developments or other relevant changes in circumstances arise." Utah and Oklahoma have followed Washington’s lead in banning the sale of any brands altogether. Massachusetts’ Alcoholic Beverage Control Commission stated that it will file an emergency ruling, similar to Washington’s, on Monday, November 22, 2010.
At the federal level, the Food and Drug Administration (“FDA”) is currently reviewing whether caffeine is a safe additive to alcoholic beverages. A negative finding would essentially ban the sale of caffeinated alcoholic beverages nationwide. It is widely assumed the FDA will, in fact, reach a negative finding. NY Senator Chuck Schumer, who has been lobbying for a ban on the drinks, stated that the FDA decision “…should be the nail in the coffin of these dangerous and toxic drinks.” The FDA decision is expected within the week.
More on FOP Labeling
Here's a link to an article that appeared recently in Inside Washington's FDA Week concerning the issue of front-of-package labeling (FOP). The article takes aim at the debate about state vs. federal regulation of FOP labeling. Here's a link to a recent post in this blog on the FOP issue.
Food Safety Tools and Defenses for Cheesemakers
Cheesemakers have endured a string of bad publicity recently over food safety. Cheesemakers, especially raw milk cheesemakers, are in the cross hairs of the FDA, the media, retailers and plaintiffs’ lawyers such as Bill Marler. I was interviewed last week on FDA seizure issues by the Pacific Northwest Cheese Project. Click here for the PowerPoint slides from my presentation to the American Cheese Society's annual meeting last August entitled "Product Liability - Protect Yourself and Protect Your Business."
Can Business Lawyers Afford to Practice "Defensively"?
I appreciate why lawyers practice defensively. We are risk adverse as a profession. But is this what our clients want from us? After all, our clients are usually in a risk-taking position when they seek our advice in the first place. In today's business climate, competition in almost ever sector is fierce to say the least. Our business clients are often in the position where they need to innovate, stay ahead of the competition or go extinct. For them, a "blue ocean" strategy is often the only pathway for survival.
Here's a common scenario in the practice of business law: client asks a question or poses a problem to his lawyer. Lawyer responds with a menu of options to solve problem. Lawyer goes through pros and cons of each but backs away from making a strong recommendation (or recommends the most risk-adverse solution). Lawyer feels that it’s the client's choice (which it is) and also wants to avoid blame if the recommendation is wrong (lawyer will be blamed anyway). Client feels dissatisfied because:
a. Client may not share the expertise/experience of his lawyer and wants a stronger recommendation; or
b. Client feels that lawyer may not be interested in really understanding the problem and/or the client's business; or
c. Client feels that lawyer is unwilling to put "skin in the game" and share the risk with the client; or
d. All of the above.
In litigation, defensive practice of law often comes in the form of "scorched earth" discovery and unnecessary motion practice. Attorneys tell their clients that they can't leave a stone unturned to prepare the case for trial (though they might not have a clue as to their trial strategy). Lawyers tell their clients that they can forgo the deposition but it's "risky." Although the lawyer advises the client that failure to conduct expensive discovery practice is "risky," the lawyer may be reluctant to help quantify the risk for the client. And if the lawyer is paid hourly, little incentive exists for the lawyer to make hard decisions in litigation as to what's necessary to try the case and what may not be. So the end result may be bloated fees and a disgruntled client (and often a bad result).
As outside counsel, we need to ask why clients hire us. Do they hire us to prescribe multiple choice solutions without a real recommendation or a path of scorched-earth litigation? Or do our clients hire us because (1) we have expertise, creativity and time that the client may not have in house and (2) the client expects us to solve its problem? With the legal monopoly threatened (look no further than the dramatic changes in professional rules in Great Britain), don't we have to provide clients the service they want? Your comments and thoughts are most welcome.
Multiple Occurrences in a Single E.Coli Outbreak: Double-Edged Sword for Insureds?
Marler Clark clients and the owners of the restaurant that sold MarlerClark's clients food they claim was contaminated with E.coli O111 joined forces against the restaurant's insurer. In the end, the peronsal injury plaintiffs and the restaurant insured convinced the United States District Court for the Northern District of Oklahoma on a Rule 56 summary judgment motion that a single E.coli outbreak constituted at least two separate "occurrences" under a commercial general liability insurance policy ("CGL") issued to the restaurant. The result was another $1 million in coverage available to pay claims. A copy of the court's opinion can be linked here.
The primary policy at issue limited the amount of insurance available to $1 million per occurrence ($2 million products-completed operations aggregrate). According to the court, the policy defined an "occurrence" as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” According to court's summary of the state health department's findings, the outbreak at issue included 341 persons, 60 confirmed, and 94 probable. The "point source outbreak" was from the Country Cottage restaurant. Though 21 persons did not dine at the restaurant, they were believed to be exposed at a church tea catered by the restaurant.
The court concluded that under Oklahoma law there are "two distinct places of injury and thus, two separate occurrences." The court explained that:
Looking for “the same temporal and spatial parameters” of an occurrence, the Court finds that the undisputed facts at least establish two separate occurrences of E. coli-induced illness covered under the policies: that resulting from the negligent contamination of food prepared and served at the Country Cottage restaurant and that resulting from the negligent contamination of food prepared and served at the Church Tea. Regardless of any temporal overlap between these two occurrences, the geographical distinction between the physical location of Country Cottage restaurant in Locust Grove, Oklahoma, and that of the Free Will Baptist Church in Broken Arrow, Oklahoma where the Church Tea took place is appreciable and, appreciatively, concrete.
For MarlerClark clients and the injured plaintiffs, the end result is another $1 million available to settle their claims. But is this a good result for the restaurant owners? The answer is maybe. Insureds should understand that the result may be a double-edged sword. On the one hand, another $1 million in indemnity is available to protect the owners' personal assets. On the other hand, if the insured had a large deductible or self-insured retention ("SIR"), two occurrences could mean two deductibles or two SIRs that need to be paid by the insured.
So why would an insured ever have a high deductible or SIR? The answer is that many food manufacturers and retailers maintain a high deductible or SIR in order to control the defense and settlement of the case and not hand over control to the insurer at the outset. Often, the insured's objective is to resolve the case in a way that best protects the client’s business and brand going forward. A conflict with the insurer arises because the insurer's objective is to resolve the case for the fewest dollars possible (combined payment of defense costs plus indemnity paid to the allegedly injured consumer).
