FDA

The New Naturals

September 15, 2016All Natural Litigation, Consumer Class Action, FDA, FoodAll Natural, California, consumer action, craft beer, FDA, labeling, puffery, Reasonable Consumer

** Where are Class Action Claims Against Consumer Food and Personal Product Companies Trending in 2016?**

By: Brent E. Johnson

Print We have blogged in the past about some of the “usual suspects” in the consumer class action line-up – particularly for food, beverage, cosmetics and related industries – for example, the “all-natural” case – the “evaporated cane juice” case – and the “handmade” or “craft beer” case. Trends come and go – as Plaintiffs run out of companies to sue and as companies change their labeling and advertising in response to the litigation risks.

Which begs the question: Where are the current litigation trends leading? We have surveyed recent filings to identify some of the tropes and traps that plaintiffs lawyers are currently focusing on:

As we have discussed in the past, the attractiveness of the all-natural class claim lies in the gaps between FDA guidance and labeling law and the vagaries of the reasonable consumer standard. That gap may be closing with the FDA taking comments and perhaps looking to expand its policy on “natural” foods. As the term “Natural” loses some of its vagueness, the term “healthy” appears to be taking its place – particularly in so far as the term has the required “eye of the beholder” quality necessary to support class action claims (although in some respects the term “healthy” is regulated see e.g., 21 CFR 101.65(d)(2)) . For example in Kaufman v. CVS Caremark Corp., No. 16-1199, 2016 WL 4608131, at *1 (1st Cir. Sept. 6, 2016) (reversing district court dismissal on Rule 12), CVS Pharmacy, Inc. was sued for its Vitamin E dietary supplement because its label touts the product as supporting “heart health.” Plaintiff argues that this is misleading because the medical literature does not support a link between consuming vitamin E and cardiovascular health. Kaufman v. CVS Caremark Corp., No. CV 14-216-ML, 2016 WL 347324, at *1 (D.R.I. Dkt. No. 1 at 7) (and in some studies cited by Plaintiff – Vitamin E dosage increases the rate of heart failure). In Hunter v. Nature’s Way Prod., LLC, No. 16CV532-WQH-BLM, 2016 WL 4262188, at *1 (S.D. Cal. Aug. 12, 2016) (denying motion to dismiss), Plaintiff alleges that Nature’s Way’s coconut oil is advertised with various health claims (such as its “Variety of Healthy Uses”, “ideal for exercise & weight loss programs”, “fuel a[] healthy lifestyle”), but according to Plaintiff, coconut oil products are not “healthy” . . . “but rather their consumption causes increased risk of CHD, stroke, and other morbidity.” (Dkt. No. 1-5 Compl. at ¶ 118). In Campbell v. Campbell Soup Co., No 3:16-cv-01005 (S.D. Cal. August 8, 2016) (Dkt 18) (Def. Mot. to Dismiss), Campbell’s Soup Co is defending against Plaintiff’s claims that its Healthy Request® soups are not “healthy” because they contains partially hydrogenated oil (PHO). Notably, Campbell’s soups are somewhat unique from other food labelling cases because they contain more than 2% meat or poultry and therefore are USDA regulated (see 21 U.S.C. § 451, et seq.) and their labelling is pre-approved (see 21 U.S.C. § 457; accord 21 U.S.C. § 607). Campbell’s has doubled-down on that argument – moving for Rule 11 sanctions. No 3:16-cv-01005 (S.D. Cal. August 29, 2016) (Dkt 18). In Lanovaz v. Twinings N. Am., Inc., No. 5:12-CV-02646-RMW (N.D. Cal. September 6, 2016) (dismissing remaining claims), Twinings successfully defended against claims that the labeling of its tea as a “healthy tea drinking experience” and having “antioxidant” benefits were misleading. In particular Plaintiff claimed that Twinings’ health benefits could not be substantiated and were contrary to FDA regulations. No. 5:12-CV-02646-RMW (N.D. Cal. Dkt. Nos. 1, 24). It appears that “Healthy” is the new “Natural.”

Plaintiff’s lawyers are also taking a close look at ingredients – to determine if touted anchor ingredients are prominent enough. For example in Coe v. Gen. Mills, Inc., No. 15-CV-05112-TEH, 2016 WL 4208287, at *1 (N.D. Cal. Aug. 10, 2016) (Order denying Mot. to Dismiss), Plaintiffs argued (successfully at the pleading stage) that General Mills’ Cheerios Protein product labeling is misleading because it implies that the product is essentially the same as normal Cheerios but with added protein. While Plaintiffs acknowledge that Cheerios Protein does have more protein than regular Cheerios (Plaintiffs calculate that 200 calories of Cheerios contains 6 grams of protein, whereas 200 grams of Cheerios Protein contains 6.4 or 6.7 grams of protein), they argue that this smidgen of an increase is so immaterial as to be misleading. In another example, in Nazari v. Gen. Mills, Inc., No. 2:16-cv-02015 (E.D. Cal. Aug. 23, 2016), the Plaintiff sued Target with a proposed class action alleging the retailer’s up & up™ Green Aloe Vera Gel lacks traces of Aloe Vera. Plaintiff alleges that while the product is labelled as an “aloe vera gel” with “pure aloe vera,” its laboratory testing (which it contends would have revealed acemannan, the key compound in aloe vera) could detect no active aloe ingredient. In another example, in Torrent v. Thierry Oliver., No. 2:15-cv-02511 (C.D. Cal. Sept. 2, 2016) (denying motion to dismiss), Plaintiff survived dismissal on claims that Natierra brand Himalania Goji berries are misleadingly labeled because they are not berries from the Himalayan mountain region in China – which was inferred by the “Himalania” brand name. In labelling, as in everything else, attention to detail counts.

We will update you on these trends as they progress.

Pokemon GMO

August 25, 2016FDA, Federal Preemption, Food, UncategorizedFDA, GMO

** Update on the National Bioengineered Food Disclosure Standard Law **

By: Brent E. Johnson

closeup of a GMO UPC symbol on white

By a stroke of the pen, President Obama put to rest for all time (by “all time,” we mean a decade) the brouhaha over labeling foods containing GMO ingredients. By signing the National Bioengineered Food Disclosure Standard law on July 29, 2016, the President and Congress proclaimed to the citizenry that GMO labeling is important — but not so important that the labels actually have to be seen. How did we get to this point? A brief history is in order.

When one of the editors of this blog watches Netflix with his English Bulldog, he is enjoying the companionship of a genetically modified organism (“GMO”). Long before the first GMO food – the Flavr Savr tomato — hit grocery store shelves in 1994, humans were engineering crops and livestock the old fashioned way – selective breeding. Modern GMOs, of course, differ from those derived from selective breeding. They are developed on a molecular level – a specific gene from a donor organism that expresses a desirable trait is inserted into the genome of the target organism to give the latter that same trait. While consumer organizations and environmental activists have sounded the tocsin (or toxin) over GMOs since the beginning of bio-engineering, the federal government – particularly the FDA – has not been alarmed.

Two years before Flavr Savr, the FDA published its “Statement of Policy: Foods Derived from New Plant Varieties.” In this document, the FDA reminded the public that a food additive must be approved prior to use unless it is “generally recognized as safe” (GRAS). The FDA concluded that, while a plant gene inserted into another plant is an additive, generally that gene is GRAS. “The agency is not aware of any information showing that foods derived by these new methods differ from other foods in any meaningful or uniform way, or that, as a class, foods developed from the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.” Based on that logic, the FDA’s regulations for plant GMOs are the same as those for traditional foods with the exception of a voluntary (“recommended”) consultation procedure with which developers of GMO-containing foods typically comply. (Note that the USDA’s Animal and Plant Health Inspection Service plays a limited regulatory role with regard to GMOs that pose a risk to other plants or animals and the EPA regulates GMOs that are bio-engineered to produce a pesticide – for example, the infamous, but unblemished, Bt-corn.)

In the 1992 Policy, the FDA eschewed requiring food companies incorporating plant GMOs to label their products as such under the Federal Food, Drug, and Cosmetic Act because “the agency does not believe that the method of development of a new plaint variety (including recombinant DNA techniques) is normally material information within the meaning of 21 U.S.C. 321(n).” The FDA has not deviated from this position in the past quarter decade. The agency’s website has a page directed to consumers which rhetorically asks, “Are foods from GE plants safe to eat?” The response is, “Yes. Credible evidence has demonstrated that foods from the GE plant varieties marked to date are as safe as comparable, non-GE foods.”

The FDA’s refusal to mandate that food companies label their products containing GMOs does not mean that consumers who care about such things have been stymied. In 1990, Congress enacted and George Herbert Walker Bush signed the Organic Foods Production Act, which required that the USDA develop national standards for organic products. Ten years later, the USDA issued its final rule establishing the National Organic Program (NOP), which governs both fresh and processed food products, including crops and livestock. The “USDA Organic” label means many things under the NOP — but one of them is no genetic engineering. GMOs are prohibited in organic products as excluded methods of production. 7 CFR § 205.105. Therefore, a consumer that doesn’t want to ingest a GMO need only look for the “USDA Organic” label.

The NOP was not enough for Vermont. In 2014, Vermont enacted Act 120 – a manifesto against the federal government’s oversight of GMOs — that required labels on products containing genetically engineered ingredients. “[F]ood offered for sale by a retailer after July 1, 2016 shall be labeled as produced entirely or in part from genetic engineering if it is a product: (1) offered for retail sale in Vermont; and (2) entirely or partially produced with genetic engineering.” Act 120, § 3043. In addition, “a manufacturer of a food produced entirely or in part from genetic engineering shall not label the product on the package, in signage, or in advertising as ‘natural,’ ‘naturally made,’ ‘naturally grown,’ ‘all natural,’ or any words of similar import that would have a tendency to mislead a consumer.” Id.

The food industry went into an uproar over Vermont’s law because – given the realities of interstate commerce – companies would have to change their labeling nationwide to satisfy the demands of Vermont. While manufacturers have had to bend to the legislative will of California from time to time (“Made in the USA”/Prop 65), it’s quite another thing to answer to Vermont.

Due, in part, to persistent lobbying, Congress enacted the Bioengineered Food Disclosure Standard law just in time to pre-empt Vermont’s organic labeling law from going into effect. The law requires that the USDA “establish a national mandatory bioengineered food disclosure standard with respect to any bioengineered food and any food that may be bioengineered” by July 2018. Therefore, GMO labeling will be required nationwide sometime after 2018. But because Congress clearly believes that this law is a solution in search of a problem, the statute has a unique labeling provision that “require[s] that the form of a food disclosure under this section be a text, symbol, or electronic or digital link . . . with the disclosure option to be selected by the food manufacturer.” What does this mean? Simply put, food companies will have the option of either a product label with a bar code accompanied by the words, “scan here for more food information” or a toll-free telephone number with “call for more food information.” In short, an actual GMO disclosure on the label is not required. Consumers who care will roam supermarket aisles – smart phones in front of their faces – scanning bar codes to find their non-GMO groceries like Pokemon Go zombies looking for Poke Balls.

No Pay, No Play

August 24, 2016Class Settlement, Consumer Class Action, FDA, Settlement ObjectorsAttorney Fees, California, class action suits, fairness hearing, false advertising, FDA, labeling, objectors

** District Court Rejects Settlement Deal That Extracts a Broad Release of Claims But Provides No Money to Class Members **

By: Brent E. Johnson

Pay writing on Keyboard

It is not common for judges to reject class settlements, usually because lawyers for the opposing sides — putting aside their adversary roles — are savvy enough not to give the judge cause. That was not the case recently, however, in a long running homeopathic product false advertising case in the Southern District of California. Allen v. Similasan Corp., No. 12-CV-376-BAS-JLB, 2016 WL 4249914, at *1 (S.D. Cal. Aug. 9, 2016).

The allegations in this case, which are similar to those of other recent homeopathy cases (see e.g., Nat’l Council Against Health Fraud v. King Bio Pharms., 107 Cal. App. 4th 1336, 1348 (2003); Herazo v. Whole Foods Mkt., Inc., No. 14-61909-CIV, 2015 WL 4514510, at *1 (S.D. Fla. July 24, 2015); Conrad v. Boiron, Inc., No. 13 C 7903, 2015 WL 7008136, at *1 (N.D. Ill. Nov. 12, 2015)) complain that Similasan engaged in false advertising by omission by not including on its products’ labels statements to the effect that (i) the product was not FDA approved as medically effective and (ii) the active ingredients were diluted. Notably, neither of those disclaimers is required on homeopathic products – but even so, many companies voluntarily include them.

In Similasan, after four years of hard fought litigation the Defendant had successfully narrowed the claims by summary judgment [Dkt. No. 142] and Plaintiffs had certified a class [Dkt. No. 143]. Similasan, however, filed a motion to decertify, arguing that Plaintiffs would not be able to prove materiality or falsity with their expert witnesses’ survey evidence [Dkt. No. 164]. With the motion to decertify pending, the parties settled and sought judicial approval of their agreement [Dkt. No. 196]. But the settlement was not a cure the district court could swallow. Judge Bashant noted her role in the fairness hearing was to look for “subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.” (2016 WL 4249914, at *3 citing In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir.2011)). In this case, the signs were not subtle, and it was not a close call for the Court to deny approval.

In particular, Judge Bashant took exception to the following features of the proposed agreement:

The remedy for the unnamed class was injunctive relief only. While the company agreed to add the disclaimers that Plaintiffs’ counsel had complained were omitted, Similasan was not required to compensate class members;
The only money went to the class representatives who would pocket $2,500.00 each and Plaintiff’s counsel who secured a clear-sailing agreement which would permit an award of fees in excess of $550,000.00;
In exchange for injunctive relief, class members released Similasan from all claims identified in the complaint;
The release covered a nationwide class even though the Court had certified a California class only.

These settlement terms were not good enough for the Court. The class was being asked to give up the right to sue but receiving nothing in return. Indeed, to the extent the remedy was an injunction, a class member who opted out would receive the same benefit without forfeiting any rights. Tellingly, eight State Attorneys General (Arizona, Arkansas, Louisiana, Michigan, Nebraska, Nevada, Texas and Wyoming) filed an amicus curiae brief urging the Court to reject the proposed settlement. [Dkt. No. 219].

The Court also discussed the role that notice (or lack thereof) played in its decision making. The Court observed that the proposed class would have been in the tens of thousands [Dkt. No. 216], but the settlement notice prompted only 136 views of the settlement information website and 21 phone calls to the settlement hotline. The Court attributed this lackluster response to the weakness of the notice, which consisted of a single ad in USA Today and some incidental online placements. But the reality is the paucity of the economic return (i.e. zero) likely resulted in mass indifference.

Sugar By Any Other Name Not Just As Sweet – Says FDA

June 10, 2016False Advertising, FDA, FoodCalifornia, class action suits, consumer action, false advertising, FDA, labeling, Ninth Circuit

** FDA concludes its study on “Evaporated Cane Juice” – issues guidance that it is a misleading description for mere Sugar **

By: Brent E. Johnson

Candy shop at local bazaar in Barcelona, Spain.

On May 25, 2016, the Food and Drug Administration (FDA) issued guidance that it is false or misleading to describe sweeteners made from sugar cane as “evaporated cane juice.” Guidance for Industry: Ingredients Declared as Evaporated Cane Juice.

The FDA promised guidance before the end of 2016 – so they under-promised and over-delivered. The FDA’s guidance reasoned that the term “cane juice”— as opposed to cane syrup or cane sugar—calls to mind vegetable or fruit juice, see 21 CFR 120.1(a), which the FDA said is misleading as sugar cane is not typically eaten as a fruit or vegetable. See U.S. Department of Agriculture, Center for Nutrition Policy and Promotion. “Added Sugars.” As such, the FDA concluded that the term “evaporated cane juice” fails to disclose that the ingredient’s “basic nature” is sugar. Guidance, Section III. As support, the FDA cited the Codex Alimentarius Commission — a source for international food standards sponsored by the World Health Organization and the United Nations — which defines “raw cane sugar” in the same way as “evaporated cane juice.” Codex 212-1999.1. The FDA therefore advised that “‘evaporated cane juice’ is not the common name of any type of sweetener and should be declared on food labels as ‘sugar,’ preceded by one or more truthful, non-misleading descriptors if the manufacturer so chooses.” Guidance, Section III. The FDA’s decision comes after a 2009 draft guidance advising against using the term “evaporated cane juice” and a host of lawsuits against food companies that ignored the guidance. Draft Guidance for Industry: Ingredients Declared as Evaporated Cane Juice (2009).

The FDA’s decision does not bode well for pending cases on this point. As we have blogged about recently, many evaporated cane juice lawsuits are currently stayed awaiting the outcome of the FDA’s guidance, see, e.g., Gitson, et al. v. Clover-Stornetta Farms, Inc., Case No. 3:13-cv-01517-EDL (N.D. Cal. Jan. 7, 2016); Swearingen v. Amazon Preservation Partners, Inc., Case No. 13-cv-04402-WHO (N.D. Cal. Jan. 11, 2016). And some have been revived on appeal – just in time – see Kane v. Chobani, LLC, No. 14-15670, 2016 WL 1161782, at *1 (9th Cir. Mar. 24, 2016) (overturning 2014 order from Northern District of California dismissing case). These suits (and others) are now set to proceed in the wake of the FDA’s guidance. Bear in mind, the guidance is not binding on courts and, in of itself, does not create a private right of action. 21 U.S.C. § 337(a) (“[A]ll such proceedings for the enforcement, or to restrain violations, of [the FDCA] shall be by and in the name of the United States”); see POM Wonderful LLC v. Coca-Cola Co., 573 U.S. ___ (2014); Buckman Co. v. Pls.’ Legal Comm., 531 U.S. 341, 349 n.4 (2001); Turek v. Gen. Mills, Inc., 662 F.3d 423, 426 (7th Cir. 2011); see also Smith v. U.S. Dep’t of Agric., 888 F. Supp. 2d 945, 955 (S.D. Iowa 2012) (holding that there is no private right of action regarding USDA statute).

In most false advertising cases, the governing test is what consumers, themselves, think – not what the FDA does. For example, in Mason v. Coca-Cola Co., plaintiffs alleged that “Diet Coke Plus” was misleading because the word “Plus” implied the product was “healthy” under FDA regulations. 774 F. Supp. 2d 699 (D.N.J. 2011). The court begged to differ: “At its core, the complaint is an attempt to capitalize on an apparent and somewhat arcane violation of FDA food labeling regulations . . . not every regulatory violation amounts to an act of consumer fraud . . . . It is simply not plausible that consumers would be aware of [the] FDA regulations [plaintiff relies on].” Id. at 705 n.4; see also Polk v. KV Pharm. Co., No. 4:09-CV-00588 SNLJ, 2011 WL 6257466, at *7 (E.D. Mo. Dec. 15, 2011); In re Frito-Lay N. Am., Inc. All Natural Litig., No. 12-MD-2413 RRM RLM, 2013 WL 4647512, at *15 (E.D.N.Y. Aug. 29, 2013) (“[T]he Court [cannot] conclude that a reasonable consumer, or any consumer, is aware of and understands the various federal agencies’ views on the term natural.”) Defendants in evaporated cane juice cases often assert that “evaporated cane juice” is a more accurate term than sugar to describe a type of sweetener that is made from sugar cane but undergoes less processing than white sugar. See e.g., Morgan v Wallaby Yogurt Company, No. CV 13-0296-CW, 2013 WL 11231160 (N.D. Cal, April 8, 2013) (Mot. to Dismiss). Those issues aside, many commentators believe the guidance will spur settlements – and they may be right. The guidance may also spur a round of label changes for those who have not already abandoned the controversial term.

Enhanced Food Labelling Guidelines

June 3, 2016FDA, FoodFDA, labeling, Nutrition Labels

** FDA refreshes its Nutrition Facts label for packaged foods **

By: Brent E. Johnson

Corn on spoon

On May 27, 2016, the FDA updated its “nutrition facts label” rule for packaged food products sold in the US. See 81 FR 33741, 21 CFR 101. The stated goal of the rule-making is to provide “updated nutritional information for most packaged foods sold in the United States, that will help people make informed decisions about the foods they eat and feed their families.”

The new Nutrition Facts label will maintain its traditional look and feel, but will be updated to include, amongst other things:

A new design increasing the type size for “Calories,” “servings per container,” and the “Serving size” declaration, and bolding the number of calories and the “Serving size” declaration to highlight this information.
A mandatory footnote explaining “*The % Daily Value tells you how much a nutrient in a serving of food contributes to a daily diet. 2,000 calories a day is used for general nutrition advice.”
New requirements for “Added sugars” to be listed both in grams and as percent Daily Value.
New mandatory nutrients are included – Vitamin D and potassium are now required – and the rule drops the requirement for Vitamins A and C to be listed (which research has shown very few people are deficient in).
Removal of the “Calories from Fat” line item (as research shows that the type of fat is more important than the amount) – the requirement to list “Total Fat,” “Saturated Fat,” and “Trans Fat” remain.
In line with new research that indicates that prior “serving size data” underestimates the typical amount consumed, the rule updates the reference amount for different types of foods – for example, the reference amount used to set a serving of ice cream was previously ½ cup but is changing to ⅔ cup. The reference amount used to set a serving of soda is changing from 8 ounces to 12 ounces.
And where a products is larger than the reference size for a single serving – but where the item could be consumed in one sitting or more multiple sittings — manufacturers will need to provide “dual column” labels to indicate the amount of calories and nutrients on both a “per serving” and “per package”/“per unit” basis.

A comparison between the original vs. the new labels makes the effect of the changes clear:

Most food manufacturers will be required to use the new label by July 26, 2018. However, manufacturers with less than $10 million in annual food sales will have an additional year to comply.

Au Naturale

April 15, 2016All Natural Litigation, FDA, Food, FTCAll Natural, FDA, Federal Trade Commission

** How can we “Know It When We See It” to divine when the FTC will label an all natural claim misleading? **

By: Brent E. Johnson

On April 12, 2016, the Federal Trade Commission (“FTC”) announced proposed settlements with four skin care, shampoo and sunscreen companies over the use of the term, “natural” in their product labeling and advertising (ShiKai, Rocky Mountain Sunscreen, EDEN BodyWorks, and Beyond Coastal products). The FTC issued an administrative complaint against a fifth skin care company making similar claims. The gravamen of each of these actions is the FTC’s assertion that the companies’ products “are not ‘all natural’ because they contain[ ] or contained at least one synthetic ingredient.” The FTC’s Director of the Bureau of Consumer Protection, in announcing the settlements, proclaimed, “’All natural’ or ‘100 percent natural’ means just that — no artificial ingredients or chemicals.” “Companies should take a lesson from these cases.”

But what exactly is that lesson? To answer that – lets recall the history of federal “natural” regulations (or more accurately, the lack thereof). The Food & Drug Administration (“FDA”) is the primary federal agency responsible for the labeling of food, drugs and cosmetics sold in the United States to, among other things, prevent consumer deception. 21 U.S.C. § 331(a). Three of the five companies sued by the FTC sell “drugs” (sunscreen). So what is the FDA’s position on “natural”? As we’ve blogged about before, the FDA has repeatedly demurred on the question asserting that “priority food public health and safety matters are largely occupying the limited resources that FDA has to address food matters.” Letter from Leslie Kux, Assistant Commissioner for Policy Food and Drug Administration, to Judges Gonzalez Rogers, White, and McNulty, January 6, 2014 (responding to the question of whether GMO seed used to grow corn rendered the corn unnatural). The FDA, from time to time, has relied on its 1991 “informal policy” of defining “natural” for food for human consumption “as meaning that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.” 56 Fed. Reg. 60421, 60466-60467 (Nov. 27, 1991). For example, in a November 16, 2011 Warning Letter to Alexia Foods, the FDA asserted that the company had misbranded its mushrooms and red potatoes as “All Natural” when they contained disodium dihydrogen pyrophosphate — a synthetic chemical preservative.

Very recently, as we’ve also posted about, the FDA has requested public comment on a possible definition of “natural” for food labeling signaling that the FDA may be ready to issue some sort of concrete “natural” rule in the near future, at least as the term applies to food. It will be interesting to see if things have changed since 1991, when the FDA, in assessing the possibility of consumer confusion, concluded that “natural” was already in “widespread use” “on a variety of products to mean a variety of things” with “consumers regard[ing] many uses of th[e] term as non-informative.” 56 Fed. Reg. 60421, 60466.

Unlike the FDA, the U.S. Department of Agriculture’s (“USDA”) rules on “natural” for meat and poultry appear quite definitive. According to the USDA’s Food Standards and Labeling Policy Book, “natural” means “(1) the product does not contain any artificial flavor or flavoring, coloring ingredient, or chemical preservative (as defined in 21 CFR 101.22), or any other artificial or synthetic ingredient; and (2) the product and its ingredients are not more than minimally processed.” Is this a “bright line” test? Not really. The USDA Policy Book states that “Relatively severe processes, e.g., solvent extraction, acid hydrolysis, and chemical bleaching would clearly be considered more than minimal processing.” Okay, so no “relatively severe processes.” But it also states. . . “the presence of an ingredient which has been more than minimally processed would not necessarily preclude the product from being promoted as natural . . . if it can be demonstrated that the use of such an ingredient would not significantly change the character of the product to the point that it could no longer be considered a natural product.” Oh.

In the end, the USDA relies on disclosure to alleviate consumer confusion. The Policy Book states: “All products claiming to be natural or a natural food should be accompanied by a brief statement which explains what is meant by the term natural, i.e., that the product is a natural food because it contains no artificial ingredients and is only minimally processed. This statement should appear directly beneath or beside all natural claims or, if elsewhere on the principal display panel; an asterisk should be used to tie the explanation to the claim.” Because the USDA’s Food Safety and Inspection Service must approve all meat and poultry product labels before they are placed on store shelves, any issues over the nuances of whether a product is “natural” are worked out on the front end.

Brief philosophical interlude: The USDA’s definition of “natural” has little or nothing to do with consumer health – a smoked meat (thought by some to expose consumers to carcinogens) is “natural” but a meat that undergoes relatively benign acid hydrolysis to round out flavor and break down proteins so they are more easily digested is unnatural. But if a consumer equates “natural” with “wholesome” (the FDA’s term) or “healthy,” does the USDA’s “natural” rule help consumers at all?

This brings us to the FTC – the agency with the longest history of not making rules on “natural” claims. “On December 17, 1982, the Commission decided to terminate its proposed trade regulation rule on food advertising. The proposed rule would have regulated energy and weight control claims, fatty acid and cholesterol claims, and natural food claims.” 48 Fed . Reg. 23270 (May 24, 1983) (emphasis added). This avoidance has continued unabated, up to and including the FTC’s revisions to the Green Guides governing environmental marketing claims. “The final Guides do not address organic, sustainable, and natural claims. . . . For . . . sustainable and natural claims, the Commission lacks sufficient evidence [presumably of what consumers think “natural” means] on which to base general guidance.” 16 CFR Part 260 (Oct. 6, 2010).

Of course, the FTC has long maintained that it has the right, on a case-by-case basis, to take enforcement actions against companies that use “natural” deceptively. 48 Fed . Reg. 23270 (May 24, 1983). But in the absence of an actual rule, the FTC is relying on the Potter Stewart pornography principle — “it know it when it sees it.” Jacobellis v. Ohio, 378 U.S. 184 (1964). That’s fine, but, under those circumstances, it is difficult for companies “to take a lesson” from the FTC’s five recent enforcement actions other than that the FTC doesn’t want to see chemicals in natural products.

But maybe that isn’t even true. The proposed settlements that the FTC announced on April 12th appear on the surface to be easy ones – the challenged products contain substances with chemical-sounding names like Dimethicone, Polyethylene, Butyloctyl salicylate, Neopentyl glycol Diethylhexanoate, Ethylhexyl glycerin, Phenoxyethanol, Polyquaternium-7 and/or Caprylyl glycol. The only public statement from one of the settling companies who sells sunscreen attributed its natural labeling to a mistaken belief that it could make the claim if the active ingredients were natural. But is important to observe that the FTC complaint against the single settlement hold out, California Naturel, is much narrower than the other complaints citing to only one “synthetic ingredient” – dimethicone – in a single product – Sunscreen SPF 30 – despite the fact that California Naturel (according to its beautifully designed website) sells a variety of skin care products that include numerous substances that have chemical-sounding names (e.g., Polyglyceryl-3 polyricinoleate – “an emulsifier made from glycerol and fatty acids”). California Naturel takes care on its website to explain when its ingredients are “extracted,” or “derived from” natural sources, but does the extraction or derivation processes render the ingredients “synthetic”? Apparently not.

So here we are – waiting for the FDA to maybe shed some light on what “natural” really means. But it is certainly understandable why the agency, as well as the FTC, have hitherto been reluctant to make a call on the issue. And whatever rule the FDA publishes, we must bear in mind its own admonition back in 1991 — “natural” “mean a variety of things” with “consumers regard[ing] many uses of th[e] term as non-informative.” Will the FDA’s pronouncement distill the essence of consumer understanding on the subject (if it even exists) or will it simply be a set of rules? If not the former, perhaps it’s better for the FTC and the FDA to continue to rely on the Potter Principle.

Is the Primary Jurisdiction Doctrine Alive Again for “Natural” Defendants?

April 1, 2016All Natural Litigation, Consumer Class Action, FDAConsumer Class Action, FDA, Ninth Circuit, Primary Jurisdiction, Second Circuit

** Ninth Circuit Stays Natural Case In “Food Court” **

By: Brent E. Johnson
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The doctrine of primary jurisdiction is a prudential means to stay or dismiss a party’s claims if the claims are better adjudicated or answered by an administrative agency – it “is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties.” Ellis v. Tribune Television Co., 443 F.3d 71, 81 (2d Cir.2006). It is properly applied “whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” Id. When applicable, “a court defers to the agency for advisory findings and either stays the pending action or dismisses it without prejudice” Johnson v. Nyack Hosp., 86 F.3d 8, 11 (2d Cir.1996).

Courts must make a case-by-case determination when considering primary jurisdiction. In doing so, they generally focus on: (1) whether the question at issue is within the conventional experience of judges or whether it involves technical or policy considerations within the agency’s particular field of expertise; (2) whether the question at issue is particularly within the agency’s discretion; (3) whether there exists a substantial danger of inconsistent rulings; and (4) whether a prior application to the agency has been made. Nat’l Commc’ns Ass’n v. AT & T, 46 F.3d 220, 222 (2d Cir.1995).

There was a time when “primary jurisdiction” was in vogue for “all natural” defendants because of the perception that the FDA was the proper administrative body to answer the question of what sort of ingredients and products qualify as “natural.” The leading case was Astiana v. Hain Celestial Grp., Inc., 905 F. Supp. 2d 1013 (N.D. Cal. 2012). This case involved Hain Celestial’s cosmetics products with labels including “All Natural,” “Pure Natural,” or “Pure, Natural & Organic.” In this case, the putative nationwide class representatives alleged that they had been duped into purchasing Hain’s cosmetics that allegedly contained synthetic and artificial ingredients such as benzyl alcohol. As is typical in such cases, the plaintiffs sought damages and injunctive relief under a variety of theories including statutory violations under the California’s Consumer Legal Remedies Act. The district court dismissed the case, applying primary jurisdiction, holding that “[in] the absence of any FDA rules or regulations (or even informal policy statements) regarding the use of the word “natural” on cosmetics labels, the court declines to make any independent determination of whether defendants’ use of “natural” was false or misleading. Doing so would “risk undercutting the FDA’s expert judgments and authority.” Other district courts invoked the agency’s primary jurisdiction to wait and see if the FDA intended to offer regulations regarding the use of the term “natural” (in particular in GMO food cases). In re Gen. Mills, Inc. Kix Cereal Litig., No. CIV–A–12–249 KM, 2013 WL 5943972 (D.N.J. Nov. 1, 2013), Barnes v. Campbell Soup Co., No. C12–05185 JSW, 2013 WL 5530017 (N.D.Cal. July 25, 2013) (GMO food case), Cox v. Gruma Corp., No. 12–CV–6502 YGR, 2013 WL 3828800 (N.D.Cal. July 11, 2013) (GMO case).

Undeterred by the district court’s dismissal, the Plaintiffs in Astiana went on a two pronged attack. They went directly to the FDA seeking guidance on the definition of “natural.” The FDA responded by letter stating – “cosmetic public health and safety matters are currently fully occupying the resources that FDA has available for proceedings on cosmetics matters” and “proceedings to define ‘natural’ do not fit within [the agency’s] current health and safety priorities.” Plaintiffs also appealed to the Ninth Circuit. Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 759 (9th Cir. 2015). The Ninth Circuit held that — while the district’s court primary jurisdiction doctrine decision was not wrong — it should have stayed the matter awaiting an FDA response. Upon remand, the district court revisited the primary jurisdiction argument and, recognizing that the recent FDA letter demonstrated that the FDA has no interest in the subject matter and, therefore, referral to the FDA would be futile, the court denied defendant’s motion to stay on primary jurisdiction grounds. Astiana v. Hain Celestial Grp., Inc., No. 4:11-cv-06342-PJH (N.D. Cal. October 9, 2015) (Dkt. No. 114).

Courts in other jurisdictions have followed this same rejection of the primary jurisdiction doctrine argument made by cosmetic company defendants in “natural” cases. Goldemberg v. Johnson & Johnson Consumer Companies, Inc., 8 F. Supp. 3d 467, 476 (S.D.N.Y. 2014) (“the FDA has not begun to promulgate a rule concerning the term natural in cosmetics . . [i]nstead, it recently declined to make such a determination . . . [t]hus, as the agency is not simultaneously contemplating the same issue . . . this factor weighs against applying the primary jurisdiction doctrine”); Paulino v. Conopco, Inc., No. 14-CV-5145 JG RML, 2015 WL 4895234, at *1 (E.D.N.Y. Aug. 17, 2015); Langan v. Johnson & Johnson Consumer Companies, Inc., 95 F. Supp. 3d 284, 290 (D. Conn. 2015); Fagan v. Neutrogena Corp., No. 5:13-CV-01316-SVW-OP, 2014 WL 92255, at *1 (C.D. Cal. Jan. 8, 2014) (“Plaintiffs’ claims are not barred by the doctrine of primary jurisdiction . . . [as the] FDA has affirmed that proceedings to define the term natural in the context of cosmetics do not fit within its current health and safety priorities.”); see also Reid v. GMC Skin Care USA Inc., No. 815CV277BKSCFH, 2016 WL 403497, at *1 (N.D.N.Y. Jan. 15, 2016) (rejecting primary jurisdiction in case alleging that face cream with “DNA repair effect” statements was misleading); Randolph v. J.M. Smucker Co., No. 13-80581-CIV, 2014 WL 1018007, at *6 (S.D. Fla. Mar. 14, 2014).

At the same time that the primary jurisdiction doctrine was being buried with respect to “natural” claims, it remained viable in various food cases, particularly those presenting discrete technical questions, i.e. Backus v. Gen. Mills, Inc., 122 F. Supp. 3d 909, 933 (N.D. Cal. 2015) (primary jurisdiction invoked on question of the amount of trans fat in baked goods that is safe); Saubers v. Kashi Co., 39 F. Supp. 3d 1108 (S.D. Cal. 2014) (primary jurisdiction invoked with respect to “evaporated cane juice” labels) (collecting cases). The basis for primary jurisdiction in particular in the ECJ cases is that that FDA has indicated that it WILL issue regulatory guidance on evaporated cane juice – but not until the end of 2016. See also Draft Guidance for Industry on Ingredients Declared as Evaporated Cane Juice; Reopening of Comment Period; Request for Comments, Data, and Information, 79 Fed.Reg. 12,507 (Mar. 5, 2014). Most evaporated cane juice cases are currently stayed (or dismissed) see, e.g., Gitson, et al. v. Clover-Stornetta Farms, Inc., Case No. 3:13-cv-01517-EDL (N.D. Cal. Jan. 7, 2016) (extending ECJ stay for an additional 180 days, until August 2016) (Laporte, J.); Swearingen v. Amazon Preservation Partners, Inc., Case No. 13-cv-04402-WHO (N.D. Cal. Jan. 11, 2016) (Orrick, J.) (extending ECJ stay and continuing case management conference until July 2016). A few judges have lifted the ECJ stay (impatient at the FDA’s movement) but they appear to be out-liers. See Figy v. Lifeway Foods, Inc., No. 3:13-cv-4828-TEH (N.D. Cal. Jan. 4, 2016), Dkt. No. 57; Swearingen v. Pacific Foods of Oregon, Inc., No. 13-cv-04157 (N.D. Cal. Jan. 5, 2015), Dkt. No. 61.

But we digress. Back to “natural” and a significant development. In November 2015, the FDA issued a request for comments regarding the use of the term “natural” in connection with food product labeling. See Use of the Term “Natural” in the Labeling of Human Food Products; Request for Information and Comments, 80 Fed. Reg. 69,905 (Nov. 12, 2015). See our previous blog post. While noteworthy in and of itself, the FDA’s requests for comments also raised the secondary issue of whether the FDA’s new-found interest in potentially defining “natural” with respect to foods triggers the primary jurisdiction doctrine? Last week, the Ninth Circuit answered – Yes. In Kane v. Chobani, LLC, No. 14-15670, 2016 WL 1161782, at *1 (9th Cir. Mar. 24, 2016), the circuit court dealt with an appeal from the Northern District of California where buyers of Chobani fruit flavored Greek yogurt filed suit against the company alleging that its labels and advertising violated California law because the “all natural” yogurt included fruit juice and turmeric. Before the district court, the plaintiffs had a difficult time articulating why it was plausible to allege that fruit juice and turmeric are unnatural vacillating between the argument that it is unnatural to use these ingredients to color yogurt and the argument that the fruit juices at issue were so heavily processed that they are no longer natural. Ultimately the district court found that the case warranted dismissal on Rule 9(b) and 12(b)(6) grounds. Kane v. Chobani, LLC, 973 F. Supp. 2d 1120, 1138 (N.D. Cal. 2014). Plaintiffs appealed on the basis that under primary jurisdiction their case should have been stayed – not dismissed. And the Ninth Circuit agreed, vacating the dismissal and remanding to the district court under a stay pending resolution of the FDA’s “natural” proceedings. So a win for the plaintiffs in Chobani – but one that defendants will take careful note of – in the Ninth Circuit and beyond.

No Parm, No Foul?

February 25, 2016False Advertising, FDA, FoodCalifornia, Class Acton Suit, FDA, Food Adulteration, Misbranding, New York

** Class actions Filed Following Bloomberg Reports of Cellulose Filling in Parmesan Cheese **

By: Brent E. Johnson

Two putative class action lawsuits have been filed over cellulose in parmesan cheese – one in federal court in New York against Wal-Mart (Moschetta v. Wal-Mart Stores, Inc., S.D.N.Y., No. 16-13770) and one in the Northern District of California against the newly merged Kraft Heinz group (Lewin v. Kraft Heinz Foods Co., 316-cv-00823). Plaintiffs’ counsel wasted no time filing their lawsuits after Bloomberg Business published a February 16, 2016 online article regarding the common practice of cheese makers adding cellulose (plant pulp) to grated parmesan cheese. Bloomberg had various brands of grated parmesan tested by an independent laboratory and reported the results of at least some of those tests — Essential Everyday 100% Grated Parmesan Cheese sold by Jewel-Osco tested at 8.6% cellulose, Wal-Mart’s Great Value 100% Grated Parmesan weighed in at 7.8% cellulose, and the ubiquitous Kraft 100% Grated Parmesan Cheese registered 3.8%. Some grated parmesan makers list cellulose as an ingredient on their labels as an additive “to prevent caking.” The FDA has no specific regulations regarding the amount of cellulose in grated cheeses (and most other foods), and it is a common food additive — cutting calories (it’s non-digestible), reducing fat content, and providing a source of dietary fiber.

While it is unclear what prompted Bloomberg to commission the lab tests, they came in the wake of a federal criminal prosecution of the now-defunct Castle Cheese Inc. and its CEO, Michelle Myrter, on food adulteration and misbranding charges. Castle Cheese, however, was a different beast altogether where the problem was not only the addition of cellulose, but the fact that its parmesan cheese did not contain any parmesan at all (rather, a combination of Swiss, white cheddar, Havarti, and mozzarella – sometimes from the rinds). A ex-employee blew the whistle on Castle, which was investigated by the FDA in 2014. Castle declared bankruptcy shortly thereafter.

The U.S. parmesan business seems beset on all sides by detractors. The Italian Parmigiano Reggiano Consortium recently published the results of a consumer survey it commissioned that purportedly showed that Americans who viewed a package of parmesan cheese that “recalled” an Italian flag believed that Italy was the country of origin for that cheese and, even in less suggestive packaging, 38% of those surveyed believed the cheese to have been made in Italy. The Italian consortium is taking its complaint that U.S. consumers are being duped into buying parmesan they believe is made in Italy to Brussels in the hope that they will be dealt with in the Transatlantic Trade and Investment Partnership trade agreement (T-TIP). Currently, cheese makers are prevented under European Union protected designations of origin regulations (“PDOs”) from labeling their cheeses as parmesan if they are not made by dairies in Parma, Reggio Emilia, Modena and parts of the provinces of Mantua and Bologna. If this regulation was “imported” into the US, would the millions of 4-17 year olds who dump the off-white powder onto their noodles take note?

FDA Seeks All Natural Comments

November 12, 2015All Natural Litigation, FDA, Federal PreemptionAll Natural, FDA, reasonable consumer standard

Green apple with stethoscope

**Are we a step closer to solving the All Natural problem?**

By: Brent E. Johnson

There are problems faced by “All Natural” or “100% Natural” defendants. See prior post. A specific problem for defendants is the inability to rely on any definitive Food and Drug Administration (FDA) guidance. The FDA’s position has been clear – it “has not promulgated a formal definition of the term ‘natural’ with respect to foods.” See Letter Leslie Kux, Assistant Commissioner for Policy, Food and Drug Administration, to the United States District Court, Northern District of California, dated January 7, 2014. To date the FDA has created only an “informal policy statement.” Janney v. Mills, 944 F. Supp. 2d 806, 812 (N.D. Cal. 2013) (citing 58 Fed. Reg. 2302–01). If there was federal regulation – defendants would have clarity in their positions – and state law claim would likely be pre-empted, see e.g., Lam v. General Mills, Inc., 859 F.Supp.2d 1097, 1102–03 (N.D.Cal.2012). In the absence of regulation, the question of what “natural” means and whether a product’s labeling violates the law is currently governed by an unwieldy “reasonable consumer standard”. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir.2008) citing Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir.1995)). This lack of objective standards is one of the reasons why the litigation has been able to take hold – at the same time as “natural” labeled food has boomed (the Washington Post reports that nearly $40.7 billion worth of food items in the U.S. has some labeling of this type). Fortunatley, the FDA has changed tack – responding, inter alia, to requests from Federal Courts and a citizen petition from the Grocery Manufacturers Association it has published a Federal Register notice asking for information and comments on the use of the term “natural” in food labeling. Specifically, the FDA asks for information and public comment on questions such as: whether it is appropriate to define the term “natural,”; if so, how the agency should define “natural,”; and how the agency should determine appropriate use of the term on food labels. Notably, the FDA notes that it may be looking to expand its policy on natural foods to include – not only the synthetic/artificial divide, but also questions of whether pesticide free and manufacturing processes should be part of the equation. The FDA is accepting public comments beginning on November 12, 2015 and finishing February 10, 2016. Comments may be submitted electronically (under FDA-2014-N-1207).

FDA Issues Not so Kind Letter to Nut Bar Maker

May 1, 2015FDA, Warning LetterFDA, Warning Letter

Arrangement of Useful Granola Bars with Muesli, Nuts, Dried Apricots and Bowl of Honey closeup on Black Stone background. Top View

**Food and Drug Administration Moves on Kind Bars to Force Them to Remove “Healthy” Labels** . . .

By: Brent E. Johnson

The KIND® company makes a range of snack bars sold under the tag line “ingredients you can see & pronounce” – primarily manufactured with nuts, grains and dried fruit. While to the casual observer such foods would be considered “healthy,” the Food and Drug Administration (FDA) has asked the company, pursuant to 21 U.S.C. § 343(r)(1)(A) to remove any mention of the term from its packaging and website (as well as the “+” symbol). See Warning Letter. The basis for the FDA’s action is that the term “healthy” and the symbol “+” have specifically defined meanings when they are applied to food labeling. According to 21 CFR 101.65(d)(2), the term “healthy” means that the food has a number of objective health measures, for example, the food must have saturated fat content of 1 g or less and must have no more than 15 percent of the calories from saturated fat (see also 21 CFR 101.62(c)(2)). The FDA asserts that certain Kind Bars, such as their Fruit & Nut Almond & Apricot, Fruit & Nut Almond & Coconut and Fruit & Nut Dark Chocolate Cherry Cashew + Antioxidants all contain at least twice the base amount of saturated fat and all had more than 15% in total of their caloric measure in saturated fat. Notably, the “+” symbol is also regulated. According to 21 CFR 101.54(e), “+” can only be used where the food has at least 10 percent more of the Reference Daily Intake (RDI) of the nutrient value of specific baseline reference foods. According to the FDA, the Kind Bars do not contain that reference adjacent to the “+” sign on their labels. Many nutritionists have sided with Kind stating that the regulation limiting saturated fats should exclude such fats from nuts because they are inherently healthful. Kind’s public statement appears however, to suggest they are complying with the mandate of the warning letter.