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  After much controversy and a ruling against the COOL requirements by the World Trade Organization (WTO), Congress repealed the COOL requirements as of December 21, 2015.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.
  • On August 25, 2020, the Center for Science in the Public Interest (CSPI) sent a letter urging FDA to take further enforcement against manufacturers, distributors, and retailers that sell products with tianeptine.  Tianeptine, approved as a prescription antidepressant in other countries, is being marketed as a dietary supplement in the Southeastern U.S.
  • FDA has issued warnings to consumers and companies on the dangers of tianeptine in the past. In 2018, FDA issued warning letters to two companies for the illegal marketing of products labeled as dietary supplements that contained tianeptine, which companies illegally claimed to treat opioid use disorder, pain, and anxiety.  CSPI noted that one online retailer that received an FDA warning letter in 2018, jackbgoods.com, continued to sell tianeptine supplements into late July.  Tianeptine products continue to be commonly available in gas stations, vape stores, and other retail outlets in Alabama and online.
  • CSPI believes that enforcement against supplements containing tianeptine should be prioritized, as they target a vulnerable population of recovering or active drug users during a nationwide opioid epidemic.  The letter notes that the popularity of tianeptine increased in the state after Alabama prohibited the sale of kratom, a substance that provides similar effects.  A bill has been introduced in Alabama to ban the sale of tianeptine in the state.
  • On Friday, August 21, 2020, Judge Richard Seeborg at the U.S. District Court for the Northern District of California filed an order granting Miyoko’s Creamery’s (“Miyoko’s”) motion for a preliminary injunction, which blocked the State of California’s attempts to prevent Miyoko’s from using the terms “butter,” “lactose-free,” and “cruelty free” on its vegan products that are made from coconut oil, sunflower oil, and cashew nuts.
  • By way of background, Miyoko’s filed suit in February 2020 to prevent California from enforcing its label demands, which the company argued violated their First Amendment rights.  In its December 9, 2019 enforcement letter, the California Department of Food and Agriculture’s Milk and Dairy Foods Safety Branch outlined numerous purported violations of state and federal law, including the following:
    • The “vegan butter” product does not meet the definition of “butter” at 21 U.S.C. 321a, which requires that a product be made exclusively from milk or cream, or both with or without common salt …. and containing no less than 80 per centum by weight of milkfat. The Department ordered Miyoko’s to remove the word “butter” from the label.
    • Given that the product is not a dairy product, it cannot make claims such as “Lactose Free,” “Hormone Free,” and “Cruelty Free,” which imply that the product is a dairy food without the claimed characteristics. California Food and Agriculture Code 38955. The Department ordered Miyoko’s to revise or remove the claims.
  • In regard to the core claims around “vegan butter,” Judge Seeborg noted that “the state’s showing of broad marketplace confusion around plant-based dairy alternatives is empirically underwhelming.”  Judge Seeborg also stated that while the standard of identity for butter stipulates that butter must contain at least 80% milkfat, the question at issue in this case is whether Miyoko’s use of the word “butter” in close proximity to terms, such as “vegan,” “made from plants,” and “cashew & coconut oil spread” amounts to misleading commercial speech.  Ultimately, the court disagreed that “butter,” “lactose-free,” and “cruelty free” claims were confusing or misleading.
  • Although the motion for preliminary injunction allows Miyoko’s to use the terms discussed above, the court concluded that Miyoko’s cannot use a “hormone-free” claim, as plants contain naturally-occurring hormones.
  • On July 16, the Japanese Consumer Affairs Agency (CAA) announced a revision to the Food Labeling Standards (“Standards”) of Japan under which sweeteners, colors and preservatives are no longer allowed to be supplemented with words such as “artificial” and “synthetic” when they are declared by their function names with substance name on the food label. In the meantime, food flavorings can only be collectively declared as “flavors” without further specification as to whether or not they are “artificial” (a table comparing the new rule and the existing rule is available here).
  • According to CAA’s Report on the Review Meeting of Food Additive Display Mechanism (“Report”) which was held on March 31, 2020, the above revision is based on a consumer survey result that shows consumers are more likely to avoid a food product when its label suggests use of artificial food additives, even though use of all food additives declared thereon have been evaluated and cleared by the Japanese food authority. Accordingly, CAA proposed not to distinguish the abovementioned types of artificial food additives from natural food additives in food labeling.  It is worth noting that, under the current Standards, “natural” and similar words cannot be used in the labeling of food additives.
  • The industry has until March 31, 2022 to adapt to this policy change.
  • Per the Report, CAA is also considering updating its guideline on the claims of “no additive” and “not used” under the Standards and relevant fair competition rules. The current Standards do not specifically regulate “additive free” type of claims, and thus, cause confusion among consumers when those claims are made on a voluntary basis by food business operators.
  • Keller and Heckman’s Shanghai office monitors food regulatory and labeling developments in Japan and would be happy to answer any questions.
  • On August 9, 2020, a class action lawsuit was filed against Hostess Brands, LLC, alleging that the company had deceptively marketed its product as a “carrot cake donette” when in fact it contained no real carrots.
  • Plaintiffs alleged that consumers would expect the product to contain real carrots because it was described as a “carrot cake” without qualifying this name with any of the terms prescribed by the flavoring regulation (e.g. “flavored, naturally flavored, artificially flavored”). They further alleged that it was apparent that the product did not contain any real carrots because the ingredient list did not disclose carrots and instead disclosed that the product contained “natural and artificial flavor.” Plaintiffs alleged that the “natural flavor” meant that at best the product contained an ingredient derived from real carrots, and that, in any case, consumers would not expect the product to contain any “artificial flavor.”
  • Plaintiffs are represented by Sheehan & Associates P.C. which has filed many lawsuits in the food flavoring litigation space, in particular against companies marketing vanilla products. Keller & Heckman will continue to monitor and provide updates regarding class-action litigation in the food industry.
  • We have discussed the slow progress toward a regulatory pathway for lawfully marketing FDA-regulated food and dietary supplement products that contain cannabidiol (CBD).  While CBD products remain technically illegal (aside from one FDA-approved drug), FDA is gathering information and has taken action so far only against CBD-containing products that make disease and health-related claims or contain unsafe contaminants such as heavy metals and pesticides.  Product labeling that may be false and misleading with regard to CBD content has meanwhile been the subject of a growing number of private lawsuits, such as the proposed class action discussed here.
  • The most recent Cannabis Law Report covers independent testing sponsored by Leafreport finding that of 22 beverages tested, only 4 (13%) contain the amount of CBD stated.  Three products (13%) were reported to contain a level of CBD that is 20% more (2 products) or less (1 product) than stated.  One product (5%) was reported to contain a level of CBD that is 30% more than stated.  Fourteen products (65%) were reported to have a CBD content that differed by more than 30% from the stated level, with 3 beverages containing more CBD than stated, 9 containing less CBD than stated, and 2 products containing no detectable amount of CBD.
  • The results of independent testing indicating inaccurate labeling for CBD beverages is unsurprising given that FDA’s own market survey data, as discussed in a July 2020 report to Congress, has revealed that of 78 products tested which claim to contain CBD, most contained a level of CBD that differed from the labeling by more for 20%.  Eleven such products contained no detectable CBD and 46 contained some level of tetrahydrocannabinol (THC), a narcotic, including one product with THC levels so high that it was referred to the Drug Enforcement Agency (DEA) for potential action.  Until there is an FDA regulatory framework for foods or dietary supplements containing CBD, however, buyers need to be cautious.
  • To help the food industry protect employees and maintain the safety of human and animal food throughout adjustments to operations during the COVID-19 public health emergency, the U.S. Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC), and Occupational Safety and Health Administration (OSHA) have developed a number of resources and guidance materials. FDA and OSHA, working together and pulling from that existing guidance, recently developed the “Employee Health and Food Safety Checklist for Human and Animal Food Operations During the COVID-19 Pandemic.”
  • The Checklist addresses considerations for the assessment of FDA-regulated human and animal food operations during the COVID-19 pandemic, especially when reassessing operations due to changes brought about by COVID-19 or restarting operations after a shutdown. The Checklist is divided into two primary sections: employee health, screening, and configuration of operations for social distancing to prevent or minimize the spread of COVID-19 (based on CDC and OSHA guidelines); and food safety requirements (based on existing regulations) to help assess the potential impact of COVID-19-related operational changes on food safety practices (e.g., closures, changes to food safety staff, changes to suppliers and ingredients, etc.).
  • The Checklist may be useful to various FDA-regulated food establishments that grow, harvest, pack, manufacture, process, or hold human and animal food (such as produce, seafood, milk, eggs, grains, game meat, raw materials or ingredients, and resulting food products). The Checklist also provides information for foreign facilities that manufacture, process, pack, or hold food intended for consumption in the United States.
  • While the Checklist does not constitute a standard or regulation, and does not create new legal obligations, it describes recommendations and guidance, referencing existing mandatory safety and health standards. The Checklist is not intended to be an exhaustive list of all measures to protect employee health and food safety, but to serve as a quick reference source to identify areas where additional attention may be warranted.  Operations should continue to refer to guidelines provided by state and local governments, as well as regulations, requirements, and guidance promulgated and provided by FDA, CDC, OSHA, and other relevant agencies.
  • New laws in several Mexican states will place a complete ban on the sale of food high in sugar to children, which will include harsh penalties on any sellers that disobey the directives including fines, and even jail time for repeat offenders.
  • By way of example, in Tabasco, Mexico, there is now a prohibition of the “ the sale, distribution, donation, gift, and supply of prepackaged sugary drinks, carbonated sugary drinks, sweets and prepared foods with a predominance of refined carbohydrates and vegetable fats in their solid form that contain hydrogenated fatty acids in their trans form, to minors [under the age of 18], as well as their consumption in medical and educational centers.”  Moreover, the State of Tabasco will prohibit vending machines in education centers, public and private hospitals, clinics, and health centers.  In Oaxaca, Mexico, a similar law will forbid the sale, distribution and promotion of sugary drinks, and junk food to those under age.   It will also apply to vending machines in schools.  These states will continue to allow parents or legal guardians to purchase these types of products for their children.
  • In regard to the advertising of foods high in sugar, the State of Tabasco will prohibit advertisements, posters or any type of advertising referring to the aforementioned products within a 300 meter radius from any educational centers, medical centers, and hospitals.  In addition, the price to advertise in authorized locations will increase by 25 percent.
  • These new laws follow a host of measures over the years that aim to reduce consumption of food high in sugar, including a new food labeling law, which will go into effect in October.  Other Mexican state governments, including Mexico City, Colima, Guanajuato, San Luis Potosi, and Tamaulipas have shown interest in adopting similar initiatives.   We will continue to monitor any developments.
  • On August 14, 2020, the FDA announced an update to its investigation of the cause of an outbreak in Cyclospora illnesses that were first reported in May 2020 and were initially linked to salads manufactured by Fresh Express containing iceberg lettuce, red cabbage, and carrots. As of the date of the announcement, the outbreak has resulted in 690 people across 13 states falling ill.
  • Though traceback of cases has revealed that the likely source of contamination was iceberg lettuce from California and red cabbage from Florida, environmental sampling was unable to confirm these results. The Californian farms growing the iceberg lettuce linked to the outbreak tested negative for Cyclospora, while the Floridian farm suspected of being the source of the red cabbage was not in production at the time of testing and the FDA was not able to verify that the Cyclospora present in a nearby canal was a genetic match to the clinical cases.
  • FDA’s announcement demonstrates the technological progress that it has made in Cyclospora detection, including a test method validated last year which allows the Agency to test agricultural water for the presence of Cyclospora. Furthermore, FDA’s announcement states that the Agency intends to issue proposed rules this year which will (1) enhance product traceability and (2) revise certain agricultural water requirements in the Produce Safety Rule.
  • The outbreak highlights the importance of preventative measures to mitigate the risk of food-born outbreaks—including through ensuring the safety of irrigation water used on produce— as well as the FDA’s commitment to improving its ability to investigate food-born illness outbreaks, both through advances in technology and changes to the regulatory frameworks in place. Keller and Heckman will continue to monitor and report on updates to this and other food-born illness outbreaks.

Conagra Slips Out of Parkay Spray False Ad Suit (subscription to Law360 required)

  • The Nutrition Labeling and Education Act (NLEA) requires food intended for human consumption and offered for sale to bear nutrition information that provides a serving size that reflects the amount of food customarily consumed.  FDA updated the regulations on serving sizes in May of 2016 to provide more realistic Reference Amounts Customarily Consumed (RACCs).  The RACC for “Fats and Oils: Spray types” and “Fats and Oils: Butter, margarine, oil, shortening” are 0.25 grams and one tablespoon, respectively.
  • On August 12, 2020, a California federal judge granted summary judgment for Conagra Foods, Inc. in a lawsuit filed in 2013 alleging the labeling of Parkay Spray, which is labeled as a spray-type fat and oil with a RACC of 0.25 gram, uses artificially small serving sizes in order to disguise the true fat and calorie content of its product.  The judge did not consider whether the plaintiffs would ultimately be able to prove the label is misleading or deceptive in violation of California and Hawaii consumer protection laws based on allegations that the product is used as a buttery topping, is marketed as an alternative to butter for use on foods like corn and bread, and is in fact used as a topping by consumers.  Instead, the judge found it is not possible to conclude that Parkay Spray belongs in the butter, margarine, oil, and shortening reference amount category, as opposed to the spray-type fat and oil category, because the product could not be “used interchangeably” with butter or margarine.  Accordingly, since plaintiffs seek to impose state law requirements that are not identical to the federal requirements, the judge ruled that the deceptive labeling claims are preempted as a matter of law.
  • The order otherwise pointed out that FDA has already declined to amend the spray-type fats and oils category (based on a lack of data that could be used for calculating a different RACC) after being made aware of the precise consumer concerns raised by the plaintiffs.  In this regard, the judge also refused Conagra’s request to seal the contents of consumer inquiries and complaints concerning Parkay Spray, although Conagra has 30 days to more narrowly tailor a request to seal certain other documents in the case.