Richard Goldfarb

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Richard Goldfarb is a partner of Stoel Rives LLP in the Corporate Group. He has a national reputation for expertise in all manner of commercial transactions, with particular emphasis on secured financing and sales and leases of goods. He has been active in the food and agricultural sector for over 25 years, and has done extensive work for clients in the dairy, fruit and biofuels industries, as well as lenders to farmers, packers and agricultural cooperatives.


Articles By This Author

Locavore To the Max

Health economist Jane Sarasohn-Kahn has an interesting take in a new article on her Health Populi blog about "km zero", a food movement she describes as "the future of food."  Basically, it takes locavore standards to the max, seeking to source food as close to you as possible, for the freshest and the best ingredients, including home grown food and CSAs. 

I'm super prejudiced here, as Jane has been my friend for well over 40 years (we performed James Thurber's "The Macbeth Murder Mystery" together in high school), but sourcing fresh food and local food and good food are all on the same scale to better nutrition as well as better taste.  Of course, it works better in somewhere like Florence, which she writes about, or California, than it might in areas where most agriculture is large-scale monoculture, but it's possible to put in an herb garden or a kitchen garden almost anywhere. 

My favorite local agriculture is actually done at an Italian restaurant near us, Perche No, where the herbs and the tomatoes are grown on the roof.  Since it's walking distance from home, there's not much of a carbon footprint in going there.  The food is beyond spectacular, too.  As, apparently, is the food at Tastevere Kmzero, a Rome restaurant that prides itself on using local ingredients and is a takeoff on its neighborhood, Trastavere.  Of course, it might take a bit more carbon to get there. 

The 2014 Farm Bill: "Almost a Miracle" and "Like a Swiss Army Knife"

Some helpful information about the new Farm Bill.  

First, the summary material from the Ag & Food Law Blog, which quotes Rep. Collin Peterson (D-Minn)as saying that getting it passed was "almost a miracle." 

Then, two tools mentioned in their blog post, both from the Department of Agriculture.  First, a summary that is headed with a picture of a Swiss Army knife, accompanied by President Obama's quote that that was what the bill was like.  Second, a webpage from the Economic Research Service, also summarizing the bill and, as their name implies, doing some work on its economic implications.  The first one provides the administration's own take on the bill, what it means and how they interpret it.  The second one includes some more objective infomation, particularly comparing it to the last bill. 

POM Finds Class Decertification Wonderful

In a recent decision, Judge Dean Pregerson of the U.S. District Court for the Central District of California decertified the class in an action against POM Wonderful over health claims about its pomegranate juice. You know the juice, it’s the one in the cooler section of the grocery store in the glass jar that looks like a purple snowman. Judge Pregerson had previously certified the class, but after discovery, particularly after plaintiffs’ expert’s testimony on damages, POM Wonderful had moved to decertify and, as the headline tells you, the court agreed. 

The decision to decertify was rooted in a recent U.S. Supreme Court case, Comcast Corp. v. Behrend, which dealt with the relationship between class certification and claimed damages. The court followed the Ninth Circuit’s interpretation of Comcast, which held that, in determining whether class certification was appropriate, “Plaintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability.” When applied to something that costs only a few bucks, this proposition is not easy to demonstrate.

 

Plaintiffs here offered two different theories, neither of which came close to persuading Judge Pregerson. First, the “Full Refund Model”: as plaintiffs’ expert testified: “[I]f the health benefits were what caused the purchase, at least predominantly, then a [full] refund would be appropriate”.   As the Church Lady might say, isn’t that special? And under the Full Refund Model, damages would be $450 million, an amount that would support some really nice legal fees for class counsel. POM argued, and that court agreed, that that model took no account of the benefits class plaintiffs would have received, such as hydration, calories and vitamins, even if the allegations about the untrue health benefits were proven. Heck, someone might simply want the bottle to use to make a snowman for a school project. There is no damages model that gets a plaintiff class those benefits for free.

 

More after the jump . . .

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A "Vibe" is Not Enough: Ben & Jerry's "All Natural" Case Loses Class Certification

You'll remember the scene from "Casablanca." Ilse (Ingrid Bergman) comes in and Rick (Humphrey Bogart) says, "Your unexpected visit isn't connected by any chance with the letters of transit. It seems as long as I have those letters, I'll never be lonely." That's sort of how I feel about "all natural" product labeling litigation. So long as those cases exist, perhaps I'll never be lonely. But will they always exist? The latest decision in our old friend, Astiana v. Ben & Jerry's Homemade, Inc., provides me with some optimism I might be lonely again.

As you'll recall from our post when this case was first filed, the plaintiff was upset because, she claimed, dutched cocoa was somehow an artificial product. We pooh-poohed that notion, but, presumably for reasons of judicial economy, Ben & Jerry's chose to settle the case.

In the meantime, though, the Ninth Circuit Court of Appeals decided Dennis v. Kellogg Co., which greatly restricted the terms under which settlements of similar cases could be approved. In particular, the case limited the use of the cy pres doctrine, which would dispose of unexpended settlement funds, to charities that benefit the same goals as the unrepresented and unfound members of the plaintiff class. The court said,

Thus, appropriate cy pres recipients are not charities that feed the needy, but organizations dedicated to protecting consumers from, or redressing injuries caused by, false advertising. On the face of the settlement's language, "charities that provide food for the indigent" may not serve a single person within the plaintiff class of purchasers of [the allegedly offending product].

Dennis was decided by the Ninth Circuit literally between the time the court in Astiana had preliminarily approved the class settlement and the date of the hearing on final approval. The court, cognizant of the decision, asked the parties to go back and revise their settlement to one that could be approved in light of Dennis. This they were unable to do, and the settlement collapsed. The plaintiffs then moved to certify the class. And got pounded by the court.  After the jump, you'll see how.

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California About to Adopt General Industrial Storm Pemit

Our colleagues at the California Environmental Law Blog note the General Industrial Storm Water Permit is slated for adoption on April 1, 2014.  Everyone in the California food industry from owners of feedlots to operators of manufacturing facilities will find this very important and should follow developments as Ryan Waterman and Missy Foster report on them.   

Is Soy Milk to Milk as E-Books are to Books?

I don't think we need a lot of scientific research to determine why people drink soy milk, almond milk and coconut milk.  I'll save some time and list them, not in any particular order:

  • They are lactose-intolerant
  • They are living a vegan lifestyle
  • They prefer the taste to cow's milk
  • They prefer the nutritional profile to cow's milk

All four of these reasons have one thing in common:  they depend on the consumer understanding that soy milk, almond milk and coconut milk are not cow's milk.  So why on God's green earth did someone sue claiming that by labeling the products as soy milk, almond milk and coconut milk, they were confused into thinking the products contained cow's milk?

I will not cast aspersions, because I don't need to.  U.S. District Judge Samuel Conti of the Northern District of California took care of this for me. 

The case was Ang v. Whitewaves Food Co., and it involved two issues, one of which we won't get into at all:  the question of whether evaporated cane juice is "sugar".  The other was the claim that by labelling products as soy milk, almond milk and coconut milk, the producers of these products violated the "standard of identity" for milk.  The problem is that the regulation they claim "defines" milk is not its standad of identity at all. 

The regulation the point to, 21 CFR 131.110(a), provides, "Milk is the lacteal secretion, practically free from colostrum, obtained by the complete milking of one or more healthy cows."  But since we actually are capable of reasoning and using language in a non-mechanical way, we can readily understand that this is not the definition of "milk."  This is a definition of milk, what you might call the default definition.  When we say "milk" without an adjective, in a food context, we mean cow's milk.  Milk in a dairy case that says only "milk" is assumed to be cow's milk, and indeed it had better be, or it is likely mislabeled. 

But within the same set of regulations that include this definition are a whole bunch of definitions that make it clear that the FDA is not telling anyone that the word "milk" must only apply to cow's milk, despite the plaintiffs' contentions.  For example, in the definition of "roquefort cheese", a cheese that cannot be made from cow's milk, the milk must be "of sheep origin", despite a cross-reference to a regulation that refers only to cow's milk. 

The court, without looking at my little roquefort definition, reaches the same conclusion:

Moreover, it is simply implausible that a reasonable consumer would mistake a product like soymilk or almond milk with dairy milk from a cow. The first words in the products' names should be obvious enough to even the least discerning of consumers. And adopting Plaintiffs' position might lead to more confusion, not less, especially with respect to other non-dairy alternatives such as goat milk or sheep milk.

On that basis, the court found that the claims under state law were preempted, because federal law generally prohibits states from imposing labeling requirements inconsistent with federal regulations. 

The court wasn't done with the plaintiffs, however.  Even if not preempted, the court held, citing the famous Crunchberry case we blogged about here, the plaintiffs' claims were simply not plausible. 

Plaintiffs essentially allege that a reasonable consumer would view the terms "soymilk" and "almond milk," disregard the first words in the names, and assume that the beverages came from cows. The claim stretches the bounds of credulity. Under Plaintiffs' logic, a reasonable consumer might also believe that veggie bacon contains pork, that flourless chocolate cake contains flour, or that e-books are made out of paper.

As I said at the outset, these products exist as a substitute for cow's milk for various reasons that give consumers a choice of beverage.  No one seeks out these products assuming they are getting cow's milk; they seek them out because they are seeking alternatives to cow's milk.  Judge Conti, who is a 91-year old senior U.S. District Judge appointed by Richard Nixon, deserves credit for so efficiently seeing through the plaintiffs' claims. 

FREE ABA Roundtable this Thursday

Our distinguished alumnus, founder and former fearless leader, Ken Odza, has sent out an invitation to a FREE ABA Roundtable this coming Thursday, December 12. 

The topic is criminal prosecutions of food companies and their officers. 

Contemplaying how one might become the subject of a prosecution may not exactly something that will fill you with comfort and joy this holiday season, but the topic is obviously both timely and important.

You can sign up HERE

Did I mention it is free?

Seattle Weekly Story on Pirate Joe's

I found this article in the Seattle Weekly on Pirate Joe's operation to be quite interesting as a follow-up to our earlier article

Of particular interest were the mix of goods, the markup. the volume he buys each week and that he dropped the "P" from Pirate Joe's when he was first sued.

My real question is what would happen if I walked into my local Trader Joe's (and I'm a big fan) wearing one of his "I'm Shopping for Pirate Joe's" t-shirts.

 

RIP William Keene

Sad news out of Oregon

Much of the work of detecting the cause of outbreaks is art, not science, and by all accounts he was an artist. 

Joe Canada!

When innovation meets the law, the results are often surprising. 

We in Seattle are confronting this as ride services like Lyft compete with a regulated taxi industry.

Now consider Pirate Joe's, a business located in the upscale Kitsilano neighborhood of Vancouver, B.C..  I will let them describe their business model in their own words:

Pirate Joe's is an unaffiliated unauthorized re-seller of Trader Joe's products (we are being sued). We stock what we are asked to stock by Trader Joe's lovers who don't always have the time (or a car or a passport) to head south to Bellingham (the nearest Trader Joe's). We buy retail from Trader Joe's then import everything legally and add Canadian compliant ingredient and nutrition facts labels. We have to pay the rent and the help (and the label supplier) so prices are higher than at Trader Joe's. We have no set markup - every product we carry has different import and transport issues so we kinda just wing it until it seems fair to you and also makes business sense to us. If something seems overpriced, please tell us - we're sensitive about it. ;-)

Trader Joe's has no locations in Canada.  Canadians who live in British Columbia's Lower Mainland can access the store at 2410 James Street, Bellingham, Washington or the many located further south in the Seattle metropolitan area.  But this requires them to travel, to have a passport, to brave the line at customs, to use American money, etc.  Pirate Joe's will do all that for them, and allow them to buy in comfort using Canadian money in Kitsilano. 

One way Trader Joe's could look at this is they were getting a free ride into the Canadian market.  Pirate Joe's paid them exactly what they would have been paid had the same customers all driven down to Bellingham and bought the products there.  If Trader Joe's wanted to enter Canada, it would have to deal with export and import issues, Canadian labeling issues, Canadian taxes, Canadian employment law, the foreign exchange issue, and the price of Vancouver real estate, to name just a few.  Instead, they just make sales at retail to Pirate Joe's, owe him nothing for the service of advertising their products in Canada in the best possible way, or for affixing Canadian labels to the goods, handling the taxes, leasing space, putting up a website or anything else. 

Instead, Trader Joe's sued Pirate Joe's in federal court in Seattle.

And, so far, has lost

Pirate Joe's is actually just an assumed name of Michael Norman Hallatt, who is a Canadian citizen with permanent residency in the United States.  Thus, Trader Joe's could sue him in the United States and in federal court. 

The basic claim was a Lanham Act claim.  This is the main trademark act in the United States, but the question that Judge Marsha Pechman had to answer was whether it has extraterritorial impact.  In other words, in these circumstances, did the purchase of these goods in the United States at full retail price and importation, legally according to Canadian customs, into Canada violate American law? 

Under Ninth Circuit precedent, a Lanham Act claim can have extraterritorial effect under a three prong test:

  1. The defendant's action creates some effect on American foreign commerce
  2. The effect is sufficiently great to present a cognizable injury to plaintiff under the Lanham Act
  3. The interests of and links to American foreign commerce are sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority.

The court determined, on a motion to dismiss, that Trader Joe's could not meet these tests.  The court relied on a Ninth Circuit decision involving a fight between Mike Love and Brian Wilson, both former Beach Boys.  Wilson had had a CD that included covers of old Beach Boys hits distributed with the Daily Mail in England to promote his "Smile" album and concerts.  Love, who had the right to the Beach Boys trademarks, sued.  But the Ninth Circuit found that any injury to him was not in the American market.  Similarly, Trader Joe's could not show that it was injured at all in the American market, since it had received literally as much money as it would have if Pirate Joe's customers had crossed the border and bought the goods in Bellingham. 

A far more interesting question would be what would happen if Trader Joe's wanted to open stores in Canada.  But that would represent issues of Canadian law that should be decided by Canadian courts.  Here, Judge Pechman's decision that Pirate Joe's is not damaging Trader Joe's in the United States seems correct. 

How can Pirate Joe's survive, given that it obviously has to mark up Trader Joe's prices significantly to cover its costs and some profit?  The answer lies in the price differential between the United States and Canada.  A decade ago, I spent a month in Canada when the Canadian dollar was at about 62 cents U.S.  Now it is essentially par, but Canadian prices have risen, not fallen, as the value of their dollar has increased.  So Canadians are just used to paying one-third or more higher prices for the same goods in the U.S.  Add in the convenience and cachet of the Trader Joe's goods available on a store shelf in Kitsilano, and the business model makes some sense.

Older Entries

September 27, 2013 — Bernie Madoff and the Honey Trap (Revised)

August 26, 2013 — The FDA Goes Gluten-Free: Let's Speed It Up

August 16, 2013 — Vox Puffery, Vox Dei

August 5, 2013 — The FDA Goes Gluten Free: More to Come

July 19, 2013 — I Can Believe It's Got No Fat *

July 11, 2013 — Driving a Stake Into State Obesity Litigation

March 25, 2013 — Turn your Bar Bill Into a Federal Case

March 14, 2013 — New York "Big Gulp" Ban Bites It For Now

February 20, 2013 — The Case That Makes You Go "Ewww"

October 5, 2012 — Food Security Act Doesn't Apply to Proceeds

July 17, 2012 — It's not boilerplate, it's part of the contract

July 3, 2012 — Farmers Can Be Article 2 Merchants (but not necessarily always)

June 6, 2012 — Without Causation, a Plaintiff Has No Case

May 21, 2012 — Raw Milk Redux (and Ken Redux for an Instant)

May 16, 2012 — The Best Thing. Ever.

May 11, 2012 — Accident in Search of a Cause of Action: the Alaska Supreme Court Strikes Out

November 22, 2011 — What I Learned on My Winter Vacation, or Is Water Good for You?

November 21, 2011 — Here's a Pop Quiz

September 20, 2011 — Arsenic in Apple Juice: Strong Poison or Much Ado About Nothing?

September 15, 2011 — Introducing David Goodnight

September 14, 2011 — A Misleading Headline About Farmers Markets

September 7, 2011 — Good luck, Ken (and Watch this Space)!

September 2, 2011 — Japan to World: Remember Me?

May 12, 2011 — UK Foot-and-mouth Disease Study: Impacts for the Future, Not the Past

May 6, 2011 — Take the "Cold" out of Cold Cuts and Put Back the "Hot" in Hot Dogs

April 21, 2011 — Can We Eat Quinoa and Other Passover Dilemmas

April 7, 2011 — An Update on Japan from the Perishable Pundit

April 4, 2011 — The Japanese Nuclear Incident and Food Safety

February 23, 2011 — Bad Guys Disguised As Good Guys: Labeling and Sourcing Issues at Farmers Markets

February 7, 2011 — Unmitigated Chutzpah: The CSPI's Merchantability Claim Against Safeway

February 3, 2011 — I Have Seen the Future and It Wants Me to Eat Better

December 31, 2010 — Trading Places, the 2010 Edition: OJ Way Up, Bellies Down and Out?

December 22, 2010 — The FDA's Own 30,000 Foot Take on the Food Safety Bill

December 21, 2010 — The Sally Jackson Cheese Recall: the Last Purely Voluntary Recall?

November 23, 2010 — "Sweet" and "Natural": Can One Word Have Meaning And One Not?

November 17, 2010 — Arm Me with Knowledge: A Response to Ken Odza

October 1, 2010 — The OchocincO's Misprint: This Wouldn't Happen with Flutie Flakes

September 24, 2010 — Aurora Dairy Organic Milk Case: Eighth Circuit Preempts Some Claims And Remands Others

August 25, 2010 — Consumers and Gulf Shrimp: Watch What We Do, Not What We Say

August 20, 2010 — The Great Egg Recall of 2010: Another Review of Lessons Already Taught

July 28, 2010 — How Virgin is Your Olive Oil?

June 8, 2010 — Jim Prevor's Traceability Answers

May 14, 2010 — A Traceability Story: Request for Comments

May 7, 2010 — "Always Coca-Cola"? Who Knows?

April 29, 2010 — Froot Loops Litigation: An Endless Loop for Kellogg's?

April 13, 2010 — District Court to CSPI: No Standing Any Time

March 31, 2010 — Ninth Circuit Approves California Ban on Slaughtering Nonambulatory Animals Against Preemption Challenge

March 25, 2010 — The Food Labeling Provisions of the Health Care Bill: Preliminary Thoughts

March 15, 2010 — The Great HVP Recall of 2010: A Review of Lessons Already Taught

February 12, 2010 — Bagged Salads: Consumers Union Weighs In, Perishable Pundit Replies

January 29, 2010 — Media Headlines and Food Labels Each Might Be Misleading (Film at 11)

January 22, 2010 — Where to Eat in Dodgy Places: Advice from a Real World Traveller

January 8, 2010 — Third Circuit Rules that Food Service Management Companies and Distributors are Not Competitors for Robinson-Patman Act Analysis

December 31, 2009 — The Ninth Circuit's iPod Opinion and the Warranty of Merchantability

December 29, 2009 — Who Ordered the Christmas Pudding? Please Sign Here

December 2, 2009 — The Wall Street Journal on "Bagel-Related Injuries"

December 1, 2009 — Levine v. Vilsack: The Ninth Circuit Rules the Humane Methods of Slaughter Act Provides No Remedy

November 12, 2009 — Delio v. McDonald's Corp.: The Connecticut Grilled Chicken Case

November 4, 2009 — From Onions to Chicken Soup: The Wall Street Journal Weighs in On Home Flu Remedies

October 15, 2009 — FDA's Searchable Widget for Fraudulent H1N1 (Swine) Flu Products

October 9, 2009 — Jim Prevor Deconstructs CSPI's List of "Ten Riskiest Foods"

September 18, 2009 — Macaroni Grill Changes Its Menu for the Right Reasons

August 28, 2009 — Ninth Circuit Decision Casts Doubt on Merchantability Claim in CSPI Suit Against Denny's

August 12, 2009 — FDA Draft Guidance on Tomatoes, Leafy Greens and Melons

July 26, 2009 — Settlements and Implied Warranties

July 17, 2009 — UK Hails the Return of the Nobbly Carrot and the Bendy Cucumber

July 13, 2009 — The Fuller Monty and Lady Godiva: More on the Plainview Problem

July 9, 2009 — Monty Python and the Food Recalls

July 3, 2009 — Another Recall From a Company That Does the Right Thing

June 24, 2009 — Participate in USDA Governance in Your County

June 23, 2009 — Melamine in Pet Food and the Limits of the Law

June 19, 2009 — The Perils of Raw Cookie Dough

June 16, 2009 — Nolan v. Ocean Spray Verdict: The PACA Angle

May 20, 2009 — The Missing Menu Item: the Farm Products Exception

May 19, 2009 — Hamburg Confirmed by Voice Vote in Senate

May 17, 2009 — How Not to Feed Airport Guards

May 11, 2009 — The Pistachio Industry Follows the Peanut Industry

May 7, 2009 — Salmonella in a Different Language

April 22, 2009 — Ivar's Turkey Soup Recall

April 15, 2009 — Update on the Rojak Case

April 9, 2009 — Food-Borne Illness: Glass Half-Empty or Half-Full?

April 8, 2009 — The High Cost of Loving Rojak

April 6, 2009 — A Bad Week for Grapefruit

April 1, 2009 — More on Pistachios and Setton Farms

March 31, 2009 — The Pistachio Recall: More Salmonella

March 24, 2009 — The Uniform Commercial Code and Food Recalls

March 23, 2009 — Nestle's Makes the Very Best Peanut Decision

March 11, 2009 — Maple Leaf Foods: A Case Study in the Persistence of Memory

March 2, 2009 — The Best Restaurant on Earth Closed Due to Food Poisoning

February 24, 2009 — Two Stories from China on the Same Day (with an update)

February 20, 2009 — Senator Durbin Likely to Introduce New Food Safety Legislation

February 17, 2009 — The Peanut Recall Hits Bird Food

February 13, 2009 — PCA Files for Chapter 7 Bankruptcy

February 13, 2009 — A Nicely Balanced Article from the AP

February 11, 2009 — PCA President Parnell Pleads Fifth Amendment Before House Committee

February 11, 2009 — The Human Cost of the Peanut Recall Part Three

February 11, 2009 — The Human Cost of the Peanut Butter Recall Part Two

February 9, 2009 — Update on Criminal Risk Management: The Peanut Case

February 6, 2009 — The Human Cost of the Peanut Recall Part One

February 4, 2009 — Is More Bad By-Products News Coming for Biofuels Producers?