Monthly Archives: March 2018

Round Up – Round One

FDA, Food, , ,

** Monsanto Gets its First Victory in the Battle over Herbicide Prop 65 Listing **                                                                                                                                                                                                                                                                                                   

By: Brent E. Johnson

Background: Glyphosate is a molecule that inhibits a biological process only found in plants (not humans and animals).  The compound was discovered by a Monsanto chemist in 1970, then patented and brought to market in 1974 as “Round Up.”  Initially, the product was only used on a small scale, because, while it is toxic to most weeds, it also kills most crops.  However, when Monsanto developed and began introducing genetically modified crops engineered to be resistant to the herbicide (“Roundup Ready” crops), the chemical was able to be used on a broad scale.  As a result, the chemical’s use skyrocketed — at the same time that overall herbicide use dropped.  In 1987, only 11 million pounds of Round Up were used on U.S. farms – now nearly 300 million pounds are applied each year.  A study published in 2015 in the journal Environmental Sciences Europe found that Americans have applied 1.8 million tons of glyphosate since its introduction in 1974.  Worldwide, the number is 9.4 million tons.  That is  enough to spray nearly half a pound of Roundup on every cultivated acre of land in the world.  Round Up and Round Up Ready products are worth many billions of dollars.

California’s Office of Environment Health Hazard Assessment (OEHHA) announced a proposed listing of glyphosate as a Prop 65 chemical on September 4, 2015.  The effect of glyphosate’s listing under Prop 65, cannot be underestimated as there are detectable levels of glyphosate in virtually every part of the food chain.  Monsanto is famously vigilant in protecting its rights – for example in protecting its crop patents.  So when OEHHA proposed the listing, it was inevitable that litigation would follow.

On January 21, 2016, Monsanto struck.  It filed a petition in Superior Court in Fresno County seeking injunctive and declaratory relief to enjoin OEHHA from listing glyphosate as a Prop 65 chemical.  It did so on the basis of its allegation that the listing mechanism violated the California and United States Constitutions.  See Monsanto Co. v. Office of Environmental Health Hazard Assessment, No. 16-CE CG 00183, (Sup. Cal.)  That is, primarily, Monsanto complained about how its product came to be added to the list.

Under Cal. Health & Safety Code § 25249.8 (b), which cites to Cal. Lab. Code § 6382 (b)(1), “at a minimum” the Prop 65 list must include those “[s]ubstances listed as human or animal carcinogens by the International Agency for Research on Cancer (IARC).”  IARC, based in Lyon, France, is an intergovernmental agency, part of the World Health Organization.  In March 2015, IARC issued a report labeling the weed killer glyphosate as a “probable carcinogen.”  Glyphosate Monograph, Vol. 112, IARC Monographs Series (IARC, 2015b).  That report is not without controversy — for example, the EPA has more recently issued its draft human health risk assessment which concludes that glyphosate is not likely to be carcinogenic to humans.  Nevertheless, OEHHA has interpreted § 25249.8 (b) to provide that once IARC lists a chemical, it is mandatory for them to do so also.  OEHHA duly noticed its intent to list, prompting the lawsuit.

Monsanto raised four arguments, all ultimately rejected by the trial court.

  • First, Monsanto argued that OEHHA unconstitutionally delegated its authority to the IRAC by relying on its assessment that glyphosate is a probable human carcinogen. The doctrine of nondelegation is the rather esoteric theory that one branch of government must not authorize another entity to exercise the power or function that it is constitutionally authorized to exercise, itself.  Under California law, this doctrine is not offended if the legislature determines the overarching legislative policy and leaves to others the role of filling in the details.  Monsanto Co. v. Office of Environmental Health Hazard Assessment, 2017 WL 3784247 (Cal.Super.) citing Kugler v. Yocum, 69 Cal.2d 371, 375-376 (Cal. 1968).  On that point, the court stated that the Prop 65 listing mechanism does not constitute an unconstitutional delegation of authority to an outside agency, since the voters and the Legislature have established the basic legislative scheme and policy and it was permitted to leave the “highly-technical, fact-finding” to the IARC (and other authoritative bodies referred to in the Act).
  • Second, the court rejected Monsanto’s due process claims. It held that due processrights are only triggered by judicial or adjudicatory actions.  California Gillnetters Assn. v. Department of Fish & Game, 39 Cal.App.4th 1145, 1160 (Cal. 1995).  The court stated the Prop 65 listing was not adjudicative, but a “quasi-legislative act.”
  • Third, the court rejected Monsanto’s arguments that the listing process violated California’s Article II, Section 12, which prohibits private corporations from holding office or performing legislative functions. It found that there are no facts that would tend to indicate that the IARC is a “private corporation,” or that IARC has an pecuniary interest in being given the power to name certain chemicals on its list of possible carcinogens.
  • Fourth, the court gave short shrift to Monsanto’s claim that listing glyphosate would violate its right to free speech under the California and Federal constitutions, in particular the inherent protections for commercial speech from unwarranted governmental regulation. The court held that the First Amendment claim was not ripe for adjudication because the mere listing of glyphosate does not in and of itself require Monsanto to provide a warning and it may never be required to give a warning.

Monsanto appealed this ruling.  It also sought a stay of the trial court’s decision pending its appeal,  The appellate court and the California Supreme Court rejected these requests for a stay in June 2017.  OEHHA wasted no time after the Supreme Court’s decision adding glyphosate to the list on July 7, 2017.  After this ruling, subject to the substantive appeal of the trial court decision, July 7, 2018 was to be the date by which companies must comply with the Prop 65 requirements for glyphosate.

Not content to wait idly by, Monsanto moved the battle to Federal Court,  On November 15, 2017, it filed a complaint for declaratory and injunctive relief in the Eastern District of California (No. 2:17-cv-02401-WBS-EFB) together with the National Association of Wheat Growers, National Corn Growers Association, United States Durum Growers Association, Western Plant Health Association, Missouri Farm Bureau, Iowa Soybean Association, South Dakota Agri-Business Association, North Dakota Grain Growers Association, Missouri Chamber of Commerce and Industry, Associated Industries of Missouri and the Agribusiness Association of Iowa.  So far, the following have also signed on as amicus – the State of Wisconsin, South Dakota, North Dakota, Oklahoma, Michigan, Kansas, Louisiana, Iowa, Indiana, Idaho and Missouri.

The complaint starts by attacking the IARC listing, noting that a dozen other global regulatory and scientific agencies have found no link between glyphosate and cancer.  The allegedly “false” warning under Prop 65, plaintiffs argue, compels speech violating Plaintiff’s First Amendment rights.  Plaintiffs also argue that the listing and warning requirement conflict with, and are preempted by Federal legislation,notably the United States Food, Drug, and Cosmetic Act (FDCA) and Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).  The complaint also raises the issue rejected by the state court that the listing process violates the Due Process Clause of the Fourteenth Amendment.  Plaintiffs filed a Motion for Preliminary Injunction on December 6, 2017, which was heard on February 20, 2018.  On February 26, 2018, U.S. District Court Judge William B. Shubb ruled in favor of Monsanto and the other named plaintiffs.  No. CV 2:17-2401 WBS EFB, 2018 WL 1071168, at *1 (E.D. Cal. Feb. 26, 2018).  The order declined to go so far as to remove glyphosate from the Proposition 65 list, but at least for now, bars the State of California from imposing the corresponding warning requirement while the case challenging its listing proceeds on the merits.

The court primarily relied on Monsanto’s First Amendment argument in issuing the injunction.  Judge Shubb concluded that, to the extent Prop 65 necessitates warnings for glyphosate, California is in essence compelling commercial speech.  The court held that the government may only require commercial speakers to disclose “purely factual and uncontroversial information” about commercial products or services, as long as the “disclosure requirements are reasonably related” to a substantial government interest and are neither “unjustified [n]or unduly burdensome.”  Id. at * 5 citing Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985); CTIA-The Wireless Ass’n v. City of Berkeley, 854 F.3d 1105, 1118 (9th Cir. 2017).

In this case, the court held that the link between cancer and glyphosate was not uncontroverted – particularly where “only one health organization had found that the substance in question causes cancer and virtually all other government agencies and health organizations that have reviewed studies on the chemical had found there was no evidence that it caused cancer.”  Id. at *6.  The court went further stating, “[u]nder these facts, the message that glyphosate is known to cause cancer is misleading at best.”  Id.  Accordingly, it was determined that the balancing of interests involved weighed in favor of restraining the enforcement of the warning requirement for glyphosate while the remainder of the case was decided.

The court enjoined “defendants” (i.e. OEHHA and the California Attorney General) and “their agents and employees, all persons or entities in privity with them, and anyone acting in concert with them.” Id. at *8.  We will see if private Prop 65 bounty hunters consider themselves bound by this injunction.

One area the dispute will also move to is the No Significant Risk Levels (NSRLs) for glyphosate.  If the NSRL is set at a particularly high level (perhaps based on the factual controversies referred to above), then the issue over listing may be mooted.  Again, however, a sky high NSRL still may not dissuade Prop 65 bounty hunters.

Playing Chicken with the USDA

All Natural Litigation, False Advertising, Food, ,

** Consumer Groups allege Chicken was laced with “Special K” in False Advertising Case  **                                                                                                                                                                                                 

By: Brent E. Johnson

The “Food Court” (aka the Northern District of California) has seen many unique lawsuits over the years, some of which we have reported on.  Currently pending before the court is a must-watch dispute between Sanderson Farms Inc. (the #3 poultry producer in the U.S.) and three consumer and environmental non-profits — not only because of the bitter feud between the parties, but because of the fascinating intersection between a relatively unknown USDA program and its overseers and consumer expectations of what “100% Natural” means in the advertisement of meat products.

The battle began on June 22, 2017, when Organic Consumers Association, Friends of the Earth, and Center for Food Safety filed suit, on behalf of themselves and the general public, against Sanderson claiming that testing conducted by the Food Safety and Inspection Service (“FSIS”) of the United States Department of Agriculture (“USDA”) in 2015 and 2016 under the National Residue Program showed that Sanderson’s chicken “contain[s] residues of antibiotics important for human medicine, residues of veterinary antibiotics, and other pharmaceuticals, as well as residues of hormones, steroids, and pesticides.”  Organic Consumers Association et al v. Sanderson Farms, Inc., No. 3:17-cv-03592-RS (N.D. Cal. June 22, 2017) Dkt. No. 1 at ¶ 2.  The consumer watchdogs alleged that these chemicals are “not natural.”  Id. at ¶ 5.  Moreover, the alleged presence of the chemicals in Sanderson’s chicken meat “strongly indicate[s] that the birds are raised in intensive-confinement, agro-industrial conditions where cruelty is inherent,” which runs counter to consumer expectations that “All Natural” includes the concept that the chickens are “humanely raised.”  Id. at ¶ 71.

Plaintiffs did not simply file a lawsuit, however.  They launched a public opinion campaign against Sanderson.  This effort included approaching large commercial purchasers of Sanderson’ poultry (Darden Restaurants, Olive Garden) to educate them concerning the company’s alleged practices in an effort to dissuade them from purchasing chicken raised with antibiotics.

Sanderson struck back with a motion to dismiss asserting that Plaintiffs lacked standing and their complaint was pre-empted by the Poultry Products Inspection Act (“PPIA”) and Federal Meat Inspection Act (“FMIA”).  Dkt. No. 23 (August 2, 2017); Dkt. No. 32 (September 13, 2017).  On February 9, 2018, the district court denied the motion.  It dispatched with Sanderson’s standing argument, holding that the diversion of Plaintiffs’ resources from their core public interest mission [i.e., to protect consumers’ right to safe, pollutant free food] to combating the alleged misrepresentations by Sanderson was sufficient injury to confer organizational standing.  Dkt. No. 48 at 6 – 7.  On pre-emption, the court ruled that there was no express pre-emption and implied pre-emption was not mandated because “[a]llowing plaintiffs to proceed with their advertising claims in no way undermines the PPIA’s [and FMIA’s] objectives of ensuring that poultry products are ‘wholesome, not adulterated, and properly marked, labeled, and packaged.’”  Id. at 9.  When Sanderson pointed out that the “100% Natural” wording on its label was specifically approved by USDA (as is true with the labels for all meat, poultry, and fish in the U.S.), the court responded that “common sense suggests even ‘language that is technically and scientifically accurate on a label can be manipulated in an advertisement to create a message that is false and misleading to the consumer.’”  Id.

It’s at this point that things got nasty.  A quick bit of background: the Plaintiff non-profits obtained the testing data upon which they based their complaint from USDA via multiple Freedom of Information Act (“FOIA”) requests.  According to the complaint, the test data revealed that FSIS conducted 69 inspections of Sanderson’s products in 2015-2016, and in 49 cases residue of synthetic drugs, antibiotics (including antibiotics for human use), and pesticides were found.  Dkt. No. 1 at ¶ 2.  The chemicals in some of the poultry tested were revelatory; for example, Ketamine – a Schedule III anesthetic used legally to induce a trance-like state at the beginning of general anesthesia and illegally (as “Special K,” “Cat Valium,” and “Jet”) as an hallucinogenic and date rape drug.  There is, of course, no sane reason for poultry producers to slip Special K into their chickens’ water troughs.  Plaintiffs produced this FSIS test results to Sanderson at the time they filed their successful opposition to the Company’s motion to dismiss.  According to Sanderson, the results showed negative levels of residue for some 40 chemicals tested – an obvious impossibility.  As for chemicals with positive test results, the levels were below the FSIS’s detection limits or Minimum Levels of Applicability (“MLA”).  For example, at least some poultry tested positive for Ketoprofen (an NSAID) – but at a level (less than one part per billion) far below the minimum levels of detection established by USDA in its own testing protocol —20 parts per billion (for poultry kidney screening) or 5 parts per billion (for muscle screening).  Dkt. No. 49 at 8.

Sanderson was surprised that the FSIS test results were the basis of Plaintiffs’ allegations because “Sanderson has consistently passed FSIS residue testing, which has shown no antibiotic residue or other contaminants in its chicken products, including on the very test dates and locations identified by Plaintiffs in their Complaint.”  Dkt. No. 49 at 12.  Sanderson’s surprise turned to apoplexy when it discovered that Plaintiffs communicated extensively with USDA and FSIS regarding the test results prior to filing the complaint and were told by the agency that the test results did not reflect the presence of the identified chemicals, but were “preliminary screening data” that had not been confirmed.  Id. at 5.

Based on these facts, Sanderson filed a motion for Rule 11 sanctions against Plaintiffs stating that “[t]he problem with Plaintiffs’ storyline is that [its] allegations are entirely false—and Plaintiffs and their attorneys know it.”  Id. at 5.  In a rare move, USDA’s Office of General Counsel approved Sanderson submitting the declarations of two FSIS officials, Dr. J. Emilio Esteban, Executive Associate for Laboratory Services, and Mark R. Brook, a Government Information Specialist for FSIS, in support of Sanderson’s sanctions motion.  Dr. Esteban’s declaration stated that in a teleconference with Plaintiffs’ attorneys, he explained that, in addition to the test results being “preliminary screening data,” “all of the findings in the screening tests . . . were ultimately confirmed as ‘non-detected.’”  Dkt. No. 49, Ex. 1.  Mr. Brooks swore in his declaration that, upon learning of the filing of the complaint, he spoke with a deputy director at FSIS who participated in conference calls with Plaintiffs and she opined that Plaintiffs’ “seemingly intentionally ignored the explanations of the FOIA data that the USDA/FSIS scientists had provided on the recent conference calls.” Dkt. No. 49, Ex. 2.

Plaintiffs’ opposition to the sanctions motion spends a significant portion of its page limit suggesting some sort of “undue influence” by Sanderson Farms over USDA.  (“Sanderson has admitted to contacting USDA in autumn 2017, and perplexing events began to occur around the same time.”)  Dkt. No. 55 at 6 – 7.  That argument (if it is an argument) is likely to go nowhere.  On the merits, Plaintiffs argue that Sanderson “conflat[es] regulatory standards with scientific standards” (which is a bit frightening, if one thinks about it).  Id. at 13 – 14.  Relatedly, Plaintiffs contend that the issue of the interpretation of the data it received from FSIS is a question for experts — not one to be resolved by the district court on a motion for sanctions.  Id. at 15 – 16.  Finally, Plaintiffs assert that Sanderson’s admitted use of antibiotics belies any notion that its poultry is “100% Natural” and suggests that its chickens “are not raised as portrayed in Sanderson advertising and referenced in the [complaint].”  Id. at 16.

What is it about the living conditions that Plaintiffs argue runs contrary to Sanderson’s USDA approved “100% Natural” label?  For Sanderson’s answer, one can consult Bob and Dale, the Sanderson spokesmen in their “The Truth About Chicken” advertising campaign”.  What Bob and Dale want you to know is that FDA has never approved the use of steroids or hormones in chickens and USDA does not allow poultry meat to be sold if it is not clear of antibiotics.  Therefore, any company that labels its poultry products as “hormone free” or “antibiotic free” in the United States is akin to Ford advertising that its cars and trucks have wheels.  It’s a redundancy.  While Plaintiffs argue that these advertisements are false and misleading — and assuming that Sanderson and the FSIS officials who submitted declarations are correct that the company’s poultry meat does not contain the chemicals alleged in the complaint — the case seems to boil down to the claim that, for a chicken to be “100% Natural,” a veterinarian can never have administered antibiotics to it (irrespective of whether the antibiotics are present at the time of sale).

The hearing on Sanderson’s motion for sanctions is set for April 5, 2018.  Rule 11 motions are notoriously difficult to win.  But in this case, Plaintiffs will be arguing that not only should the USDA’s approval of the Company’s “100% Natural” label be disregarded (as the court has already determined), but the USDA’s interpretation of its own test data as well.  It will be interesting to see if USDA has anything further to say on those issues.