Court to Rule on Consumers' Expectations For Organic Cosmetics
Dr. Bronner’s Magic Soaps (“Dr. Bronner’s”) received a favorable ruling recently in its suit against competitors that it believes are misleading consumers by labeling cosmetic products as “Organic”. Part of Dr. Bronner’s claim appears to be that “Organic” standards established by the U.S. Department of Agriculture (“USDA”) set the bar for consumer expectations of "Organic" cosmetic products. The USDA’s National Organic Program (“NOP”) standards, according to the USDA, do not apply to “cosmetics, body care, or personal care products”. Dr. Bronner’s argues in its complaint that “[p]ersonal care products labeled as in compliance with ‘Organic’ or ‘Made with Organic [up to three specified ingredients]’ under the NOP criteria reflect basic organic consumer expectations . . . .” (Brackets in original.)
Last week, a California Superior Court in San Francisco overruled the demurrer of Ecocert France (SAS) and Ecocert, Inc. A demurrer is essentially a request made to a court, asking it to dismiss a lawsuit on the grounds that no legal claim is asserted.
According to Dr. Bronner’s, the “Court turned aside the defendants’ arguments that Dr. Bronner’s, in its complaint filed with the Court, had not sufficiently spelled out how actual consumers, the company and competition in the organic personal care industry have been hurt by the defendants’ deceptive practices.” The court’s ruling does not necessarily mean that Dr. Bronner’s is likely to succeed, only that it has articulated colorable claims. The court did not rule on the merits of these claims.
This case should be watched closely by those in cosmetics and food industries. Dr. Bronner’s claims turn, at least in part, on its view of “consumer expectations.” Do consumers have expectations as to what “Organic” means? Does it mean something different for cosmetic products? These are just a few of the significant questions that may be addressed in the litigation.
Salmon Labeling Probably Headed to Supreme Court
The U.S. Supreme Court signaled last week that it may review a California Supreme Court decision finding that federal law does not preempt claims for violations of state consumer protection laws concerning “selling artificially colored farmed salmon without disclosing to . . . customers the use of color additive.” Following a petition for certiorari filed in April, the Supreme Court issued an order last week inviting the Solicitor General “to file a brief in this case expressing the views of the United States.”
The Bush administration generally favors federal preemption of state consumer protection laws. Most Supreme Court watchers believe that the Court will grant certiorari if the Solicitor General advocates doing so. This case, if considered by the Supremes, is sure be significant with wide ranging implications for consumer protection claims concerning food product labeling.
Lessons from Toxic Rice and Chinese Dairies - Threats From Bioterrorism and Supplier Fraud
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Manufacturer fraud and bioterrorism should be on the radar screen for any food producer. Apart from the meltdown in the U.S. financial markets and presidential politics, the big news this week is toxic rice from Southeast Asia and melamine-tainted dairy products from China. Both crises were caused by intentional contamination of food products by raw-materials suppliers with the apparent motivation to defraud food manufacturers and sellers.
Both (especially melamine-tainted dairy products) are causing a worldwide health scare and crisis in consumer confidence. Consumers outside of China may not be at serious risk, because the melamine-tainted dairy products are not sold as pure dairy products. Outside of China, Chinese dairy products are used only in small quantities as ingredients in products such as candy and coffee. U.S. and European Union consumers are at risk only when consuming unusually large quantities of these “nondairy” products.
Yet the consumer crisis inside and outside of China could have ameliorated dramatically but for failures in crisis management. Even the presumably government-controlled Chinese press understands this: “Crisis management is closely related to the brand and credibility of an enterprise, but many Chinese enterprises have not developed the capability to react properly when a crisis emerges . . . .”
Consistent with Western principles of crisis management, Chinese experts, according to the Chinese press, opine that “one principle of crisis management is to take a responsible attitude immediately and in a sincere manner, which is of great help for enterprises to rebuild their credibility.”
The press in China points to a company named Sanlu and concludes that “Sanlu, the center of the scandal, provided a bad example of crisis management. When it was first exposed, Sanlu refused to take the blame and passed the buck to innocent dairy farmers, which ignited great anger nationwide. . . . Sanlu didn’t openly admit its products were toxic until Sept. 11. It eventually recalled baby formula manufactured on and before Aug. 6. The scandal led to the fall of chairwoman Tian and the disappearance of all dairy products bearing the brand of Sanlu.”
Dos and Don'ts for Executives Managing a Crisis
As discussed frequently in this blog, management of an outbreak at its inception determines the course of the crisis (and, in some cases, the fate of the company).
The Globe and Mail, in its ongoing coverage of the Maple Leaf Foods Listeria outbreak, today published a helpful punch list of 15 dos and don’ts for corporate executives managing a food-borne outbreak.
The last two items on the list may be the least obvious but are among the most important:
“14. Do make a list of the five questions you would least like to be asked and be prepared to answer them, since somebody will undoubtedly ask them.
“15. Do set up a rumour control hotline or website if rampant speculation could fuel the crisis.”
A hotline for collecting consumer information and complaints can be valuable. It allows the company not only to get control over and manage misinformation (the point being made in the Globe and Mail), but also to gather information about how many people the outbreak affects and who has fallen ill. Even more important, a hotline may enable the company to direct ill people to appropriate medical treatment, minimizing or even eliminating litigation.
Good Time To Review Crisis Management Plans
Personal injury and economic damage claims await for the FDA and CDC to determine causation. Produce industry, particularly in Mexico, stands to suffer long lasting injury.
Whether or not your business stands to be impacted (or has been impacted) by the current outbreak, now is a great time to review and rehearse your crisis management plan. I recommend that your team include the following (whether in-house personnel or outside consultants):
- Scientific - Epidemiology, Microbiology, Infectious Disease - Quantifies risks, assists public health officials and supports litigation;
- Accounting - Estimates costs of response options and manages system for customer reimbursement;
- Public Relations - Coordinates all internal and external communications and develops a plan to limit impact to the brand;
- Quality Assurance - Assists in conducting traceback;
- Sales and Marketing - Notifies suppliers and buyers, monitors recall effectiveness and coordinates product returns;
- Legal - Assists with fact investigations, assists coordination with regulatory officials, addresses liability issues, deals with issues of insurance coverage and prepares for litigation;
- COORDINATOR/TEAM LEADER - selecting a member of the team that can bridge a diversity of disciplines and demonstrate leadership is critical.
More on The Raw Milk Debate - Consumer Choice vs. Consumer Protection
I found comments attributed in the article to Kansas State professor Doug Powell most salient:
Doug Powell says he's not surprised that government health officials denounce the dangers of raw milk then turn around and license the sale of the same milk.
"In part, it's because of the almost evangelical way people talk about raw milk and that America is founded on consumer choice," said the associate professor of food safety at Kansas State University.
"The numbers of illnesses from outbreaks caused by unpasteurized milk are not that high. You could very easily make the cases that 'Wow, maybe tomatoes should be regulated a whole lot more than we do now because the numbers of cases of salmonella saintpaul are up to 550 now,' " said Powell, who is also scientific director for the International Food Safety Network.While I'm not sure I agree that "America is founded on consumer choice," professor Powell is surely right that the conflict between consumer choice and consumer protection is bringing raw milk to boil. Professor Powell is also correct that from a public health standpoint, fresh produce presents a greater and more certain danger.
Implicit in the Post-Intelligencer article is that the debate suffers from a lack of consumer information. For example, do we really understand the alleged benefits of raw milk? There is some information on the web but is this peer-reviewed information that consumers can trust? On the flip side, consumers should be given better information than the kind of "scared straight" quality of information currently available. Both those who advocate against raw milk and those who support it can surely agree that both would be served by better research and consumer information.
