California Court Declines to Dismiss Food Label Class Action Despite Lack of Alleged Purchase Date

Food manufacturers received a setback earlier this week, when Judge Thelton Henderson of the Northern District of California ruled that where a consumer identifies a specific class period in which a defendant food manufacturer labeled its products in a deceptive manner, the consumer does not have to allege the specific date he or she purchased the product.

In Figy v. Lifeway Foods, Northern District of California, Case No. 13-cv-04828-THE, the plaintiff consumer brought claims against Lifeway Foods, a producer of retail dairy beverages and products similar to yogurt. The plaintiff alleged he had purchased Lifeway Foods products labeled with the ingredient “Evaporated Cane Juice” (“ECJ”) five times between October 17, 2009 and the filing of the complaint. The plaintiff further alleged that while he was aware the products contained ECJ, he did not know that ECJ indicated the products contained added sugar. Plaintiff claimed he would not have purchased the products if he knew they contained added sugar, and asserted 13 causes of action, including claims under the California Unfair Competition Law and the Consumer Legal Remedies Act. Continue Reading

Missouri Court denies Motion to Dismiss Over “Nothing Artificial” Claims

Like several California courts before it, a recent Missouri federal court case reminds food manufacturers that they must carefully monitor the marketing claims made on the front of their products’ labeling packages regardless of whether an ingredient list is included on the packaging.

In Thornton v. Pinnacle Food Groups LLC, the Court denied a motion to dismiss putative class action claims where the plaintiff alleged that a label describing a manufacturer’s muffin mix contained false and misleading statements about the product’s ingredients. The plaintiff alleged that she purchased Duncan Hines Simple Mornings Blueberry Streusel Premium Muffin Mix labeled as containing “Nothing Artificial”, and that the Muffin Mix contained monocalcium phosphate and xanthum gum, which were artificial, synthetic substances. Thus, the plaintiff claimed, the “Nothing Artificial” statement was false, deceptive, and misleading. Continue Reading

FDA Offers Webinar to Review Recent Nutrition Facts Labeling Final Rules

The Food and Drug Administration (FDA) is planning to host a webinar on Monday, June 27, 2016, to review the agency’s recent Nutrition Facts Labeling Final Rules and what industry needs to know about the changes to nutrition facts labels and serving sizes. The FDA published the final rules in the Federal Register on May 27, 2016.

As part of the presentation, the audience will hear from Susan Mayne, Ph.D., the Director of FDA’s Center for Food Safety and Applied Nutrition (CFSAN) about the impact of the Nutrition Facts Labeling Final Rules. Doug Balentine, Ph.D., the Director of CFSAN’s Office of Nutrition and Food Labeling, will highlight some of the major changes from the current nutrition facts panel the industry can expect, including modifying the list of required nutrients that must be declared on the label, updating serving size requirements, and providing a refreshed design. Lastly, there will be a question and answer session at the end of the webinar.

Registration for this informational webinar is not necessary. Here are the details of the event:

Date: Monday, June 27, 2016

Time: 3:00 pm – 4:00 pm ET (connect by 2:45 pm)

To hear the presentation and ask questions:
Dial: 1-312-470-0062 Passcode: FDA
Toll Free Number: 800-857-9836

Additionally, to view the slide presentation during the webinar, click here. The FDA’s slides along with a recording of the webinar will be made available after the webinar.

As a reminder, the final rule regarding the nutrition facts panel takes effect on July 26, 2016. Manufacturers with $10 million or more in annual food sales will have until July 26, 2018 to comply with the requirements of the rule, and manufacturers with less than $10 million in annual food sales will have until July 26, 2019.

Food 2.0 Event Reviews Natural and Organic Food Landscape and Prospects

food2point0Stoel Rives LLP is proud to sponsor the 2016 Food 2.0 event taking place today through June 9, 2016, in Los Angeles, California.  The annual event brings together manufacturers, service providers, investors, companies, consultants and lawyers to assess the natural and organic food landscape and the prospects for this rapidly evolving space.

Stoel Rives Partner Anne Glazer chairs the Pre-Summit Briefing on June 7, addressing the topic “Developing & Implementing ‘Clean Labels’” for Natural Food Products.”  She also presents on “Navigating Alternative Proteins in a Traditionally Animal-Based Regulatory Environment,” discussing labeling and shelf category disputes and challenges involving nut “milks,” vegan “cheeses” and cricket flours and the like.  Finally, Anne will also moderate a panel discussion  on mandatory and permissive GMO labeling, which is sure to be lively.  Other topics presented on Tuesday will include organic certification, consumer demands, ingredients and “natural” labeling. Read the full event agenda.

The Summit also addresses topics like strategic investing in healthy brands, private equity perspectives on building more effective branding campaigns, and the future of food retail.  We plan to provide our readers additional updates from the conference throughout the week.


FDA’s Nutrition Facts Panel Gets a Makeover

Updated Nutrition Facts Panel, Image courtesy of FDA

In a major step aimed at helping consumers maintain healthy dietary practices, the  U.S. Food and Drug Administration (FDA) issued a final rule on a new nutrition facts panel that will be required on the back of packaged food and beverages in the coming years. The final rule revises FDA regulations to provide updated nutrition information on the label and to improve how the nutrition information is presented to consumers.

This adjustment to the nutrition facts panel is the first update in over a decade. The FDA first issued regulations related to the nutrition facts label in 1993 and amended them in 1995 (to establish new daily values and to update existing daily values) and again in 2003 (to address the declaration of trans fats).

Here are the key updates to the nutrition facts panel for food and beverage companies to be aware of:

  • “Calories” and “servings” must appear in bolder and larger typeface.
  •  “Calories from fat” will be removed because research shows the type of fat is more important than the amount.
  •  Serving sizes will more closely reflect the amount of food people currently eat.
  •  For packages that are between one and two servings, such as some soft drinks, calories and other nutrients will be required to be labeled as one serving.
  •  Labels must separately list how many grams of sugar have been added by manufacturers and what percentage of the recommended daily maximum that represents.
  •  “Dual column” labels must be used to indicate both “per serving” and “per package” calorie and nutrition information for certain multi-serving food products that could be consumed in one sitting or multiple sittings.
  •  Nutrients like sodium, dietary fiber and vitamin D now have updated daily values consistent with the Institute of Medicine’s recommendations and the 2015-2020 Dietary Guidelines for Americans.
  •  Declaration of Vitamin D and potassium must include the actual gram amount, in addition to the percent daily value.
  • Vitamins A and C will no longer be required to appear on the new nutrition facts label.

Some view the requirement to include “added sugars” labeling as the most significant change to the iconic nutrition label. The FDA explained that in adopting this change, the agency followed scientific evidence underlying the 2010 and the 2015-2020 Dietary Guidelines for Americans which support reducing caloric intake from added sugars. The final rule requires “Includes X g Added Sugars” to be included under “Total Sugars” to help consumers understand how much sugar has been added to the product. This was a hotly contested issue between the agency and the food and beverage industry during the proposed rule comment period.

The final rule is the result of significant stakeholder engagement over the past several months. The FDA reported that they received nearly 300,000 comments, conducted several consumer studies and made those studies publicly available, and, in light of new scientific recommendations (particularly for added sugars), issued a supplemental notice of proposed rulemaking.

These new rules apply to all packaged foods, including foods imported into the United States, except certain meat, poultry and processed egg products, which are regulated separately by the U.S. Department of Agriculture’s Food Safety and Inspection Service. The final rule will take effect on July 26, 2016. However, most companies will not be expected to reach full compliance until July 26, 2018. Manufacturers with less than $10 million in annual food sales will have an additional year to comply with the updated nutrition facts regulations.

GMOs: To Label or Not to Label? That is the Question

As the days grow longer and the snow starts to melt, so, too, does the debate on genetically modified organism (GMO) labeling begin to heat up. This is because Vermont’s Genetically Engineered Food Labeling Act—which requires that food entirely or partially produced with genetic engineering and offered for retail sale in Vermont be labeled as such—goes into effect on July 1, 2016.  The Vermont law and others like it are born out of a desire by consumers to have knowledge about the content of their food when making purchasing decisions.  Understanding the law and its accompanying regulation for purposes of compliance is critical for several reasons.

First, the entity responsible for making the label disclosures is dependent on whether the food is packaged or unpackaged. For unpackaged raw agricultural commodities and processed food, retailers are responsible for posting a label disclosing the presence of genetic engineering on associated signage or on the bin, shelf, or container where the food is displayed.  For packaged food produced with genetic engineering, manufacturers are responsible for making the necessary disclosures on the package’s label.

Second, certain foods are exempt from the law’s labeling requirements, despite containing or possibly containing genetically engineered material. For example, foods consisting entirely of or derived entirely from an animal that is itself not produced with genetic engineering, regardless of whether the animal has been fed or injected with any food, drug, or other substance produced with genetic engineering, are exempt.  This means that all animal products, including processed dairy products, are exempt, unless the product requires labeling because of additional ingredients (e.g., ice cream produced with genetically engineered sugar).  Other items exempt from the law’s labeling requirements include products whose labels are subject to approval by the USDA, foods that include one or more processing aids or enzymes produced with genetic engineering, alcoholic beverages, foods with minimal genetically engineered content (less than 0.9% of the total weight of the food), food that has been certified as organic, food sold in restaurants for immediate consumption, and medical food. Continue Reading

The Egg Salmonella Sentencing: An Exercise in Imagination

Indulge me for just a moment in an exercise in whimsy. Except as will be expressly described below, any resemblance to real persons or substances, living or dead, is purely coincidental.

Imagine if you will that in the processing of a particular foodstuff, unless care is taken during certain steps, the foodstuff will provide the consumer with a mild hallucinogenic experience. The risk of this is well-known in the industry, as are the steps–and the costs of those steps–needed to avoid this. In larger quantities and greater refinement, the drug has a serious street value and it is in fact on Schedule I of the drug lists, meaning you can’t get it even with a prescription.

A major producer of this particular foodstuff is well aware of all of these facts. But certain of its lower level managers have taken it on themselves to use these facts to boost profits, and with it their job security and remuneration. By cutting corners on costs, they have increased margins. By making it known through back channels that products including the drug are widely available under their brand names in locations near certain college campuses, they have boosted sales. On occasion, when they have been close to discovery, they have taken funds from the company’s petty cash and used them to bribe, successfully, certain federal drug agents.

Senior management of the company knows only the following: that the drug can attach to the product and give a mild high, that keeping the product free of the drug is expensive, that if the expense is not incurred, sales will suffer because some properly tested product will need to be destroyed and that there is demand for the adulterated product, particularly on college campuses. Had they looked at their financial statements with any degree of curiosity, they would have seen expenses lower, and revenue higher, than they should have been for the given level of production if the steps needed to avoid selling drug-containing products had been taken.

Now imagine the operation is exposed. All the lower level managers turn state’s evidence and testify about what senior management knew or should have known. Senior management pleads guilty and the prosecution successfully demonstrates that they were subject to the drug kingpin statutes, which mean they can be imprisoned for between 20 years and life, with no possibility of parole (if someone had died, they might have been given the death penalty).

Now let’s leave my imagination and return to reality. The only facts you need to change are these: the product, eggs, was sold not with a hallucinogenic drug but with salmonella enteridis (“SE”), which is poisonous; rather than being pushed on college campuses, the products were simply sold in refrigerated cases all over the country, and thousands were sickened by them. Millions of eggs had to be recalled. And senior management, Austin DeCoster and his son Peter, were prosecuted not under the drug kingpin statutes but under the responsible corporate officer doctrine under the Federal Food, Drug and Cosmetic Act of 1938, having pled guilty to having sold shell eggs containing SE across state lines. They were fined and, as you may have read, sentenced to three months in literally the jail of their choice.

Most commentators have called this an important signal and great deterrence to future actors and the like, without pointing out the absurdity that the penalty for doing this by poisoning people is orders of magnitude less than it might have been if all they did was to provide them a little buzz. But this wasn’t sufficient for the DeCosters and their lawyers. Continue Reading

Is Paleo the New Black?

An article by two lawyers at Reed Smith, Drew Amoroso and David S. Reidy, entitled “Is ‘Paleo’ The Next Battleground In Food Litigation?”, reminded me of this prior article, the one I wanted to call “Don’t Make Artisan the New Natural”.   Their article is behind a pay wall, but it’s worthwhile reading if you can access it.

Amoroso and Reidy make a number of cogent points about purveyors of food with a “Paleo” label:

  • “The differing definitions of Paleo may lead consumers who purchase foods labeled as Paleo to believe they are buying a product that meets certain nutritional specifications, when, in fact, it does not”
  • “Companies that advertise the health benefits of Paleo foods must ensure their claims are not misleading to consumers and any claims they make are backed by appropriate scientific support”
  • “Because of the lack of regulatory guidance and varying definitions of the term Paleo, Paleo food producers are left to guess as to whether their claims could be construed as misleading”

My interest is not in whether a Paleo diet is good for you (I’m a lawyer, not a nutritionist), but, similarly to Amoroso and Reidy, in what people in the food industry can do to ensure that the endless litigation that has accompanied “natural” food labels can be avoided.  They mentioned one organization, called the Paleo Foundation, that has begun to make certifications entitled “Paleo Friendly,” “Certified Paleo” and “Paleo Approved” (the last of these is for farms and ranches, rather than retailers).  This set me to thinking about the differences between these certification labels and the VPN labeling discussed in my previous article.

By now, the term “Paleo” without more is a likely weak mark.  Dr. Loren Cordain, author of the bestselling “The Paleo Diet” and subsequent books, has a trademark for the “The Paleo Diet”, but as he himself explains,

I currently own the trademark to the term, “The Paleo Diet” for educational materials only. Over the years many kindle books have appeared on Amazon which use my trademarked term. I have looked into a number of these, and from an academic and scientific perspective, the message most of them deliver is inaccurate and in some cases go so far as to plagiarize my copyrighted work. To me, these kinds of actions are unfair and unjust to the author who wrote the original materials. Hence, when books using the words “The Paleo Diet” appear on Amazon either as hard copy or otherwise, I ask the authors to either remove the book or change the title and to please give me a chance to read the book so I can determine whether or not I would endorse it.

But with regard to the term “Paleo”, without more, he says, “I agree with everyone that ‘Paleo’ has become a worldwide movement/phenomenon that is not owned by anyone, nor should it ever be.”   There are many trademarks for Paleo, including a trademark for Paleo in connection with hats and t-shirts and the like, and the validity of that mark is untested.  There’s a mark for Paleo Certified, which is probably why the Paleo Foundation went with “Certified Paleo” instead.

Which brings us back to the Paleo Foundation and the differences between its certifications and those of VPN for Neapolitan Pizza.  The VPN certification includes a colorful and imaginative logo.  At least in the United States, the phrase “Vera Pizza Napoletana” is evocative and not just descriptive.  When you combine it with a cartoon soldier carrying a pizza peel, you have a relatively strong trademark.  When you combine that with significant training and policing of the people who are authorized to use the mark (I have no information on what they are in fact doing, but the training course is a minimum of 60 hours, at a cost of €1500, plus transportation to Naples; that sounds pretty serious), you have something that is substantial and likely to be afforded legal protection for its unauthorized use.

For Certified Paleo, there appears to be a two-step process, one of which is a self-certification that one’s products meet the standard laid out here and the other appears to be a review and at least the potential for audit and even site visits for the certification.  How much audit is involved and how much policing really occurs might make a huge difference to potential liability issues.

But the real danger area, as Amoroso and Reidy point out, is not in calling yourself Paleo, but in what addtional claims you make.  When you’re talking about Neapolitan pizza, you’re talking about taste, and taste, of course, is different for every person.  When you’re talking about a diet, the risk of making undemonstrable claims is significant.

There is a safer route.  If you’re certified by the Paleo Institute, that’s all you have to say.  If, as the Paleo Institute suggests, people in the emerging Paleo community are all sold on the ideas of what is behind the institute’s certification, you, as a food purveyor who obtains their certification, need say nothing more.  Essentially what you’re saying is, I know there are true believers in this diet, and I am making an honest product that complies with one organization’s standards for that diet; if that’s what you’re after, that’s what I’m selling.  That should insulate you from liability on two fronts:  from those who claim the diet doesn’t do what it’s intended to do and from those who claim your version of the diet isn’t the “true” version.  The risk, of course, is by not making your own claims about the benefits of the diet, you may not generate sufficient business to make a profit.  That’s a cost-benefit analysis everyone in business has to make.

Here’s Why Restaurant Chains Are Starting to Issue New Food Menus

In the past few months, consumers may have noticed that some popular chain restaurants have started to display calorie and other nutrition information on menus and placards. The reason can be traced to the release by the Food and Drug Administration (FDA) of its final rules regarding “Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments” in November 2014. The rules take effect on December 1, 2015 and many food establishments have decided to get a jump on compliance.

FDA’s long awaited menu labeling rules implement the nutrition labeling provisions found in section 4205 of the Patient Protection and Affordable Care Act of 2010 (ACA). The ACA, among other things, amends section 403(q) of the Federal Food, Drug, and Cosmetic Act (FDCA), by requiring restaurants and similar retail food establishments (i.e. part of a chain with 20 or more locations doing business under the same name and offering for sale substantially the same menu items) to provide calorie and other nutrition information for standard menu items, including food on display and self-service food. Additionally, section 4205 of the ACA provides that a restaurant or similar retail food establishment that is not a chain may elect to be subject to section 4205’s nutrition labeling requirements by registering every other year with FDA.

Covered Establishments Under the Menu Labeling Rule

In order to fall within the scope of FDA’s new rules, a covered establishment must meet the following criteria: Continue Reading

When to Call the Whole Thing Off

People who aren’t intellectual property lawyers often mix up trademark, copyright, patent and trade secret protection.  Each provides a different kind of protection for a different kind of property interest, and they generally don’t overlap.  There are also different protections awarded under federal and state (and sometimes foreign) law for different forms of intellectual property, requiring some serious navigation of the legal system.  A recent case out of the U.S. District Court in Cleveland is illustrative of the difficulties encountered in finding one’s way through the minefield of intellectual property.

The case is Tomaydo-Tomahhdo v. Vozary, although the actual dispute was between two former business partners in the restaurant named Carroll and Moore.  Carroll bought out Moore, and in their purchase and sale agreement, Moore agreed “to return ‘all originals and copies of graphic design files, videos, photographs [ ], menu files and development ideas, recipes (current and historical) and training tools (picture boards, build sheets, prep lists, master order guide)…'”  Insofar as one can tell from the court’s opinion, though, Moore did not agree not to use any recipes or other learning gained while he and Carroll were in business together, all of which were developed by Moore and none by Carroll.

Moore and the named defendant, Vozary, who used to work for Tomaydo-Tomahhdo, opened a catering business called Cater-ology.  Carroll, who was compiling a cookbook for and named for her restaurant, decided that Cater-ology was using her restaurant’s recipes, and sued.

Pause a moment for a civil procedure lesson.  Federal courts are courts of limited jurisdiction, their jurisdiction limited by both Article III of the Constitution and by federal statutes.  Basically, a case needs to be brought under federal law or else the parties must be citizens of different states (with a requirement of an amount in controversy, currently $75,000).  But what if the parties are from the same state, but one of several causes of action involve a federal question?  The courts have developed, as a means of efficiency (so you don’t have to bring two actions at the same time on the same facts), a concept called “pendent jurisdiction”.   It allows a court that would otherwise only have jurisdiction over one or several of a larger number of claims to keep them all in a single action.  Importantly for this case, pendent jurisdiction is discretionary with the court.

Carroll’s claims were vast, but only one, for copyright infringement, was a federal question.  The other claims, for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, unfair competition, tortious interference with current and prospective business relationships, and civil conspiracy, are all state law claims, whether statutory or common law.  So Carroll’s copyright claim was the only one that entitled her to a day in federal court.  But that claim was, as the court found, untenable.

The distinction is that copyright protects only the expression of a work, it doesn’t protect ideas or processes.  The words, the images, the display of the information in a recipe–these things are all protectible by copyright.  So when my cousin Jennie Schacht writes a cookbook, the words she uses in describing the recipes, the photographs (the copyright in which may actually belong to the photographer), and the way the words are displayed on the page, these are all protected by copyright.  But anyone can use the recipes, without a license.  It would be somewhat rude to do this, but you could copy down the recipes in a bookstore and make them at home and not owe anyone anything.  I totally adore her key lime ice cream, by the way.

And the judge in this case dismissed the copyright case on this very basis.  Quoting a case out of the Sixth Circuit involving Godiva Chocolates, the court held,

The identification of ingredients necessary for the preparation of food is a statement of facts. There is no expressive element deserving copyright protection in each listing. Thus, recipes are functional directions for achieving a result and are excluded from copyright protection under 17 U.S.C. 102(b).

Now, if you were to write a cookbook and use the exact same words as in one of these recipes, you’d have yourself a copyright problem.  But the court specifically noted that when Carroll began to write her cookbook, both Moore and Vozary were not working with her.  Of course, that would only matter if Moore and Vozary were competing with a cookbook, not competing with food made from a recipe.

My partner Anne Glazer, who works extensively on intellectual property law in food and agriculture, has this to say about the case:

Don’t worry, you can cook any recipe you like, as long as you haven’t contractually agreed not to. A copyright is a bundle of exclusive rights, for example, the rights to copy, display and modify the copyrighted work.  The right to use the work is not in the bundle.

If the defendants had made posters out of the recipes and put them on the walls, there might be a copyright case — if a court could find some original creative expression in the wording of the recipes.

Oddly, we also learn that Carroll’s claims about the recipes did not survive scrutiny.  She claimed, for instance, that Cater-ology was using her chicken salad sandwich recipe.  Only the defendants had changed the cheese, changed the kind of mayo, and added pecans and apples.  As the court wrote, apparently in exasperation, “Certainly, plaintiffs cannot be suggesting that somehow the copyright prevents defendants from serving chicken salad sandwiches.”

The district court’s decision, then, was no surprise.  What was a surprise was that the plaintiffs have apparently decided to appeal the case to the Sixth Circuit Court of Appeals.  I suspect you’ve all been humming what I’m going to suggest here.  Or let Ella Fitzgerald suggest.