Supreme Court Creates New Food Labeling Battleground, plus GMO Labeling Primer

My colleague Anne Glazer recently co-authored an article with Connie Kirby of Northwest Food Processors Association titled “Summary of Regulatory Intersection between the Federal Trade Commission and the Food and Drug Administration over the Labeling and Advertising of Food Products: Implication for Genetically Engineered Foods.”

Prepared for Oregon Governor Kitzhaber’s Task Force on Genetically-Engineered Agriculture, of which Connie is a member, the article provides a helpful summary of the jurisdictional arrangements and regulatory approach to GMO labeling by the federal agencies charged with regulating food product manufacturing. It also provides an excellent breakdown of the recent U.S. Supreme Court decision in POM Wonderful, LLC v. The Coca-Cola Company, which paved the way for a new battleground in food and beverage labeling litigation: competitor-to-competitor lawsuits.

Readers can download a PDF copy of the article here.

Also a quick shout-out to Connie Kirby and her fellow bloggers on their new “NWFPA Issues Blog.” NWFPA members can follow their commentary on the recent decision in POM Wonderful and other current topics relevant to the food industry at http://www.nwfpa.org/resources/issues-blog.

FDA Issues Gluten Free Labeling Compliance Guide

Nearly a year ago on August 5, 2013, we reported on the blog that the Food and Drug Administration (FDA) had published a final rule establishing a regulatory definition of the term “gluten-free” for voluntary use in the labeling of foods. The final rule is intended to provide a uniform definition of the term “gluten-free” so that consumers, particularly those who have celiac disease, will know what it means when they see it on the labeling of food.

The rule became binding and effective on September 4, 2013, but August 5, 2014 is the date when FDA-regulated foods labeled “gluten-free” must comply with all requirements established by the final rule. In preparation of the upcoming compliance date, FDA prepared a Small Entity Compliance Guide which restates in plain language the requirements concerning use of the term “gluten-free” in the labeling of foods.

Specifically, the guidance states that any label claiming that a food is “gluten-free” must not contain any of the following ingredients:

  • An ingredient that is a gluten-containing grain (such as wheat, rye, or barley or any of their crossbreeds); or
  • An ingredient that is made from a gluten-containing grain and that has not been processed to remove gluten. For example, “wheat flour” is an ingredient made from wheat that has not been processed to remove the naturally occurring gluten in wheat. Therefore, wheat flour cannot be used as an ingredient to make a food labeled “gluten-free;” or
  • An ingredient that is made from a gluten-containing grain and that has been processed to remove gluten, if the use of that ingredient contains 20 parts per million (ppm) or more gluten.

The claim can also appear on the labels of foods that inherently do not contain gluten, such as fresh vegetables or juices.

Another important bit of information is that, unlike other required label components, there are no requirements for color, type size or placement of the “gluten- free” claim.

Although the rule does not expressly require manufacturers to test for the presence of gluten in the raw ingredients or finished foods labeled “gluten-free,” it might be wise to do so. Failing to ensure that the food item bearing a “gluten-free” claim meets the requirements of the rule could cause the product to be deemed misbranded and thus subject to FDA regulatory action. In its guidance, the agency encourages companies to use effective measures to ensure that any foods labeled as “gluten-free” comply with the requirements including:

  • testing the ingredients to determine their gluten content;
  • requesting certificates of gluten analysis from ingredient suppliers; or
  • participating in a third-party gluten-free certification program.

However, as with all agency guidance, FDA’s compliance guidance for gluten-free labeling does not establish legally enforceable responsibilities. Instead, this guidance describes the agency’s current thinking on a topic and should be viewed only as a recommendation. If you have any questions about gluten-free labeling or other food label claims, contact Stoel Rives label compliance experts Claire Mitchell and Anne Glazer.

Constitutionality of Vermont's Recently Enacted GMO Labeling Law Challenged

In a lawsuit filed yesterday, June 12, 2014, in United States District Court for the District of Vermont, four national trade associations representing food producers and manufacturers sued the state of Vermont claiming that the state’s recently passed Act 120, which would require certain food containing ingredients derived from genetically engineered crops to be labeled as such, violates the United States Constitution.

Enacted on May 8, 2014, Act 120 amends Title 9 of the Vermont Statutes to include a new chapter 82A, “Labeling of Food Produced with Genetic Engineering.” The new law requires food that is intended for human consumption and that is offered for sale on or after July 1, 2016 to be labeled as produced from genetic engineering if the food was entirely or partially produced with genetic engineering.

The act also prohibits a manufacturer of a food produced entirely or in part from genetic engineering from labeling the product on the package, in signage, or in advertising as “natural,” “naturally made,” “naturally grown,” “all natural,” or any other similar words. Most importantly, though, unlike other recently passed GMO labeling laws in Connecticut and Maine, Vermont’s law does not require passage of similar laws by other states in order to take effect. It is the first “no-strings-attached” GMO labeling bill to pass in any state.

Act 120 exempts certain foods from the labeling requirements including: food consisting entirely of or derived entirely from an animal that has not itself been produced with genetic engineering; a raw agricultural commodity or processed food that has been grown, raised, or produced without the knowing or intentional use of food or seed produced with genetic engineering, provided that the person responsible for labeling has obtained a sworn statement to that effect; processed food subject to labeling solely because it contains a processing aid or enzyme produced with genetic engineering; alcoholic beverages; processed food with genetically engineered materials that in the aggregate do not account for more than 0.9 percent of the total weight; food certified by an independent organization as not having been knowingly or intentionally produced from or commingled with food or seed produced with genetic engineering; unpackaged processed food intended for immediate human consumption; food served, sold, or otherwise provided in a restaurant or other food establishment; and medical food.

The lawsuit, filed jointly by the Grocery Manufacturers Association (GMA), the Snack Food Association, the International Dairy Foods Association and the National Association of Manufacturers, challenges the constitutionality of Act 120 on the basis that it “fails any standard of First Amendment scrutiny.” Specifically, the associations argue that Vermont does not have a sufficient government interest to compel the labeling of foods produced with genetically engineered ingredients and, therefore, runs afoul of the protections commercial speech is afforded under the First Amendment.

The plaintiffs also challenge Vermont’s law on the grounds that is violates the Fifth, Fourteenth, and Fifteenth Amendments as well as the Commerce and Supremacy clauses. Moreover, the complaint alleges that Act 120 is preempted by a number of federal laws, including the Federal Food, Drug and Cosmetic Act and the Nutrition Labeling and Education Act.

As this dispute heads to the court, other states, including Oregon, continue to introduce GMO labeling measures for legislator and voter consideration.

New Bipartisan Bill Introduced Regarding GMO Labeling

Last week U.S. Representatives Mike Pompeo (R-KS) and G.K. Butterfield (D-NC) introduced a bipartisan bill that would amend the Federal Food, Drug, and Cosmetic Act with respect to foods produced from, containing, or consisting of a bioengineered organism. The result has been either applause or outrage depending on which side of the GMO labeling debate you find yourself on.

Titled the “Safe and Accurate Food Labeling Act of 2014,” the bill, if passed, would establish a federal labeling standard for foods with genetically modified ingredients and give sole authority to the Food and Drug Administration (FDA) to require mandatory labeling on such foods if they are found to be unsafe or materially different from foods produced without genetically modified ingredients.

Specifically, the bill provides that biotechnology companies developing genetically modified ingredients for use in food products must submit a premarket approval notification to the FDA at least 210 days before the bioengineered organism is first introduced into interstate commerce. The premarket approval process outlined by the bill looks quite similar to the GRAS Notice Program currently in place for food additives.

The bill states that:

[a] bioengineered organism shall not be introduced or delivered for introduction into interstate commerce for a food use or application unless (1) the use or application of the bioengineered organism in food has been addressed by the developer of the bioengineered organism in a premarket biotechnology notification, to which the Secretary has responded…by stating no objections.

Within 30 days of receipt of the premarket notification, the FDA must deliver a preliminary where it will either:

  • inform the notifier that the notification is complete and has been filed; or
  •  inform the notifier of any missing elements that prevents further review of the notification.

Once the notification is complete and filed, the FDA then has an additional 180 days to substantively respond by informing the notifier that the agency has no objections or that the notifier’s safety determination is inadequate.

If the FDA does indeed determine that the notifier’s safety determination does not pass muster there is a material difference between a food produced from, containing, or consisting of a bioengineered organism and its comparable marketed food and that disclosure of such difference is necessary to protect health and safety or to prevent the label or labeling of such food from being false or misleading, the agency may specify labeling that would adequately inform consumers of such material difference. The bill is clear that the use of bioengineering does not, by itself, constitute a material difference.

The part of bill that has caused the biggest uproar can be found in Section 104 on Preemption. The Section states that:

no State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect as to any food in interstate commerce any requirement for the labeling of a food by virtue of its having been developed using bioengineering, including any requirements for claims that a food is or contains an ingredient that was developed using bioengineering.

The bill would block states from implementing their own labeling laws pertaining to food containing genetically engineered ingredients. The rationale behind the ban according to Rep. Pompeo is that this legislation would eliminate a 50-state patchwork of GMO labeling laws that could mislead consumers and raise the price of groceries. According to a recent article by James Andrews at Food Safety News, [e]fforts to label genetically modified organisms (GMOs) have sprouted across more than two dozen states, including two successful bills in Maine and Connecticut, along with measures that came up short at the ballot box in California and Washington.”

It is unclear whether the bill will pass, but Stoel Rives attorneys will be tracking its progress in the legislature and reporting on any developments.

Food Package Nutritional Labels Set for an Overhaul

The Nutrition Facts panel found on many food packages, that most of us have been scanning in grocery aisles for the past 20 years, is expected to undergo some significant changes starting this week. According to a recent press release from the U.S. Food and Drug Administration (FDA), the agency is planning to update the Nutrition Facts label based on the latest science-based nutrition recommendations. 

Sources indicate that the changes may be announced as soon as this Thursday, when First Lady Michelle Obama is scheduled to speak at the fourth anniversary celebration of the “Let’s Move!” campaign. Bookmark this site for our report once the proposed Nutrition Facts changes are announced.

By way of background,  the Nutrition Facts panel has allowed consumers to have consistent nutritional information and to make healthier choices, since passage of the Nutrition Labeling and Education Act of 1990 mandated nutrition labeling. In addition, throughout the years, mandatory nutrition labeling has encouraged many companies to change their ingredients to make the foods more healthful and thus more appealing to many consumers.

However, in light of new knowledge about nutrition and more evidence that people actually consult the labels of food packages, FDA officials believe it is time for an overhaul. Paula Trumbo, Ph.D., acting director of FDA’s nutrition programs staff explains that “updates are currently being assessed to address such factors as current nutrient recommendations, public health concerns based on recent data on food consumption, and the agency’s desire to make this information as clear and useful as possible.”

Initiative 522 Defeated in Washington

Based on preliminary results from Tuesday’s election, it appears that Washington State’s hotly debated Initiative 522 (I-522) concerning the labeling of genetically-engineered foods has gone the way of California’s Proposition 37. Washington officials reported on Wednesday, November 6, 2013 that voters had rejected the measure, 54% to 46%. California’s similar labeling measure, Proposition 37, was rejected by California voters in November 2012.

County by county results show that certain counties in Washington including, King, Whatcom, and Jefferson, were largely in favor of passing I-522. However, the measure lost heavily in the southwest, central and eastern regions of the state.

If it had passed, I-522 would have required that any food offered for retail sale in Washington that was or may have been entirely or partly produced with genetic engineering to be labeled as follows:

  • In the case of a raw agricultural commodity, the package offered for retail sale must clearly and conspicuously display the words “genetically engineered” on the front of the package, or where such a commodity is not separately packaged or labeled, the label appearing on the retail store shelf or bin where such a commodity is displayed for sale must display the words “genetically engineered;”
  • In the case of any processed food, the front of the package of such food must clearly and conspicuously bear the words “partially produced with genetic engineering” or “may be partially produced with genetic engineering;” and
  • In the case of any seed or seed stock, the seed or seed stock container, sales receipt or any other reference to identification, ownership, or possession, must state clearly and conspicuously that the seed is “genetically engineered” or “produced with genetic engineering.”

In addition to the labeling requirements, I-522 would have also created a new private right of action for consumers to sue food companies alleging that they are not meeting the labeling standards set forth in the measure. Throughout the I-522 campaign, opponents argued that these so-called “bounty-hunter” lawsuits would impose significant defense costs and force settlements on food processors that may have inadvertently violated the measure’s requirements.

Despite I-522’s failure, the issue of GMO labeling appears to be here to stay. Earlier this year, Connecticut became the first state to enact legislation requiring the labeling of genetically engineered foods. According to Connecticut’s law, however, the labeling requirement will not take effect until four other states, including one state sharing a border with Connecticut, enact similar legislation. In addition, the requirements of the law will not take effect until a combination of Northeastern states with a cumulative population of over 20 million residents enacts similar legislation. Maine enacted similar legislation this summer, but the law also requires other states to enact GMO food labeling laws before the mandate takes effect.

Several other states currently have pending GMO labeling legislation that will be addressed during the next legislative session for those respective states. Stoel Rives attorneys will continue to track these state GMO labeling measure as developments occur. Check back here for updates.

Federal Judge Orders FDA to Address "All Natural" Labeling on GMO Foods

Coauthored by Claire Mitchell and Thomas Woods:

California federal courts now appear positioned to lead the way nationally on the issue of whether food products containing genetically modified ingredients, commonly referred to as “GMOs” can be labeled “All Natural.” Just last week a federal judge in Colorado stayed the case of Nicole Van Atta v. General Mills, Inc. (Case No. 12-cv-02815-MSK-MJW) (PDF), pending the Food and Drug Administration’s (FDA) input on this very issue recently sought from the agency by a California judge in the case of Cox v. Gruma Corp. (Case No. 12-CV-6502 YGR) (PDF).  

California, a hotbed of consumer litigation activity due to the state’s expansive consumer protection laws, has become a particularly common venue for consumer class actions alleging misbranding and false advertising regarding the use of “All Natural” claims. In particular, many cases have been filed challenging a manufacturer or retailer’s use of “All Natural” labels on products containing GMOs. These lawsuits are typically brought under California’s unfair competition and false advertising laws (referred to as the “UCL” and “FAL” or §§ 17200 and 17500 of the California Business and Professions Code).

Cox v. Gruma Corp. (“Cox”), the case that lead to the Colorado court’s stay, is a class action lawsuit filed in December 2012 in U.S. District Court for the Northern District of California against Gruma Corporation, the manufacturer of Mission® Tortilla chips. The complaint in Cox alleges that the product’s labeling is false and misleading because it claims to be “All Natural” when it is not in fact natural due to the involvement of genetically modified corn seed in the product’s manufacture.

In Cox, U.S. District Judge Yvonne Gonzalez Rogers issued a final order dated July 11, 2013 (PDF) that stayed the class action for six months and referred to the FDA for an administrative determination the precise question of whether a food product containing GMO ingredients may be labeled “All Natural.” In making her decision, Judge Rogers agreed with plaintiffs’ argument that “a gaping hole in the current regulatory landscape for ‘natural’ claims and GMOs” exists. Accordingly, relying on the primary jurisdiction doctrine, Judge Rogers explained that a court may stay proceedings or even dismiss a complaint without prejudice where the claims involve “an issue of first impression or a particularly complicated issue Congress has committed to a regulatory agency.” Clark v. Time Warner Cable, 523 F. 3d 1110, 1114 (9th Cir. 2008). Based on the nature of the claims in this lawsuit, Judge Rogers concluded that “[u]nder these circumstances, deference to the FDA’s regulatory authority is the appropriate course.”

Many, including the plaintiffs, were surprised by this order based on the fact that, more recently, judges handling similar cases in California have refused to apply the primary jurisdiction doctrine to dismiss or stay matters. The plaintiffs object to the stay order. They argue that FDA has repeatedly declined to define the term “natural” when asked to do so, and there is no reason to suspect it should address the issue now differently now. Specifically, in 2010, a New Jersey federal court judge stayed a food-labeling suit against Hornell Brewing Co. Inc. and ordered FDA to address whether products that contain high-fructose corn syrup may be labeled “natural.” In a September 2010 letter responding to the court (PDF), Michael Landa, Acting Director of Center for Food Safety and Applied Nutrition (CFSAN) at the time, wrote that FDA was declining to provide such a determination.

It is unclear how FDA will respond to the recent order issued in Cox v. Gruma Corp., however, it is undeniable that there is mounting pressure on the agency to act. Although the Cox plaintiffs are correct that FDA has declined to issue formal rules concerning what is and is not “natural,” courts appear to recognize that something this time “feels” different. Perhaps this is because FDA and courts are undeniably more cognizant of the need for resolution of this issue in the context of GMO-containing products given voter interest on the issue throughout 2012, recent Congressional pressure in the form of letters to the agency requesting action on GMO labeling, and several court orders now staying litigation specifically on the issue of whether GMO-containing foods can be labeled “All Natural.” 

While it is not expected that the FDA will issue a formal rule in response to recent court orders, it is expected that FDA will respond in some form six months from now in a manner that will tell us whether it will, or will not, issue formal rules or updated guidance on this issue in the reasonably near future. For certain, it will be interesting to see how the Court in Cox formally deals with this issue six months from now and how that case impacts litigation throughout the country.  

Stoel Rives attorneys will continue to track this case and other similar “All Natural” cases as developments occur. Check back here for updates.

USDA Approves Non-GMO Label Claim for Meat and Egg Products

Coauthored by Andrea Canfield and Claire Mitchell:

The Food Safety and Inspection Service (FSIS),  the division of the U.S. Department of Agriculture (USDA) charged with regulating the safety and proper labeling of meat, poultry, and egg products, recently approved the Non-GMO Project Verified label claim for meat and liquid egg products. The label, certified by the Non-GMO Project, is intended to inform consumers that the animal was not raised on a diet that consists of genetically engineered ingredients, like corn, soy and alfalfa.

In October 2012, representatives from the Non-GMO Project, a third-party certifying organization, approached FSIS about potentially indicating on product labels under FSIS jurisdiction that the animals were fed diets without genetically engineered ingredients. USDA spokeswoman Cathy Cochran noted that FSIS “worked with the Non-GMO Project, three food companies, the Food and Drug Administration, and the Agricultural Marketing Service to be sure that the potential [non-GMO] label claims are truthful and not misleading to consumers.” According to Cochran, the agency took great care in vetting the Non-GMO Project’s standards, requirements and auditing processes before giving its approval.

Importantly, the approval of the Non-GMO Project Verified label does not necessarily signal a USDA policy shift with regard to non-GMO products. Cochran explained that FSIS allows companies to, “demonstrate on their labels that they meet a third-party certifying organization’s standards, provided that the third-party organization and the company can show that the claims are truthful, accurate and not misleading.” Cochran added that “[t]he agency…is not certifying that the labeled products are free of genetic engineering or genetic modifications.” Instead, the labels simply indicate that the products meet the standards of a third-party certifier regarding the use of non-GMO feed.

In order for a product to bear the Non-GMO Project’s verification seal, the product must have been produced according to consensus-based best practices for GMO avoidance. As described in the Non-GMO Project’s Standard, those practices require farmers, processors, and manufacturers to:

  • Perform ongoing testing of all at-risk ingredients.
  • Ensure that the product contains less than 0.9% GMO ingredients.
  • Abide by rigorous traceability and segregation practices to be followed in order to ensure ingredient integrity through to the finished product.
  • Verify compliance through an annual audit.
  • Allow for onsite inspections for high-risk products.

Representatives at the Non-GMO Project emphasize the fact that the non-GMO verification seal is not duplicative of the USDA certified organic label. Though genetic modification is an excluded method by the National Organic Program, GMOs are not prohibited substances and no GMO testing is required of organic products. This means that GMO ingredients can still be found in certified organic products as a result of accidental contamination. The Non-GMO Project requires product testing as a component of its Standard to ensure the level of GMO ingredients in a product falls below the action threshold. Yet even with the Non-GMO Project’s rigorous testing requirements, the high risk of contamination to seeds, crops, ingredients and products makes a claim that a product is entirely “GMO free” legally and scientifically indefensible.

Currently, there is no federal labeling requirement to indicate whether a food product was, or was not, developed using genetic engineering and only two states have passed GMO labeling laws; however, according to the Non-GMO Project’s Executive Director, Megan Westgate, “non-GMO” is the fastest growing label claim in the industry appearing on over 800 brands and 10,000 products. For those interested in learning more about the Non-GMO Project Verified mark, contact the Non-GMO Project’s Product Verification Program team at 877-358-9420 x102.

Another GMO Labeling Iniative on the Horizon, This Time in Washington

Last week on January 3, 2013, sponsors of Initiative 522 (I-522), a measure that would require the labeling of certain genetically engineered foods, filed their petitions with the Washington Secretary of State’s Office for review.

The filing of I-522 comes in the wake of Proposition 37, a similar initiative that was ultimately rejected by California voters in November 2012. If enacted, I-522 would require that any food offered for retail sale in Washington that is, or may have been, entirely or partly produced with genetic engineering to be labeled as follows:

  • In the case of a raw agricultural commodity, the package offered for retail sale must clearly and conspicuously display the words “genetically engineered” on the front of the package, or where such a commodity is not separately packaged or labeled, the label appearing on the retail store shelf or bin where such a commodity is displayed for sale must display the words “genetically engineered;”
  • In the case of any processed food, the front of the package of such food must clearly and conspicuously bear the words “partially produced with genetic engineering” or “may be partially produced with genetic engineering;” and
  • In the case of any seed or seed stock, the seed or seed stock container, sales receipt or any other reference to identification, ownership, or possession, must state clearly and conspicuously that the seed is “genetically engineered” or “produced with genetic engineering.”

Like Proposition 37, I-522 exempts certain food from the genetically engineered labeling requirements. Specifically, the following certified organic products, alcoholic beverages, medical foods, food sold for immediate consumption such as in a restaurant, products unintentionally produced with genetically engineered material, food made from animals fed or injected with genetically engineered material but not genetically engineered themselves, food processed with or containing only small amounts of genetically engineered ingredients, and any processed food that would be subject to the labeling requirement solely because one or more processing aids or enzymes were produced or derived with genetic engineering.

Now that the petitions have been filed, they must be reviewed to confirm that the sponsors of the initiative have obtained the necessary 241,153 valid signatures of Washington registered voters. Once the signatures are verified, the initiative will then be turned to the Washington State Legislature for further action:

  1. The Legislature can adopt the initiative as proposed, in which case it becomes law without a vote of the people;
  2. The Legislature can reject or refuse to act on the proposed initiative, in which case the initiative must be placed on the ballot at the next state general election; or
  3. The Legislature can approve an alternative to the proposed initiative, in which case both the original proposal and the Legislature's alternative must be placed on the ballot at the next state general election.

The Washington Legislature will convene on Monday, January 14, 2013 and will be in session until April 28, 2013. Stoel Rives attorneys will report on the status on I-522 as it moves through the Legislature.

In addition to Washington's I-522, a bill that would mandate the labeling of food and commercial feed containing "genetically modified material" has been pre-filed in the New Mexico State Senate. Senate Bill (SB) 18, sponsored by Sen. Peter Wirth (D-Santa Fe), seeks to amend the New Mexico Food Act to require a disclosure label on any product containing more than one percent of a genetically modified material.

Pepperidge Farm Facing Potential Class Action Lawsuit Over All Natural Claims

Although California’s Right to Know Genetically Engineered Food Act, better known as Proposition 37, failed earlier this month when put to a vote, food companies still remain vulnerable to attacks over the use of genetically engineered ingredients in their products.

Specifically, it appears that marketing a food as “all natural” when it contains a genetically engineered (GE) ingredient continues to generate class action litigation. The latest lawsuit challenging the use of the word “natural” on a product label was filed by plaintiff Sonya Bolerjack on November 6, 2012 in U.S. District Court for the District of Colorado against Pepperidge Farm, Inc. The class action complaint alleges that the company “mistakenly or misleadingly represented that its Cheddar Goldfish crackers are ‘Natural,’ when in fact, they are not, because they contain Genetically Modified Organisms (GMOs) in the form of soy and/or soy derivatives.” In particular, the plaintiff asserts that the product is not natural due to the presence of soybean oil.

The plaintiff claims that Pepperidge Farm violated Colorado’s Consumer Protection Act by engaging in deceptive trade practices; breached express warranties including that the product is natural even though it contains GMOs; and negligently misrepresented to the public through its packaging and labeling that the product is natural even though it contains GMOs.

In bringing this class action suit, the plaintiff is seeking certification on behalf of a class defined in the complaint as “all United States persons who have purchased Pepperidge Farm Cheddar Goldfish crackers containing Soybean Oil, for personal use, during the period extending from November 6, 2008, through and to the filing date of this Complaint.” Currently, a decision as to whether to grant or deny an order certifying that the action may be maintained as a class action is pending.

These class action lawsuits involving challenges to the use of “natural” or “all natural” language on a product label have been both costly and damaging to reputation. It also appears likely that they will continue. In order to avoid litigation, companies should review their products and labeling for synthetic preservatives or artificial ingredients included in or added to the food, so that product labeling is accurate.

Californians to Decide Tomorrow Whether Prop 37 Sinks or Swims

Tomorrow, California voters will be asked to decide the fate of Proposition 37, a voter initiative that would require certain raw and processed foods that have or may have been “entirely or partially produced with genetic engineering” to be labeled as such, if sold in California. Proposition 37 contains a number of exemptions from the labeling requirement. Specifically, if passed, the following foods would be not be required to comply with the mandatory labeling provisions of the initiative:

  • certified organic products;
  • alcoholic beverages;
  • medical foods;
  • food sold for immediate consumption, such as in a restaurants;
  • products unintentionally produced with genetically engineered material;
  • food made from animals fed or injected with genetically engineered material but not genetically engineered themselves; and
  • food processed with or containing only small amounts of genetically engineered ingredients.

Initially, Proposition 37 was supported by more than two-thirds of Californians who said they intended to vote on November 6, according to a poll from the California Business Roundtable and Pepperdine University’s School of Public Policy. On October 30, however, their latest poll indicated that support had dropped to approximately 39% and opposition had increased to almost 51 percent.

 

In addition to being the center of heated debate here in the U.S. over the past several months, the initiative has also received international attention. A recent article in The Guardian noted that “California’s ballot initiatives often take on huge importance. Often they are seen as laboratories for new ideas, that are adopted later in the rest of the country.”

 

Stoel Rives attorneys will be watching the outcome of the polls in California and will report on the results later this week.

Prop 65 Targets Cooked Food, Coffee and Vitamin Supplements

This blog entry was originally written by Lee Smith from the California Environmental Law Blog.

The Industry Acrylamide Coalition (Coalition) filed suit against the State of California Office of Environmental Health  Hazard Assessment (OEHHA), the agency that manages and revised the Prop 65 list to include 4-metheylimidazole (4-MEI), as a carcinogen.  4-MEI is often found in cooked foods. The Coalition argues that the third party report on which the listing was based, from the National Toxicity Program (NTP), is insufficient to support a valid Prop 65 listing.  The complaint, which was filed in Sacramento, alleges that OEHHA failed to consider the entire file of evidence before making its decision.  The Coalition’s complaint also indicates that 4-MEI is created during normal cooking of food and ingredients and cannot easily be removed.  The Coalition includes the American Beverage Association, the California League of Food Processors, and the Grocery Manufacturers Association of USA.

Acrylamide – In Your Coffee?

In a similar manner, the National Coffee Association is coordinating the joint defense of a number of coffee roasters and retailers with respect to a 60-day notice served on 40 roasters.  The chemical at issue is acrylamide, which is formed when certain proteins are heated.  Original scrutiny for this chemical concentrated on potato products such as french fries, but apparently the same chemical reaction occurs in coffee when it is roasted.  In addition, other beverages that also contain caffeine, such as soft and energy drinks, have also received 60-day notices.

Dietary Supplements and Prop. 65

A dietary supplement company has been ordered to pay 2.65 million as part of a joint settlement with district attorneys in California.  This is one of the larger suits filed and settled by a public enforcement entity, other than the California Attorney General.  People v. Irwin Naturals, Inc., Orange County Superior Court, Case No. 30-2011-00445453.

Irwin Naturals was alleged to have made false and misleading representations with respect to the marketing and sales of its products.  The products were advertised as having Hoodia Gordonii, an alleged appetite suppressant; however, lab results found that the chemical was not present and triggered a mislabeling suit.  Additionally, the suit alleged that many of the products also exceeded the Prop. 65 level of  proposed Maximum Allowable Dose Level (“MADL”) of .5 micrograms/dA1.  Most of the indicated products were green tea products, sold without the Prop. 65 warning as required.

As part of the settlement, 1.95M in penalties were paid to help enforce state consumer protection laws, $100,000 in restitution, and $600,000 in set aside for investigation costs.  Reportedly, prosecutors felt that this prosecution was necessary in part because the FDA does not regulate dietary supplements.

Peeled, Inc. Seeks Injunction, Damages in Trademark Infringement Suit Against Peeled Fruit LLC

Originally posted on the Essential Nutrition Law Blog by Jonathan Stagg

Peeled, Inc. (“Peeled”) www.peeledsnacks.com, a company specializing in healthy, natural snack foods including dried fruits and dry roasted nuts, recently filed a trademark infringement suit in the United States District Court for the Southern District of New York against Peeled Fruit LLC (“Peeled Fruit”) www.simplypeeled.com.  Peeled Fruit sells frozen soft-serve fruit, with fresh fruit toppings. Peeled alleges that Peeled Fruit is attempting to cash in on the brand awareness and goodwill associated with Peeled’s marks.  

Peeled began marketing its products under the marks “Peeled,” “Peeled Fruit,” and “Peeled Snacks” as early as 2004. Since that time, Peeled’s marks have received extensive coverage in television and print media, including receiving a coveted spot on Oprah’s O List as one of Oprah’s favorite afternoon snacks, and receiving the 2008 “Best of Food” award from Health Magazine. Peeled registered the mark “PEELED SNACKS” on January 10, 2006 with the United States Patent and Trademark Office.
 
Peeled alleges in its complaint that long after it began marketing its products with the Peeled marks, Peeled Fruit began infringing on the marks by using the words “Peeled” and “Simply Peeled” in its marketing materials. Peeled argues that Peeled Fruit sells similar products with similar ingredients, and that as a result the products are confusingly similar. Peeled claims that Peeled Fruit had full knowledge of Peeled’s prior use of the marks, and that in spite of Peeled’s requests, Peeled Fruit has refused to cease its use of the marks.
 
231Peeled alleges that Peeled Fruit not only knew about Peeled’s use of the marks, Peeled Fruit “adopted the trademarks with the intent to trade and capitalize on the goodwill generated by Peeled, Inc.’s extensive and widespread use of its trademarks, as well as its extensive sales, advertising and consumer acceptance and recognition.” Peeled argues that the similarities between the products sold by both companies make the shared use of the marks likely to cause confusion, mistake and deception among consumers.
 
As a result, Peeled is seeking an injunction against Peeled Fruit, which would restrict Peeled Fruit from further use of the marks. Peeled is also seeking a monetary damage award, under federal trademark law (15 U.S.C. § 1117), in an amount equal to either 1) three times the amount by which Peeled was damaged by the alleged infringement, or 2) three times the total profits Peeled Fruit obtained from the use of the allegedly infringing marks.  Finally, Peeled is seeking an order from the court, under 15 U.S.C. § 1118, requiring Peeled Fruit to destroy all materials that display the allegedly infringing marks.

Court's Decision on CR 12(b)(6) Motion In Zupnik: FFDCA Preemption Under Further Attack and Twombly Ignored

We previously cited the motion to dismiss in Zupnik, et al. v. Tropicana Products, Inc. as an example of good pleading practice in a putative consumer fraud class case. United States District Judge Dale S. Fischer apparently disagreed with our assessment, this week issuing an order denying the motion.

Tropicana’s lead argument was a failure of pleading. Tropicana attacked the complaint both on the basis of Rule 9(b), and under the Supreme Court’s recent decision in Twombly. The Twombly decision requires the federal court on a Rule 12(b)(6) motion to determine whether operative factual allegations are “plausible” and more than simply “conclusory.”

Judge Fischer rejected summarily Rule 9(b) arguments. She completely disregarded Tropicana’s Twombly arguments, failing even to mention the Supreme Court’s decision.

Tropicana also moved to dismiss based on federal preemption. Most of Judge Fischer’s decision is devoted to the preemption argument. She ruled that since California’s Sherman Law is substantively identical to 21 U.S.C. § 343(a) of the FFDCA, the preemption argument fails.

Judge Fischer theorized that even though plaintiffs could not point to anything on Tropicana’s label that violated any FDA regulation, the FDA could bring an enforcement action “to target specific false or misleading labels.” If the FDA can bring that kind of action under 21 U.S.C. § 343(a), plaintiffs, according to Judge Fischer, should also be able to bring a private right of action under the identical California law. Query whether Judge Fischer’s reasoning negates any FFDCA preemption defense to a claim brought under California’s Sherman Act? 

Consumer Fraud Claims: Examples of Good and Bad Motion Practices

The Good: Tropicana recently brought a motion to dismiss the Zupnik putative consumer fraud class claims pending against it. Zupnik alleges that Tropicana misled consumers in the promotion of its “Pure 100% Juice Pomegranate Blueberry Flavored Blend of 5 Juices from Concentrate with other Natural Flavors” because its front label did not include pictures of fruits other than pomegranates and blueberries.

Tropicana’s motion, brought under both FRCP 9(b) and 12(b)(6), appears as a good example of how putative consumer class claims can be challenged at the outset of the case. Though we don’t yet know whether Tropicana will be successful, its pleading is a sharp attack on the plaintiff’s complaint and takes advantage of the heightened pleading requirements announced recently by the Supreme Court.

Tropicana moved on the basis that the complaint lacks particularity required under Rule 9(b) (the rule requires pleading of the “particularity of the fraud”). It also challenged whether the plaintiff had any injury in fact or alleged any reliance on particular advertising. Finally, Tropicana argued that Zupnik’s claims were expressly preempted by federal law.

Tropicana cites to Twombly to urge the court to disregard “plaintiffs legal conclusions . . . even when made, as here, in the guise of factual allegations.”

Tropicana also attacks Zupnik’s complaint on the basis that “she got what she paid for.” Tropicana points out that its product sold for far less than juice with a higher level of pomegranate or blueberry juices. Because she got what she paid for (presumably regardless of whether she understood it at the time of purchase), she lacks standing to bring a claim for consumer fraud.

The Bad: Coincidently, in another case involving a putative consumer fraud class claim over depictions of fruits on a label, Judge Gorton of the United States District Court for the District of Massachusetts in Wiley v. Gerber Products Company granted Gerber’s motion to transfer to the Southern District of California for consolidation with the Williams case pending in California. (The Williams case was previously discussed in this blog.)

The lesson from Wiley v Gerber: if your strategy is to avoid transfer of venue, think about this when pleading. For example, do not include allegations in the complaint about a nationwide class and the application of different states’ consumer protection laws.

Wiley argued against transfer, contending that the “Court’s familiarity with Massachusetts law, under which several claims are brought weights against transfer.” The problem is that “in her amended complaint, Wiley added several claims under New Jersey state law which only undermines her contention that this Court is especially competent to adjudicate the state laws at issue in this dispute.” Wiley also alleged a nationwide class. The court found that the plaintiff’s choice of forum mattered little when she alleged a nationwide class.

Court Rules That Retailers Have No Duty to Investigate Suppliers Compliance with Organic Regulations

An important ruling was issued last week dismissing claims that milk produced by an organically certified dairy and labeled as organic was not really organic. Plaintiffs in the action asserted violations of various states’ laws because they claimed that they paid more for the milk because it was labeled as "organic.”

A federal judge in the Eastern District of Missouri granted a Rule 12(b)(6) motion to dismiss on a multitude of cases pending against the dairy, various retailers selling the dairy products and others (originally these suits were filed in various federal courts around the country but were consolidated for pretrial purposes by the United States Judicial Panel on Multi-District Litigation or MDL).

The judge ruled that claims against the dairy were preempted because a “conflict exists between federal and state law” (otherwise known as “conflict preemption”). As explained in the opinion, conflict preemption exists where “a party’s compliance with both federal and state law would be impossible or where state law would pose an obstacle to the accomplishment of congressional objectives.” Here, the court found that for “plaintiff’s claims to succeed, the Court would have to invalidate the regulatory scheme established under the OFPA [Organic Foods Production Act] and NOP [National Organic Program].” The court concluded that if plaintiffs were to prevail “producers would be liable even where fully certified and authorized to use these terms and seals.”

For the retailer defendants, the judge ruled that because plaintiffs’ claims against the dairy are preempted, “the retailer Defendants cannot be liable.” But the court went further and dealt explicitly with the plaintiffs’ claims that the retailers “should have investigated” the dairy’s activities to ensure compliance with the OFPA and NOP. The court rejected these arguments:

The Retailer Defendants did not have any duty to inspect [the dairy’s] facilities, or the facilities of any of their other organic producers. Imposing such a requirement “would place an undue burden on the distributor who is least likely to have access to such information.”

This should be good news for organic retailers. Hopefully, this decision will reduce their legal exposure to consumer labeling claims going forward.

Another High-Profile California Labeling Case

Center for Science in the Public Interest (CSPI) recently filed a putative class action in federal court in the Northern District of California claiming that Glacéau’s VitaminWater is mislabeled under California law. This suit comes on the heels of the recent Ninth Circuit decision that remanded the Gerber foods case. We previously discussed the Gerber case on this blog and how it presents “serious questions as to whether there are any clearly defined legal standards as to when a food label is misleading and when it’s not.”

The VitaminWater case appears to raise similar issues. CSPI fails to point to anything directly in VitaminWater’s labeling or advertising that is actually incorrect. Instead, CSPI asserts that “the central message” of VitaminWater’s labeling “is that drinking VitaminWater is good for one’s health.” CSPI asserts this is misleading because “VitaminWater is loaded with sugar” and as a result “may actually harm consumers’ health.” CSPI also faults the product labeling because it fails to disclose that Glacéau, the company that manufactures VitaminWater, was purchased by a soft drink manufacturer.

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.
 

California Menu Labeling Laws--Restaurants Beware of Asking What Your Customer Wants!

Yesterday, California became the first state in the Union to write into law menu labeling requirements. Like municipal ordinances recently enacted in New York City and Seattle, the California law requires certain “chain” restaurants to disclose nutritional information and calorie content information for certain items.

The law, to be phased in between 2009 and 2011, applies to restaurant chains with at least 20 locations that “offer for sale substantially the same menu items, or operates as a franchised outlet of a parent company . . . with the same name in the state that offer for sale substantially the same menu items.”

The new California law reads like a lawyer’s dream. Numerous exemptions are granted for certain grocery stores, “certified farmer’s markets” and others. Exemptions are also created to the exemptions. For example, “separately owned food facilities to which this section otherwise applies that are located in the grocery store” are not included in the “grocery store” exemption. To further add to the confusion, “grocery store” is defined to include convenience stores, though the law fails explain what that means. Does this mean that the law applies to a hamburger chain restaurant but not to the neighboring chain “convenience store” that sells the same hamburger but also a quart of milk? Does this make any sense? Won’t this statutue almost certainly generate significant litigation?

The labeling requirements apply to “standard menu items,” which are defined as “a food or beverage item offered for sale by a food facility through a menu, menu board, or display tag at least 180 days per calendar year . . . .” Yet a “standard menu item” does not include “a food item that is customized on a case-by-case basis in response to an unsolicited customer request.” What does "unsolicited customer request" mean? What about a sandwich shop that offers nearly infinite combinations of products? According to SUBWAY, “there are more than two million different sandwich combinations available" its menu.

Aside from being riddled with ambiguities, inconsistencies and impossible-to-interpret language, this blog has previously made the case that menu regulation should be the domain of uniform federal law and not inconsistent, piecemeal local ordinances. The California law is yet another argument in favor of federal preemption.

Section one of the California law cites national obesity statistics from the Centers for Disease Control and the federal Nutritional Labeling and Education Act of 1990. Nothing about this bill is specific to California. Because the law only applies to large restaurant chains, its impact is mostly on large national or regional companies. Ironically, the California legislature understood the problem of inconsistent regulation and chose to preempt all local and municipal regulation of restaurant menus. If menu regulation is an issue that needs regulation (and there are many good arguments why it does not), it should be taken up by Congress, the FDA and the USDA, not  states or local municipalities.