Food Cos. Escape Suit Alleging False US Origin Labeling (subscription to Law360 required)

• The Federal Meat Inspection Action (FMIA) grants the United States Department of Agriculture (USDA) exclusive authority to regulate the labels and packing of beef products.  A lawsuit, previously covered on this blog, that sought to force USDA to reinstate its country of origin labeling (COOL) rules was dismissed on June 5, 2018.  Under USDA’s COOL rules, implemented in 2013, meat labels were required to indicate where animals were born, raised, and slaughtered.  After much controversy and a ruling against the COOL requirements by the World Trade Organization (WTO), Congress repealed the COOL requirements as of December 21, 2015.  In the aftermath of the COOL controversy, a beef product label, which cannot be used until it is approved by USDA’s Food Safety Inspection service (FSIS), is permitted to bear the phrase “Product of the USA” if the product is “processed” in the United States.
• On August 27, 2020, a New Mexico federal judge granted motions by defendant meat processing companies, Tyson Foods, Inc., Cargill Meat Solutions, JBS USE Food Company, and National Beef Packing Company to dismiss two previously consolidated putative class actions on behalf of consumers and ranchers alleging that “Product of the USA” claims are fraudulent and misleading as applied to beef from cattle raised in foreign countries and imported live for slaughter and processing in the U.S.  The judge denied injunctive relief, finding it was preempted by the express language of the FMIA in that it would create labeling requirements “in addition to, or different than” the USDA’s standards.  Further, the judge refused to consider whether USDA’s decision to approve the label may be wrong, determining that since USDA had authority to regulate country-of-origin labeling the preemption analysis stands without consideration of any evidence as to whether the labeling is misleading.
• Although appeals are expected in the federal lawsuits in New Mexico, potential new action from the USDA could possibly cement the preemption argument.  As we have covered on this blog, on March 26, 2020, in denying two petitions requesting that the FSIS permit “Product of the USA” labeling only on meat of “domestic origin,” the USDA announced an intent to initiate rulemaking to limit “Product of USA” and certain other voluntary U.S. origin statements to meat products derived from livestock that were slaughtered and processed in the United States.