Our colleague Claire Mitchell recently published an article in Guide to U.S. Food Labeling Law that describes how a California ballot initiative could be a game changer for food companies that use biotechnology in their food production process. Titled the California Right to Know Genetically Engineered Food Act, the initiative represents the state's first-ever ballot measure to require labeling of genetically engineered foods.
Claire describes the specific labeling requirements that would take effect on July 1, 2014, should voters approve Proposition 37. She also discusses the approach taken by the U.S. Food and Drug Administration on genetically engineered foods and the compliance challenge a new labeling requirement could pose for global food companies. You can read the full text of her article here.
The primary issues raised in Rep. Welch’s letter related to potential customer confusion due to the similar packaging and frequently close shelf placement of the Log Cabin “All Natural Syrup” line and maple syrups from Vermont producers. Below are pictures of a “Vermont Pure Maple Syrup” package and the Log Cabin package. We at the Food Liability Law Blog would love to hear from readers what you think – Is the Log Cabin Package misleading or confusing? Is it problematic for the two products to sit on the same supermarket shelf? What does the wording “All Natural” on the Log Cabin package convey to you?
Over the last several weeks, the Federal Trade Commission (the “FTC”) and POM Wonderful LLC (“POM”), the makers of POM Wonderful 100% Pomegranate Juice and POMx supplements, have been engaged in a battle over the scope of the FTC’s authority to regulate advertisements and the propriety of claims POM has made in marketing its products.
After initially being placed on the defensive by a warning letter from the Food and Drug Administration (the “FDA”) in February, POM has taken an offensive approach by suing the FTC for declaratory relief, asking that the FTC’s standard for non-deceptive advertising be held invalid. Further, POM has asked the Washington D.C. District Court to find that the FTC overstepped its authority in defining what constitutes “substantiation” of health-related claims in recent consent agreements with Nestle Healthcare Nutrition, Inc. and Iovate Health Sciences, Inc. In those cases, the FTC alleged that Nestle and Iovate had engaged in deceptive trade practices in contravention of the FTC Act by falsely advertising the health benefits of their various products. As we have blogged previously (here and here), POM has been fairly active in the past year in pursuing its legal remedies, the two prior instances being Lanham Act claims.
On September 27, the FTC responded, alleging in its suit against POM that the advertisements for the company’s 100% Pomegranate Juice and POMx supplements contain false and unsubstantiated claims regarding the ability of the products to treat or prevent heart disease, prostate cancer, and erectile dysfunction. Interestingly, the FTC has proposed a settlement to POM, with one of the conditions being that POM receive FDA approval for any advertisements that claim its product “cures, prevents, treats, or reduces the risk of any disease.” Thus far, POM has stood by its research behind its health claims, making this an interesting set of cases to follow moving forward.
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.
Two recent court orders in motions to dismiss consumer fraud class actions illustrate the fine lines that exist in the analytical process courts engage in when determining whether or not a claim may continue forward.
In Zeisel v. Diamond Foods, Inc., the U.S. District Court for the Northern District of California denied Diamond Foods' motion for dismissal of the plaintiff’s claims. The complaint alleged that the plaintiff and other consumers in the class purchased the company’s shelled walnut products based on false claims of health benefits that consumption of the omega-3 fatty acids in walnuts provides. The complaint alleged (1) unfair competition, (2) false advertising, (3) violation of California’s Consumers Legal Remedies Act and (4) unjust enrichment.
Diamond Foods moved for dismissal on the basis that the plaintiff’s claims were preempted by the Federal Food, Drug and Cosmetic Act (the “FDCA”), as amended by the Nutrition Labeling and Education Act (the “NLEA”). The court found that the plaintiff’s claims were not expressly preempted on the plain language of the NLEA’s preemption clause, and further that the plaintiff’s unfair competition claims were based on California’s Sherman Food, Drug and Cosmetic Law, not the FDCA. The court also held that the plaintiff’s claims were not impliedly preempted, as Congress expressly stated its intent that the NLEA was not to be construed to preempt any provision of state law, unless such provision is expressly preempted under section 403A of the FDCA. As such, the plaintiff’s claims were allowed to move forward.
However, in Loreto v. Procter & Gamble, the background and core issues of which we blogged about here and here, the U.S. District Court for the Southern District of Ohio granted Procter & Gamble’s motion for dismissal, and dismissed the plaintiffs’ claims with prejudice. The plaintiffs alleged that Procter & Gamble violated consumer fraud statutes in New Jersey and all other states and the District of Columbia through false and misleading advertising practices involving Vick’s DayQuil Cold and Flu Symptom Relief Plus Vitamin C and Vick’s NyQuil Cold and Flu Symptom Relief Plus Vitamin C.
The court initially held that the plaintiffs, residents of New Jersey, lacked standing to pursue any claims under any state consumer protection statute other than that of New Jersey. Next, the court agreed with Procter & Gamble’s contention that despite presenting their cause of action in the form of a claim under the consumer protection statutes of New Jersey and other states, the plaintiffs’ cause of action was in actuality an improper attempt to assert a private right of action under the FDCA. Finally, the court held that even if it were to assume the plaintiff’s claims were not an improper attempt to assert a private right of action under the FDCA, the plaintiff’s claims merited dismissal as the alleged no actual injury, failed to allege causation, and otherwise failed to assert other essential elements of the individual state consumer law causes of action. The court, holding that the plaintiffs had ample opportunity to amend their complaint on notice of Procter & Gamble’s positions and failed to address the pleading deficiencies in their amended complaint, ultimately found that dismissal with prejudice was warranted.
"I Can't Believe It's Not Implausible" - Iqbal/Twombly Doctrine Does Not Result in Dismissal of Yumul Claims
As our own Ken Odza recently blogged, the plausibility pleading standard articulated by the Supreme Court in the Iqbal and Twombly cases resulted recently in the FRCP 12(b)(6) dismissal of misrepresentation claims against Unilever. That ruling seemed to indicate that consumer fraud claims would be vulnerable to motions for dismissal. However, in an order granting in part and denying in part the defendant’s motion for dismissal in Yumul v. Smart Balance, Inc., the U.S. District Court for the Central District of California did not apply the plausibility pleading standard as stringently as the court in the Unilever decision, lending some question as to precisely how far Iqbal and Twombly will reach.
In Yumul, the plaintiffs alleged Smart Balance violated the California Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. These exact same violations were alleged in the Unilever case. In Yumul, the plaintiffs alleged that Smart Balance misled consumers with its marketing of Nucoa margarine as “cholesterol free” and “healthy,” despite the presence of artificial trans fat in the product.
In addressing Smart Balance’s motion for dismissal, the court noted the plaintiffs’ reliance on the delayed discovery exception in support of its assertion that tolling of the statute of limitations was appropriate. Stating the applicable law, the court offered that:
A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.
In its order, the court directed the plaintiffs to specify the manner of discovery (how and when the plaintiffs actually discovered the fraud or mistake) within 14 days of the July 30 order in an amended complaint. The court denied Smart Balance’s motion to dismiss on all other grounds. While this is no guarantee of success for the plaintiffs by any means, the decision of the court not to dismiss the allegations in Yumul on the basis of the plausibility pleading standard under Iqbal and Twombly stands as an example of the type of inconsistency we may see as courts attempt to apply the standard. We will continue to closely follow this case.
In an opinion issued on July 21, 2010, Judge John Gleason of the United States District Court for the Eastern District of New York largely denied the defendant’s motion for dismissal and held that 10 of the 13 claims in a class action suit brought against Coca-Cola for alleged unlawful health claims on its Vitaminwater drinks could proceed. The claims that still must be examined in court include allegations of misleading advertising, fraudulent business acts, and unfair methods of competition.
The plaintiffs in the class action, which include the health advocacy group Center for Science in the Public Interest (“CSPI”) as co-counsel, contended that Vitaminwater’s labeling and marketing is misleading because it (1) communicates a number of purported health benefits (including healthy joints, optimal immune function, and reduced risk of chronic disease), drawing consumer attention away from the significant amount of sugar (33 grams per bottle) in the product; (2) portrays Vitaminwater as healthy when it is essentially a snack food that provides nutritional benefits because it has been specifically fortified to do so; and (3) suggests that Vitaminwater contains nothing but vitamins and water.
While the court concluded, citing applicable Food and Drug Administration (“FDA”) rules and commentary, that sugar was not a “disqualifying nutrient” under applicable FDA regulations, the plaintiffs’ latter two claims were found to accurately describe violations of FDA regulations, and accordingly may serve as a non-preempted basis of state law liability.
The FDA regulations restricting health claims or implied claims of healthiness related to foods that meet certain minimum nutrient levels, colloquially termed “the jelly bean rule,” were developed in an effort to prevent food producers from encouraging the consumption by consumers of junk food by fortifying the food in question with nutrients. The “jelly bean rule” is applicable only to (1) health claims, and (2) nutrient content claims that use the word “healthy” to suggest that a food may help consumers maintain healthy dietary practices because of its nutrient content. Finding that Vitaminwater’s labeling contains claims in each of these two categories, the court ruled the plaintiffs could proceed with this claim.
The plaintiffs alleged Vitaminwater’s labeling is misleading because it uses a product name that includes two of the product’s ingredients (vitamins and water), but fails to mention another notable ingredient (sugar). FDA regulations on this subject recognize that such product names have the potential to mislead consumers. Thus, the court held that the plaintiffs were allowed to pursue this claim. In the aftermath of this ruling, Coca-Cola released a statement expressing their confidence that the plaintiffs’ claims are without merit and will ultimately be rejected. Given that the implications this case could carry into the growing functional food and beverage segments of the market, we will continue to track it closely.
At its recent annual meeting, the American Medical Association (“AMA”) agreed to urge the Food and Drug Administration (“FDA”) to adopt more accurate labeling standards regarding trans fats and saturated fats used in food products.
Current FDA rules allow nutrition labels to list saturated and trans fats as zero, so long as the product contains less than 0.5 grams of fat per serving. However, the AMA claims that this is misleading to consumers, who could potentially consume more than a quarter of the American Heart Association’s recommended limit of two grams of trans fat per day in a single serving, unaware that the product contains trans fats.
The AMA’s position that consumers are being misled by current FDA rules does have some support in the marketplace. In a consumer survey conducted by market researchers Greenfield Online, 72 percent of U.S. respondents said they read nutrition labels and fact panels in an effort to make healthy purchasing decisions when shopping, and 61 percent said they considered zero grams of trans fat per serving to be the most important heart health related claim for a product.
In a May 25, 2010, Federal Register Notice, the Federal Trade Commission (the “FTC”) announced its intention to issue compulsory process orders to 48 food and beverage manufacturers, distributors, marketers, and quick service restaurant companies. The proposed orders seek information concerning the companies’ marketing expenditures targeted toward children and adolescents, and nutritional information about the companies’ food and beverage products marketed to children and adolescents.
The proposed orders, issued under Section 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), will seek information in six categories, including:
• The categories of foods marketed to children (ages 2-11 years) and adolescents (ages 12-17 years);
• The types of measured and unmeasured media techniques used to market food products
to children and adolescents;
• The amount spent to communicate marketing messages about food products to children and adolescents;
• The nature of the marketing activities used to market food products to children and adolescents;
• Marketing to children and adolescents of a specific gender, race, ethnicity, or income level; and
• Marketing policies, initiatives, or research in effect or undertaken relating to the marketing of food and beverage products to children and adolescents.
By procuring this information, the FTC will be able to evaluate the impact of self-regulatory efforts on the nutritional profiles of foods marketed to children and adolescents. In addition, the FTC seeks to determine and analyze how companies allocate their promotional activities and expenditures among various media and for different food products. Interested parties may submit comments on or before June 24, 2010.
This FTC action is a follow-up to its July 2008 report entitled, Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation. That report represented the findings of a 2006 FTC study of promotional activities related to food and food products targeted toward children and adolescents. It found that, while room for improvement existed, the food and beverage industries had made significant progress on this front since the FTC and the Department of Health and Human Services co-sponsored a Workshop on Marketing, Self-Regulation & Childhood Obesity in 2005. As everyone from the First Lady to the World Health Organization is focused on the impact of marketing on childhood obesity, the results of this FTC action will bear monitoring.
“Got Milk?” The answer to that question may not be as cut and dried as you might believe, at least in Wisconsin. In a May 19 letter to the state Senate, Wisconsin Governor Jim Doyle explained his rationale behind his veto of Senate Bill 434, which would have authorized dairy farmers with a Grade A dairy farm permit to sell unpasteurized milk, buttermilk, butter, and cream directly to consumers. Sellers would have been required to post a warning sign at the site of sale stating that raw milk does not provide the protection of pasteurization and is not recommended for certain categories of consumers – including children, seniors, pregnant or nursing women, diabetics, or those with compromised immune systems.
Citing widespread opposition from the public health community (including the Wisconsin Public Health Association and the Food and Drug Administration, which has previously issued releases on the health issues related to unpasteurized milk) and numerous industry stakeholders, Governor Doyle explained that, in his view, the lack of rigor in the testing standards for pathogens, risks to public health and the state’s economic interests should an outbreak of disease linked to consumption of unpasteurized milk occur, and the ongoing work of the Wisconsin Department of Agriculture, Trade and Consumer Protection’s recently created Raw Milk Policy Working Group, which has been charged with reviewing the legal and regulatory framework surrounding the sale of unpasteurized milk to consumers in an attempt to strike a balance between market demand and public health, warranted a veto of the bill. An aide to Majority Leader Russ Decker stated that the Senate is not likely to attempt to override Governor Doyle’s veto.
This issue of the sale of unpasteurized milk to consumers is not limited to Wisconsin. In his letter to the Senate, Governor Doyle mentioned the comprehensive testing approach required for raw milk products under California law. In order for raw milk to be legally sold in California, it must meet the standards provided in the Milk and Milk Products Act of 1947. Under California Administrative Code, raw milk and raw milk products must bear a detailed warning to consumers on the principal display panel of the label. Washington State Administrative Code also requires raw milk containers to bear a warning label. As more consumers express preferences for unprocessed, “natural” foods, issues related to the sale and consumption of unpasteurized milk could find a more prominent place in the judicial system and industry marketplace.