What's in a Name? - Trade Organizations Push for HFCS Flexibility
The Corn Refiners Association (the “CRA”), a trade organization representing the US corn refining industry, recently petitioned the Food and Drug Administration (the “FDA”) to allow the term “corn sugar” as an alternative label declaration for high fructose corn syrup (“HFCS”). The the FDA’s decision on whether to approve the renaming is expected to take up to two years.
The CRA is advocating the renaming, stressing that HFCS, despite the name, is not actually high in fructose. There are three different types of HFCS one that is 55 percent fructose and 42 percent glucose (HFCS 55, most commonly found in soft drinks) - one that is 42 percent fructose and 58 percent glucose (HFCS 42, usually used in food products), and one used for specialty applications that is 90 percent fructose and 10 percent glucose (HFCS 90, typically used to blend with HFCS 42 to make HFCS 55). Buttressing the CRA’s claim is an American Dietetic Association study that also reached the conclusion that HFCS contains proportions of fructose and glucose that are similar to sugar.
While the CRA’s stated objective in pursuing the alternative label declaration for HFCS is achieving greater clarity for consumers, this change may also yield economic benefits for companies that use HFCS in their products. According to a recent report by market research organization Mintel, a majority of consumers surveyed claim to avoid products in which HFCS is listed as one of the first ingredients. This preference is strongest among more affluent and better educated consumers. HFCS has faced significant levels of negative publicity in recent years, reaching a crescendo with the 2004 publication of a study in the American Journal of Clinical Nutrition highlighting the parallel between obesity and the rise in high fructose corn syrup consumption, and hypothesizing that the two could be related. The study’s authors have since said they were wrong in their speculation, and the American Medical Association has concluded that HFCS “does not appear to contribute more to obesity than other caloric sweeteners”, but as the results of consumer surveys and sales data indicate, the backlash against HFCS has continued. There is precedent for this type of rebranding, as in November of 2009 Ajinomoto rebranded its aspartame sweetener as “AminoSweet” based on many of the same issues at play in the current discussion of HFCS.
"Always Coca-Cola"? Who Knows?
On April 27, the U.S. District Court for the Southern District of Illinois dismissed the case of Kremers v. Coca-Cola Company. The case involved another of these ubiquitous claims where someone is suing saying they were fooled by labeling on a product. Unfortunately, the case was dismissed on grounds that indicate we might never really know the answer to the real gravamen to the plaintiffs’ complaint.
The claim involved the change, famous in product lore, from Coke to “new Coke” and then back to “Coca-Cola classic.” In 1985, Coca-Cola Company announced it was reformulating its flagship brand, renaming it “New Coke.” Two months later, having learned that brand loyalty may indeed trump blind taste tests, it relaunched its old formula as “Coca-Cola classic.” Eventually, New Coke was renamed “Coke II” and is, according to Coca-Cola Company itself, no longer available in the United States.
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The Kremers case involved what, at least on the can of Coke® I borrowed from my office, is a tiny legend at the bottom of the can, saying “Original Formula.” The claim was that the original formula” of Coca-Cola included sugar, not high fructose corn syrup, and therefore the phrase “Original Formula” was misleading, requiring, of course, the company to cough up damages to everyone who had been fooled by the phrase.
Unfortunately for the two named plaintiffs, fortunately for Coca-Cola Company and definitely unfortunately for anyone who wanted to find out the answer to the question of whether “Original Formula” could in fact be misleading, the two plaintiffs had different, but equally dispositive, flaws in their cases. Lead plaintiff Amanda Kremers couldn’t beat the five year Illinois statute of limitations for claims of unjust enrichment. She admitted in her deposition that she had first heard that high fructose corn syrup was in Coke® way back in the 1990s. Second named plaintiff Jason McCann admitted on deposition that he’d never read the words “Original Formula” on the can, which made it basically impossible for him to claim he was deceived. And both plaintiffs admitted to continuing to buy Coke® even after the case was brought, when they clearly could not have been deceived about the contents of the beverage, since they were already suing its manufacturer. 
The unanswered question in the case is interesting. As you can see, the type size for “Original Formula” is about the same as the type size for “High Fructose Corn Syrup” on the ingredients label. That would probably argue against anyone being reasonably misled by the one by somehow failing to look at the other.
More to the point, however, is that the history of Coca-Cola does not support the plaintiff’s case. The “formula” of Coca-Cola is proprietary and a trade secret (though how much of a secret is of course the subject of debate). Coca-Cola used to include real live cocaine, as opposed to completely decocainized coca leaves. According to Snopes, at some point in the 1920’s
glycerin was added as a preservative, cocaine was eliminated, caffeine was greatly reduced, and citric acid was replaced by phosphoric acid, to name the changes we know about.
By “Original Formula,” they quite clearly mean “not that New Coke stuff everyone complained about in 1985.” Coca-Cola Company itself admits they misunderstood their own customers then; they’re just reassuring them now.
Also according to Snopes, when New Coke was introduced in 1985, there was no sugar in Coke®. So focusing on the high fructose corn syrup, as opposed to the other changes, seems likely to be an attack on HFCS more than anything to do with being fooled by which Coca-Cola formula is in the can.
Of course, if you want Coke® with real sugar, it’s available from Mexico (Sugared Coke® is also available in the United States in some areas around Passover, because observant Ashkenazic Jews don't eat corn during the holiday).
I haven’t drunk Coke® in years, but this past winter we were visiting some Mayan ruins and on the way back had lunch in Bacalar, where we had a choice of beer, bottled water and Coke®. I chose the Coke® and after one sip I realized that this was the beverage I had grown up with. Yes, sugar in Coke® does, at least to these taste buds, make a difference. But I can also read a label.
Preemption v. Plausibility: Will There Be More or Fewer Successful Consumer Fraud Suits?
Products Liability Law360 ran a piece this week entitled “Suits Over Deceptive Food Marketing Likely To Increase” (unfortunately, this is a subscription-only site) authored by Liz McKenzie. The article discusses rightly how increased FDA enforcement action may lead plaintiffs attorneys to file “piggy-back” putative class actions. For example, it took just 13 days following the FDA’s warning letter to General Mills concerning Cheerios for the first putative class suit to be filed.
Compounding increased FDA enforcement, recent rulings from the Supreme Court and the Third Circuit, like the Snapple Decision, have made it more difficult to assert a preemption defense in food cases in the absence of formal FDA rulemaking.
But, what one hand giveth the other taketh away. The hope for food companies is that that the Supreme Court’s recent decisions in Twombly and Iqbal will negate the preemption decisions and effectively heighten the bar for consumer fraud claims related to product marketing. Dismissal for failure to meet the new “plausibility” pleading standard and not preemption is exactly how the District Court ruled in Wright v. General Mills. Wright involved a putative class complaint involving Nature’s Valley products sold as “100% Natural” “even though the products contained one or more non-natural or artificial ingredients such as high-fructose corn syrup (’HFCS’).”
In Wright, the court found defective, under the Iqbal/Twombly “plausibility” standard, the plaintiffs’ injury-in-fact allegation. The Wright court ruled that the injury-in-fact allegation “conclusory,” “sparse” and “defective.” The plaintiff alleged only that “Defendant caused Plaintiff and other members of the Class to purchase, purchase more of, or pay more for, these Nature Valley products.”
Following the Supreme Court's new standard of notice pleading and its application in the Wright case, query how any putative consumer fraud class complaint can survive a Rule 12 motion without having first completed market surveys or gathering of other evidence of consumer injury.
Snapple Decision - FDA's Policy Concerning Use of "Natural" Not Entitled to Preemptive Effect
High Fructose Corn Syrup Labeling: Opening the Floodgates For Consumer HFCS Claims?
The Third Circuit ruled this week in Holk v. Snapple Beverage Corp., reversing the district court and reinstating the state law putative class claims for consumer fraud and breach of warranty for use of the term “all natural” despite the inclusion of high fructose corn syrup (HFCS) (though the court noted that the manufacturer no longer uses HFCS in its products).
The case is significant and is getting attention because the Third Circuit concluded that “FDA’s policy statement regarding the term ‘natural’ is not entitled to preemptive effect.” The court was persuaded because “the FDA declined to adopt a formal definition of the term ‘natural’ choosing instead to simply enforce its long standing ‘informal policy’”:
[T]he agency has considered “natural” to mean that nothing artificial or synthetic (including colors regardless of source) is included in, or has been added to, the product that would not normally be expected to be there. For example, the addition of beet juice to lemonade to make it pink would preclude the product being called “natural.”
As expected, the court followed its previous ruling in Fellner v. Tri-Union Seafood, LLC (our blog entry about it is here), ruling that neither the FDA’s “informal policy” nor their enforcement letters were entitled to any preemptive weight.
Practice Tip: For the next HFCS case, preemption may not be a dead issue. The Third Circuit did not rule (though it expressed its skepticism) on the “express preemption” argument based on 21 U.S.C. § 343-1(a)(3). The court ducked the issue by concluding that Snapple waived the argument by not “advancing it” in the district court.
HFCS Labeling Case: Opening The Floodgates For New Consumer Claims?
The Third Circuit may be close to opening the floodgates of claims against food and beverage manufacturers who use high-fructose corn syrup (“HFCS”) in products labeled “all natural.” Shannon Duffy at the Legal Intelligencer reported recently on a “lively hour-long” oral argument in the Third Circuit about reversing a District Court’s dismissal of state consumer claims against Snapple for use of HFSC.
The District Court dismissed the consumer claims in 2007 on the basis of field preemption. The dismissal predated the Third Circuit’s decision in Fellner v. Tri-Union Seafood, LLC. See our previous blog on the Fellner case. Despite the FDA’s position in Fellner that a state law failure-to-warn claim is preempted by federal law, the Third Circuit ruled to the contrary.
In Fellner, a claim by a person who suffered from mercury poisoning after eating canned tuna literally for breakfast, lunch and dinner for five years may have been an outlier. But reversal of the District Court’s decision in the Snapple case will open the floodgates to consumer class action claims against a whole slew of food sellers and manufacturers.
