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The Litigation Risks of Food Labeling

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The Litigation Risks of Food Labeling

With hundreds of class action lawsuits being filed each year for allegedly deceptive food labeling, and many more cases threatened and settled without getting to court, it is critically important that food companies and their lawyers understand the risks. This course introduces participants to the regulatory framework governing food labeling and advertising, the legal theories used in litigation, and defenses that food companies commonly assert in these cases. Lauren Handel of Handel Food Law LLC will review examples of recent cases illustrating the labeling issues that have been most targeted in litigation. She also will discuss strategies for advising clients on their labeling and advertising to minimize the risk of getting sued.

Transcript

- Hi, my name is Lauren Handel, and I'm the principal attorney of Handel Food Law. I have a practice that's focused on food and beverage businesses, mostly CPG companies. And a lot of what I do is advise my clients on regulatory compliance, particularly with regard to the labeling and advertising of their products. I've been involved in some food labeling litigation, but mostly what I'm doing is advising clients on how to minimize the risks of getting sued or threatened with a lawsuit regarding the labeling or advertising of their products. So today I'm going to talk about the litigation risks of food labeling. The topics that I'm going to cover to start are the regulatory framework that applies to food labeling and advertising. So for those of you who might not be familiar with food law, and just give you some background on the agencies that regulate food labeling and advertising. I'm also going to talk about the common claims and defenses that get asserted in food labeling litigation, as well as what have been the targets in the last several years that have been popular for food labeling litigation, meaning that the types of claims or representations that manufacturers or brand owners make about their products that the plaintiffs' lawyers have gone after. And then finally, I'm gonna cover some strategies for how to advise clients who are selling food or beverage products on how best to minimize the risks of getting sued. So my goal here is to just inform you about the legal issues with the labeling and advertising of food and beverage products but with a particular focus on minimizing litigation risks. So turning to the regulatory framework, there is shared and multiple levels of responsibility in our country when it comes to the labeling and advertising of food and beverage products. At the federal level, the FDA, the Food and Drug Administration has general responsibility for all food in this country. However, the United States Department of Agriculture has primary jurisdiction when it comes to products that contain meat, poultry, catfish, or that are processed egg products. USDA also has responsibility with regard to labeling of organic products, as well as a relatively new bioengineered foods disclosure standard, which is what are commonly known as GMOs or genetically engineered foods. The Federal Trade Commission has responsibility for advertising and consumer protection. So when we're thinking about traditional advertising or social media, basically anything that's not the label on or that accompanies the product, that's within the FTC's jurisdiction. And then states also have responsibility and authority when it comes to the labeling and advertising of all products, including food. So states might have their own laws that impose additional extra requirements beyond what's required in federal law. States have their own consumer protection laws, which is what gives people the right to sue, as we're going to discuss in more detail. For the most part, when it comes to the labeling regulations, states are enforcing and have adopted federal laws. They've adopted them in their own state laws, and there is an issue of federal preemption. So while states can impose additional requirements, states can't have label labeling requirements that conflict with federal law. An example of a state law that goes beyond federal requirements that's very significant in the food and beverage industry is Proposition 65 in California, which requires warnings on products that can expose people to chemicals that the state has identified as cancer risks or reproductive harm risks. And just importantly, as a caveat for this presentation, this could be an entire presentation on Proposition 65. So beyond mentioning it here, I'm not going into that, but for anyone who's advising food and beverage companies, it is a very important law to be aware of if your clients are selling products in California. It is a very big litigation risk for businesses if they fail to provide required warnings under that law. So I've also included courts in this slide on regulation, which might seem out of place, but litigation can be considered a regulatory tool. It is a way that rules get enforced. And so litigation can be brought both by consumers or class actions on behalf of consumers. Litigation can be brought by advocacy groups or by competitors against each other relating to the labeling or advertising of food and beverage products. And given that, especially when it comes to FDA, that the enforcement of the federal rules are fairly lax, there's a lot of room for litigation. And it's become a very active forum, especially of class action litigation, to target food and beverage product labeling. So there's an important distinction between FDA and USDA with regard to their oversight of product labeling within their respective jurisdictions. So the FDA has no review or preapproval of food labels. So when FDA is enforcing a labeling rule, it's because it's become aware of an issue with a product that is already in the marketplace. And that could happen because FDA is doing an inspection of a facility, somehow it comes to its attention. When a product is imported, FDA inspectors can examine it at the border and notice a labeling issue. For the most part, FDA is not going out and looking at store shelves for labeling problems, but it does have an enforcement priority to crack down on foods, which includes beverages and supplements that make what are called drug claims. So if a product is making a claim that suggests it's intended to prevent or treat a disease, that makes it a drug, an unlawful drug, and that is a priority of FDA with regard to its labeling regulations. But otherwise, there's not a whole lot of enforcement of FDA labeling rules by the regulators. Now, USDA is different because USDA requires preapproval of labels. Now, there are a lot of basic labels that can be considered generically approved. So unless the label is making certain kinds of claims or has certain issues that USDA requires an actual sketch or a draft of the label to be submitted for a review and approval, the manufacturer can certify for itself or determine for itself that the label meets all of the regulatory requirements. And then the label is deemed generically approved by USDA. But if the label is making what are called special statements or claims, and, again, this is for meat and poultry products or catfish products, then the label does require submission of a draft to USDA's Food Safety Inspection Service for review and approval. And then the agency will review the entire label. And if there are claims, then the producer must submit substantiation documentation to show that the claims are truthful. So claims such as humanely raised or grass fed or pasture raised all require documentation to be submitted. So there's a concept in food labeling law, or in food law generally, which is misbranding. So that's the term for something being wrong with the label, and it is illegal to misbrand food or to sell food that is misbranded. And there are different forms of misbranding under the law. So perhaps the most obvious version is that the label is false or misleading. So that can be a statement of fact that's inaccurate or deceptive. Or it can be an omission. It can be the failure to disclose some material facts. Even statements that are technically true or literally true can be misleading in certain contexts. So in some cases, FDA requires additional disclosures be made. So for example, if a food is labeled as fat free or cholesterol free, that may be literally true, but it could still be considered misleading if it's a food that naturally has no fat or cholesterol. So that type of claim would need to be rephrased to convey to consumers that it is a naturally fat free food. A claim that a product has a particular ingredient or is high in certain nutrients or is shown to have a certain benefit, that can be misleading if there's very little of that ingredient in the product. Then the failure to disclose material facts in light of the representations that are made. So for example, if a claim was made that a dairy product was antibiotic free, that might be true when talking only about the finished product, that there's no detectable amount of antibiotics in the dairy product, but if there's a failure to disclose that antibiotics were used in raising the cows, maybe that's misleading to consumers and a form of misbranding. Another version of misbranding is when the container is misleading as to the fill or the amount of the product in the container. So that could be literally an incorrect statement of the net weight of the product, but it also can be a container that is larger than needed for the quantity of product that is in it. And then there is kind of the technical form of misbranding where the label violates some rule, and there are pretty detailed and extensive regulations both in FDA and USDA regulations about required content or the conditions in which certain kinds of claims may or may not be made. So for example, claims about nutrient content or claims about health benefits, rules around the standards of identity, meaning, what's the name of the food? What do you call the product? Rules around how you describe the characterizing flavor. Those are all types of regulations, and the violation of them, even if it's not necessarily misleading to consumers, is considered a form of misbranding, which makes the product illegal. So it's important to understand that our food laws have no private right of action. So it is a consumer or a private citizen cannot bring a suit directly under the Food, Drug, and Cosmetic Act or any other food labeling law to enforce that law. So that's in contrast to some kinds of environmental statutes that provide for a private right of action. California's Proposition 65, that I mentioned, which creates a private right of action. That does not exist in our labeling laws. However, private plaintiffs can sue under the state consumer protection laws, which all states have, as well as common law. And that's a way, essentially, to enforce the labeling laws on the theory that the violation of a labeling law causes consumers to be deceived. It's also a way to kind of supplement the labeling laws. So even if there's an issue that's not addressed at all in regulations or if a label complies with regulations, if it's still deceptive to consumers, there can be a cause of action under consumer protection law or under common law for that type of issue. Most of the food labeling and advertising litigation is class action litigation that's brought on behalf of consumers, perhaps all consumers that purchased a product within a state, it can be multiple states, it can be nationwide. And there are a lot of these cases. So this is why I'm talking about this at all today and why it's important to know about if you advise food and beverage companies. For about the last 10 years, it's become a very popular area of class action litigation with at least about 100 cases being filed over each of the last 10 years. The numbers of cases have been trending upward with more than 300 cases being filed just last year in 2021. And for all of the cases that get filed, there are many more that don't ever get to court. So a lot of these cases start with a demand letter that gets sent to the defendants, and many of those cases get settled before they ever get filed in court. So the consumer protection statutes, which are referred to as little FTC acts often, because they're state counterparts to the Federal Trade Commission Act, or sometimes the statutes are based on the Uniform Deceptive Trade Practices acts. Like I said, those statutes allow for private right of action, and they're designed to provide broader protection for consumers than existed under the common law. So they make it easier for consumers to be able to state a claim than they might be able to under common law theories, although common law claims are often asserted in these cases in addition to the statutory claims. And those common law theories are typically breach of warranty, sometimes misrepresentation or fraud under the common law, or unjust enrichment. In addition to consumer class actions, lawsuits can be filed by advocacy groups. So groups, for example, that might have a public health focus on food labeling like the Center for Science in the Public Interest, that's brought a number of lawsuits. Groups that are focused on animal welfare or the environment can bring these kinds of cases challenging food labeling and advertising. And the District of Columbia, under its own quote, unquote state law has a particularly broad remedy and statute for this type of claim when it comes to advocacy groups. So the DC's Consumer Protection Procedures Act, it provides broad standing for our public interest group to sue on behalf of DC consumers. And as a result of that, it's become a fairly active venue for food labeling litigation. Civil claims can also be brought by competitors under federal law, under the Lanham Act or under state unfair competition law, where the theory is that a competitor's false or misleading labeling or advertising is actionable as a form of unfair competition. And then outside of the courts, the national advertising division of the Better Business Bureau is a forum for voluntary challenges where industry competitors can assert a claim, a challenge, against each other relating to their advertising or labeling. And it stays out of the court, at least initially. Again, it's voluntary, so both parties have to agree to participate, but the advantage of these types of proceedings is they're streamlined. There's no discovery, there's no formal trial, it's all done on papers. So it's less expensive than going to court. The proceedings are mostly confidential, and the defendant has no obligation to comply with the decision of NAD's decision, but if they choose not to comply, the decision does get publicized. And also NAD has a policy of referring cases to the FTC for enforcement if a company does not agree to comply with its recommendations. So going back to the consumer class actions, which again are the most active, the most popular form of this litigation, what are the elements that the plaintiffs need to prove in their cases? And there are some nuances in the law from state to state, but the basic elements are pretty common across the states. So first it's that the labeling or the advertising is false or misleading in a material way. So there is something, whether it's an explicit representation or it can be an implied representation about the product, or it can be an omission of material facts, that is material, meaning it's likely to influence the consumer's purchasing decisions. So it can't be something minor, but something the plaintiffs have to show actually makes a difference in whether the consumer would buy the product at all, or how much they're willing to pay for it. And also importantly, the representation or the omission has to be likely to deceive reasonable consumers. So this is a reasonable consumer standard, and I'll talk more about that in a minute. Under some states but not all states, the plaintiffs also have to show that they relied on the misrepresentation when they made their purchasing decision. So, again, not all states require that. For example, New York law does not require reliance, but it is required that the misrepresentation caused the plaintiffs harm. So the harm can be in the form of the plaintiff alleging they would not have purchased the product at all or they would not have paid as much as they did had they known the truth about it. Or they paid more than the product was worth, is those are the theories of harm. So the reasonable consumer test, the plaintiffs have to show that a significant portion of consumers acting reasonably under the circumstances are likely to be deceived. So this is more than a mere possibility that consumers will be deceived, but that there's actually a likelihood that reasonable consumers will be deceived. And the case law has established that consumers generally are entitled to rely on statements they see on the front of a package, even if they could cure their deception by consulting additional information on the package, such as the ingredient list or the nutrition label that might be on the side or the back of the package. However, there's a recent decision in the Ninth Circuit in the Moore v. Trader Joe's case that kind of limited this idea in how that reasonable consumers are expected to consider really the whole context of an allegedly misleading representation. So other information that's readily available to consumers has to be considered in deciding whether or not reasonable consumers are likely to be deceived. In that case, the representation was that a product had 100% New Zealand manuka honey, and the court held that that had to be considered in light of the fact that, first of all, it's impossible to make honey from only one floral source. Also, the product had a relatively low price compared to other products that had a higher manuka honey content. And so in all of these circumstances and context, it was proper for the lower court to find that no reasonable consumer could be misled. In general, it's not enough that a particular plaintiff was confused or deceived by a label, right? So this is not a subjective test. It's an objective test. And if the particular plaintiff's subjective interpretation was not reasonable under the circumstances, that's generally not enough. But a recent decision of a district court, and we'll see how the case law develops on this, held that the plaintiff's actual deception, even though it was unreasonable, was enough to state a claim that the label violated the unlawful prong of California's unfair competition law. So for a particular theory, under a particular statutory claim where the violation of an FDA labeling regulation was alleged, that could be actionable even if reasonable consumers would not be deceived. And so that's the Chobani case that I have cited. As far as proving damages, the theories of damages are generally a price premium. So that's the difference between the value that was paid for the product versus the value that was deceived or the extra amount that the manufacturer was able to charge because of an allegedly false or deceptive label. Possibly, the theory of damages can be the full price that was paid if consumers would not have purchased the product at all if they knew the truth about it. Another theory is discouragement of profits that the manufacturer receives that's attributable to the deception. And the plaintiffs need to have a way, if this is a class action, to prove damages on a classwide basis, so a theory that is applicable across the entire class. So defenses that get asserted, failure to state a claim. So the motion to dismiss stage, failure to state a claim, meaning that there's no deception as a matter of law, no reasonable consumer would be deceived by this label. Another version of that can be that the representation that's being challenged was just puffery, meaning it wasn't an actionable statement. It wasn't something that consumers could have reasonably relied on because it was too vague or a superlative that consumers wouldn't reasonably take to be true. It's important to understand that most cases survive the motion to dismiss stage, because these are typically factual issues, and courts are reluctant to decide them as a matter of law. But in some cases, defendants can get at least certain claims struck and sometimes get the entire case struck where the court agrees that no reasonable consumer could have been confused or deceived in this circumstance. And so this is important to understand too in that even if a defendant wins a motion to dismiss, courts are usually likely to give the plaintiffs leave to amend their complaint so that they can try again. And so it's just important to know when you're advising a client that once a case proceeds beyond the motion to dismiss stage, you get into discovery, litigation can take a long time and be expensive. And so if you have a client that doesn't have the resources or the stomach for protracted litigation, they may need to be even more cautious about their labeling, because if it's possible to allege a claim that can survive a motion to dismiss, then they could very well face lengthy litigation. Other defenses, failure to plead fraud with specificity. So under federal Rule 9B, it's not enough to just state general facts that make out the claim, but you have to have the who, what, when, where, why of the fraud alleged with specificity. Primary jurisdiction is a doctrine that has been asserted in some cases, less so recently, but it's the idea that courts should defer to the agencies that have the specialized expertise in the issues and let them decide the issue rather than having the court decide. So a lot of the cases that involved labeling over the word natural, and in some of those cases, the courts stayed the case under primary jurisdiction or even in some cases dismissed the case because of primary jurisdiction, with the idea the FDA should weigh in on this. That hasn't happened in a while because FDA has, as I'll talk about in a little while, really hasn't given any sign that it's going to do anything about deciding what natural means or regulating that term. Standing is another defense in these cases. So this is the constitutional limitation on the jurisdiction of courts and requires a case to be dismissed if a plaintiff lacks standing. This can be an issue if a plaintiff purchased some but not all of the products that are listed in the complaint. Although it's usually enough if the products that the plaintiff actually purchased were similar to the other ones and they had the same labeling or were very similar labeling issues, that's usually enough for standing purposes. Standing can also be an issue when it comes to seeking injunctive relief. So if consumers were harmed only in the past, because there's nothing that requires them to buy the products again, and now that they know the truth about the products, they're not going to be fooled again, then it can be difficult to have standing for injunctive relief if they can be compensated with damages for their past harm if they can prove it, but injunctive relief won't be available. And there's recent Second Circuit and Ninth Circuit appeals court decisions about this issue and injunctive relief standing, which presumably will make it more difficult for plaintiffs to obtain injunctive relief in class actions, even in the context of a settlement. Standing can be an issue for nonprofits, for advocacy groups. So unless there's a statute like the one in DC that I mentioned that gives broad standing, advocacy groups generally have to show that their own interests have been affected in some tangible way. So for example, that they've had to expend resources to educate the public to counter the allegedly false advertising. Federal preemption, which I mentioned before, is another defense. So this is under the Supremacy Clause of the Constitution. Federal law is the supreme law of the land and cannot be trumped by state law. There are different versions expressed in implied preemption. So express preemption is where there's an explicit preemption provision in a federal statute, both under FDA law, the Nutrition Labeling Education Act, and under USDA law, the Federal Meat Inspection Act and Poultry Products Inspection Act. Those all have express preemption provisions, but they are somewhat different. So FDA's preemption preempts certain state requirements, or state requirements that are not identical to certain FDA requirements. So it's not all FDA labeling law that's preemptive but certain provisions. And in contrast, under USDA law, there's express preemption of state requirements that are in addition to or different than USDA labeling requirements. So it's much broader USDA preemption. Also, USDA preemption is broader than FDA because of the preapproval of meat and poultry labels by USDA. So that makes it a much more viable defense for meat and poultry products, especially when the litigation is focused on the product label. Because if USDA has approved that product label, then it makes it much harder for the plaintiffs to assert a state law cause of action. The courts will typically find that those cases are preempted. Challenges to class certification, I mentioned this as a defense. It's not really a defense. Class certification is the burden of the plaintiffs to show that they should have a class certified, but this is a hard fought area in any class action litigation. And these are the requirements that Rule 23 sets for class certification. So the predominance of common issues, meaning that the issues that are common to the class predominate over individualized issues. And this can be a problem with respect to class certification if the labels have changed over time during the relevant time period, or if there's differences in different parts of the country, if it's a nationwide class, or if there are differences in the relevant state law under which the claims are brought. If it's a multi-state class, those can raise predominance issues. The ascertainability of the class or will it be possible to identify the members of the class. And then also, as I mentioned, the damages theories have to be provable, as well as the liability theories on a classwide basis. And there can be significant individualized issues if there are differences between class members or different periods of time. So Lanham Act unfair competition claims. I mentioned competitors can sue for unfair competition, and I wanted to just briefly talk about this important Supreme Court precedent from 2014 in the POM Wonderful versus Coca-Cola case. And this was a case between competitors, excuse me, where POM Wonderful makes pomegranate juices and was suing Coca-Cola over the labeling of its juice beverages that use the word pomegranate in the product name but were mostly made with cheaper apple and grape juices. And POM said this is unfair competition because it's misleading consumers to believe that the products contain more pomegranate juice than they actually do. And the issue for the Supreme Court was whether a case could be brought for unfair competition under the Lanham Act when everyone agreed that the labeling of Coca-Cola's juices complied with FDA law. And the court held that, yes, that POM could sue for unfair competition because the Lanham Act and the Food, Drug, and Cosmetic Act complement each other and serve somewhat different purposes. So the FDA law does not preclude the Lanham Act. And the same principle has been recognized in consumer litigation where courts have found that compliance with FDA regulations does not necessarily mean that the label is not deceptive. So unless there's a claim for preemption or unless there's defense of preemption, then the fact that a label complies with FDA regulations is not necessarily a defense. So I'm going to talk now and give some examples of the common litigation targets that have been popular in the last several years for class action litigation, especially. And so the term natural and similar or other versions of that term, no artificial flavors or preservatives type claims, a category called healthwashing, nutrient content claims, or you know, these are representations about the amount or quantity of nutrients in a product, labeling representations about the characterizing flavor of a product or key ingredients in the product, representations about animal welfare, greenwashing or environmental benefit kind of claims, and slack fill, which has to do with representations or products that are potentially misleading with regard to how much of the product is in the container. So natural, so this was, at the beginning of food labeling litigation, there were so many of these cases. This was a very popular area and still cases are being brought about products that are labeled natural or all natural, but a lot less of them are being brought these days, mostly because manufacturers have stopped using this word as much because there was so much litigation and it was just such a lightning rod for litigation. So FDA has no formal definition. There's not a regulation that defines the term natural, but it has a policy that it will not object to representations that a product is natural, as long as it has nothing artificial or synthetic and no coloring that consumers would not normally expect to be in the product. And FDA has been clear that this definition was not intended to address the methods by which the product was made or sourced or processed, just rather it it's only about the finished product. The USDA also doesn't have a regulation that defines natural. Under its policy, natural is acceptable for a product label If it contains no artificial flavors, no coloring ingredients, chemical preservatives, or any other artificial or a synthetic ingredient, and the product and its ingredients are not more than minimally processed. And USDA will allow a natural claim as long as it meets those conditions, but also has to have a statement on the label that explains what is meant by natural. So for example, no more than minimally processed and contains no artificial ingredients. And as I mentioned, FDA had very little action when it comes to natural on product labeling. It had issued some warning letters in the past, but has not in the last more than 10 years. And so it's really not been enforcing its own policy, which left a lot of room for litigation. Industry would like FDA to define natural so that it would give some certainty about what is and what is not allowed and create a possible preemption defense. And FDA actually requested comments several years ago on whether it's appropriate to define the term natural, how it should define natural, how it should determine the appropriate use of the term on food labels, and thousands of comments were received on that request. The comment period closed in May 2016, and the last FDA has said about this publicly was in 2018 when the then commissioner said that FDA was actively working on the issue. There's been no news since then, that I'm aware of, and obviously, there's been a change of administration and a pandemic and things that seem to make it unlikely that we will see any movement from FDA in the near future on defining natural. So litigation targets, as I mentioned, it has been a very popular target for litigation when a product says that it's natural or all natural and the product contains genetically engineered ingredients, various synthetic or artificial or highly processed ingredients, like high fructose corn syrup, for example, products that contain herbicide or pesticide residues, where the plaintiffs went out and tested the products and found those residues, or antibiotic residues in dairy products, same thing. And so this is an example, Wesson canola oil, which was labeled pure and 100% natural, but canola, at least in this country, is primarily from genetic engineering. And so the allegation is that it was not a truthful label to call it natural. As I mentioned, there are fewer and fewer products claiming to be natural because of the litigation risk. So manufacturers have used other ways to try to convey the same idea because consumers are interested in eating more natural foods. But the plant stores have gone after other representations that they allege mean the same thing as natural. So the example here is of Tropicana apple juice, and the allegation in this case, and so you know, I've given you the citations to the case and docket number, case number, so that you can look them up. Many of the examples I'm giving you are currently pending cases, or some of them have been recently settled. But you can find more information about them looking them up on PACER. But in this case, the example is that 100% juice was alleged to be misleading because consumers would understand that to mean that the product is all natural, but it actually contains synthetic malic acid. And the court in this case denied the motion to dismiss and has allowed it to proceed. Other examples might be the words pure. I'm aware of a case that the product is represented as plant based, and the plaintiffs are alleging that consumers will understand that to mean all natural. Another type of case are challenging representations that a product does not use artificial flavors or artificial preservatives. Now, those are terms that are defined in FDA regulations, or rather artificial flavor is defined in FDA regulations, and chemical preservative is defined. And so manufacturers might make a claim that a product doesn't have any artificial flavors, and their use of that term might comport with FDA's definition of artificial flavor, and yet these products might have other ingredients. So a lot of these cases involve products that have multifunction ingredients, specifically acids like citric acid or malic acid that are synthetic and are used possibly as flavor enhancers but can be used for other things like regulating acidity for shelf life purposes. But the plaintiffs are alleging that they do have an effect on flavor. Therefore, they are flavors and they are artificial, and the claim, therefore, that there are no artificial flavors is false. And this is an example of the Crystal Light drink, which had the representation, no artificial sweeteners, flavors, or preservatives. So those acids also might have an effect on preserving the product, even if that wasn't the reason why they were added. So the allegation could be that the claim no artificial preservatives is false because the acid actually does help to extend the shelf life of the product. Healthwashing as a category, so this is generally the idea that a product is represented as being healthier or better for you than maybe it really is, or that the plaintiffs alleged that it is. Typically, these are products that have fairly high levels of added sugars, which added sugar has been an increased focus for nutrition in public health. And so the plaintiffs in these cases challenge not only specific representations but also what they refer to as the health halo around a product. So it can be a combination of different representations and positioning of the product that make it seem healthy when allegedly it's not as healthy. So for example, this case against Kellogg, this was one of the products, the Raisin Bran was one of the products that was challenged in this case. And you can see on this package that it doesn't say explicitly healthy, but it has representations about its omega-3 content and protein content and real fruit. And there were other products at issue in this case that were labeled heart healthy or with, quote, wholesome goodness. And this case actually settled on a classwide basis. The court approved a $13 million settlement. What's interesting is that FDA actually has a regulation around the use of the term healthy or with similar words like healthful, healthier, and that's not what was at issue here. That regulation actually doesn't address products that have high levels of added sugar. It disqualifies products from being called healthy if they have relatively high levels of fat or saturated fat, or if they don't have a meaningful amount of protein or fiber or essential vitamins and minerals, but it doesn't address sugar at all. And FDA has said that it's going to revisit its rule on healthy nutrient content claims. But because of that rule, some of these cases, the sort of healthwashing theory, some of them, the courts found that there was preemption because they conflicted with FDA rules, but other courts have let the cases continue and found they were not preempted. Nutrient content claims have become a pretty popular target for this type of food labeling litigation. So especially, claims about the content of sugar or protein. There are, as I mentioned before, detailed regulations about nutrient content claims and the conditions in which they can be made and the language that can be used and in some cases, additional disclosures that are required. So in this example, this is targeting the zero gram sugar claim, which on the bottom left of the package, there is labeling that's the Facts Up Front keys, nutrition keys that says zero gram sugar. And the FDA does have a regulation that if a product does not qualify as low calorie or reduced calorie but it makes a no sugar type of claim, disclosure is required to accompany that claim saying that it's not a lower reduced calorie food. And so that's the allegation in this case involving Goldfish crackers, that that disclosure was missing, and therefore the zero grams sugar claim on the front of the package is misleading to consumers. And what I think is interesting is that in this particular case is, again, it's this Facts Up Front nutrition key. So that's a labeling initiative of the Grocery Manufacturers Association, and it's a voluntary initiative to put some nutrition information about the basic nutrition information on the front of the package and not only on the nutrition facts panel. And the FDA has actually said, in response to a request from the Grocery Manufacturers Association that it won't enforce all of its rules about nutrient content claims for manufacturers that follow the guidelines of this Facts Up Front initiative, except that this particular issue that's being raised in this case is not one of the things that FDA was asked or that it said it would not enforce, which is this not a low calorie food disclosure for no sugar claims. Protein content claims. So protein, protein content has become increasingly popular, consumers looking for higher protein, lower carbohydrate type foods. And so more and more you're seeing products that are marketed because of their protein content, and plaintiffs are increasingly challenging these claims. These are pretty technical and kind of complicated theories, but basically the plaintiffs are getting products analyzed at a lab to determine what is the protein level. And what you need to know is that there are different ways of determining how much protein is in a food. So not all protein is the same in terms of its usefulness in our bodies, because it's not all digested the same way, and there are different ways of calculating protein. Under FDA regulations, it's acceptable to determine the amount of protein using what's called a nitrogen method. So that looks at how much nitrogen is in the food and then multiplies it by a particular number. And it's an indirect way of stating the amount of protein, but that method can overstate the amount of protein that's actually digestible and usable in your body. So when it comes to stating the percent daily value of protein in the nutrition facts panel, there's a different method that FDA requires to be used, which corrects for the digestibility of the protein. So in these cases, this particular example against KIND for its protein content claims, the allegation was that the front of pack protein claim, six grams protein, overstated the amount of protein because it did not correct for digestibility. And the court in this case said, no, that's not misleading because FDA allows this method, which is the nitrogen method, to state the quantity of protein. And FDA actually clarified this in, just in January this year in 2022 on its website, clarified that for purposes of stating the quantity of protein in a claim outside the nutrition facts panel, it is acceptable to use the nitrogen method even if that means that the percent daily value is going to be less in the nutrition facts panel than it would be for another product that had stated these exact same grams of protein. And so because of that FDA clarification, perhaps these cases will decrease. But I actually just saw today that two cases have been filed against Beyond Meat regarding its protein labeling. In that case, saying that they have miscalculated the percent daily value that they're stating for protein, and that they failed to use the digestibility corrected analysis for that. Implied sugar claim. So, again, there's a focus on sugar as a health issue and something that consumers are concerned about. And so there have been cases where the products don't directly state anything about sugar, but they've made representations, like in this case, Snapple Sorta Sweet, there's one where the representation is a tad sweet, where the plaintiffs say this implies that the product has low sugar, but they actually have significant amounts of added sugar. And this is, again, an area that's not explicitly addressed by FDA regulations. Actually, FDA's regulations on sugar content claims explicitly say that they do not prohibit claims about sweeteners, but there's room for plaintiffs to allege that there's deception. Representations about flavor, characterizing flavor, or key ingredients, so there have been a large number of cases in the last few years, mostly brought by one firm that's been prolific in alleging that product descriptions and images of their characterizing flavor or key ingredient are deceptive because they cause the consumers to believe that the product has more of a desirable ingredient than it actually does. So a lot of these cases have involved products that are described as vanilla. Some of them have images of vanilla bean or a vanilla flower, and they were not exclusively flavored with vanilla extract or something that came actually from a vanilla bean but also contain the flavoring compound vanillin. And the plaintiffs alleged that that's deceptive because consumers would expect more real vanilla. Sometimes the plaintiff's lawyers in this case can tell from the ingredient list that the product is using a flavoring rather than getting the flavor exclusively from the food that is named as the characterizing flavor. Sometimes they're actually going out and doing testing of the product to look for markers of added flavors or to see if there's, how much of markers of real fruit or real vanilla are there. In this example, Pop-Tarts, the product is called Frosted Strawberry. There's a picture of a strawberry, and the plaintiff is alleging that the product is misrepresenting the amount of strawberry in the product, that it actually has very little strawberry and a significant amount of less valuable fruits, pears and apples. This case was actually dismissed recently where the court found that no reasonable consumer would be deceived as a matter of law because the product actually does have strawberry in it. And that is in line with decisions in a lot of these cases, a lot of them are being dismissed as not deceptive as a matter of law, that consumers will see the representation vanilla, and they'll just expect from that that the product tastes like vanilla, not that it contains a significant amount of actual vanilla. But some of the cases are being allowed to proceed. They're certainly not all being dismissed, and so they continue to be filed. Another example of a key ingredient type case, Keebler or Fudge Stripes cookies. You'll see that it has the representation, real Keebler fudge. And the plaintiff is alleging that it's deceptive to use the word fudge in the labeling, because if you look up fudge, you'll find that it's made with butter, sugar, and milk, and none of those things are used in this product, but rather it's made with oil and sweeteners and whey. There's another case, key ingredient kind of case here, MorningStar Farms, veggie breakfast, veggie sausage links, and there are other quote, unquote, veggie products at issue in the case where the plaintiff is alleging that it's deceptive to use the word veggie because that will cause consumers to believe that the product has a significant amount of vegetables, but rather they're mostly made with grains and oils. And Kellogg is arguing in its defense that consumers understand veggie in this context to mean meatless, not that the product is made mostly with vegetables. Animal welfare representations. So this Happy Egg case is an example of a nonprofit advocacy group lawsuit that was brought in DC Superior Court. And there are no FDA regulations for animal welfare type claims on food labeling. USDA has some policies and require substantiation for these kinds of claims if they were made on chicken instead of eggs, for example. But here the eggs were labeled free range and it's pasture raised. But there was a pasture raised on over eight acres, but there was no mention of how many hens were actually put on that amount of pasture. And so the allegations were that Happy Egg did not conform to industry standards for pasture raised eggs, and it was actually overcrowding its birds and therefore misrepresenting the treatment of the animals. Here's another example of a case regarding animal welfare labeling claims, where this is against Foster Farms. And the plaintiff is alleging that the third party certification here, which is the American Humane Certified, was deceptive because it would cause consumers to believe that the chickens were treated humanely when the certification standard actually allows for inhumane practices in the plaintiff's view. This court was dismissed as preempted, and that was affirmed by the California Appeals Court, and it's because the label was approved by USDA. I think it's interesting, though, because the representation was about the humane treatment of the animals was just the certification mark. And what that mark means is just that the product meets the certification standard of this third party, but the plaintiff actually alleged that that certification was nevertheless deceptive. Another example, animal welfare, dog food. So free run poultry was the representation. That's not a defined term, but not only was the poultry described as free run, there's a image on the back of the package of this grassy area with chickens walking around freely. And yet the allegations were that the chickens were actually confined in houses and never went outside. So an example of imagery as being a misrepresentation, in addition to the express statement, free run. Sustainability and environmental type claims. So here in this example, there's a label, simple, sustainable seafood. And there are actually two cases involving this salmon from ALDI. And the plaintiffs alleged that the salmon is not sustainably produced because it's raised using practices that are both environmentally harmful and inhumane to the fish. So there's no definition of sustainable in any law or even kind of generally, that consumers can interpret it a lot of different ways. The Federal Trade Commission explicitly warns against this in its Green Guides that broad environmental benefit claims can be interpreted in ways that can be impossible or very difficult to substantiate. So the best practice is to clearly say what you mean, and all these defense that it's been raising in this case is that sustainable here is qualified because it means the Best Aquaculture Practices certification that's also on the label, but it's another example where a certification might not necessarily remove the possibility of consumer fraud or at least allegations of it. Another example of sustainability, perhaps, being very broadly interpreted, in this case, Nestle chocolate chips have the representation sustainably sourced, and the lawsuit alleges that that's not true because slave labor is used on cocoa farms that are used to supply cocoa to Nestle. So again, it's important to really qualify exactly what these representations mean because consumers can have a lot of different interpretations about a word like sustainable that's including not only environmental but also labor practices, fair trade practices, animal welfare. Slack fill. So, again, the idea that a consumer can be deceived by thinking that a product contains, that there's more of a product in a container than it actually has. And this is a fairly active area of class action litigation. Here's an example of an image that was actually used in the complaint against Kodiak Cakes for its brownie mix. The defenses to this type of slack fill cases, if the consumers can see the fill in the container. So for example, if it's a box that has a clear window, if the contents normally settle after the container is filled and that's the reason for the empty space, or if the empty space serves a function. So if there's like extra air or gas in a bag of chips to protect the product, that can be a defense, but the risk of this type of litigation is particularly high if a manufacturer has a product on the market at a particular weight and then they reduce the amount of product in the container but they don't change the container. Or if a product uses the same size container as their main competitors but put less of the product in it. Another type of sort of underfilled product case is this multidistrict litigation. There are multiple class actions that have been consolidated into one case involving Folgers Coffee was labeled as it makes up to 240 cups of coffee, but the plaintiffs followed the directions on the package and made the coffee and found that they couldn't make nearly 240 cups. So finally, how to advise clients. So compliance with FDA rules is clearly not enough. You can have a product that is entirely compliant and still alleged to be deceptive, but it's also really important not only to know what the labeling rules are but also to pay attention to the litigation. So if you're advising food companies, it's important to pay attention to legal news sources that report on these types of food labeling and false advertising cases. Food industry news sources also typically report on these kinds of cases. And to just stay on top of, what are the types of issues that are getting people in trouble? Literal truth is not always enough. So you have to think not only about what is being said, the specific representation that's being made, but also the net overall impression that consumers will have. And are there material facts that are being omitted and should be disclosed? The overall impression is really important. So if a client ever asks you to evaluate a particular claim without giving you the overall packaging, it's really problematic and hard to advise in that circumstance. You need to see the context in which a representation is going to be made, not only on the packaging but also the other marketing materials that the client plans to use. So you can't just evaluate a labeling claim in isolation. Ask a lot of questions so you can fully understand the product and how it's sourced and what substantiation the client has. Ask a client, what have they not told you? What would they not want a class action plaintiff's lawyer to know or one of their competitors to know so that you can fully understand the product and be able to evaluate whether or not a claim is truthful or misleading? And then understand that anyone in this industry has to balance the risks, that they're going to get sued, or that some regulatory enforcement action will be taken against the marketing benefits that they're going to get. It's a very competitive industry. So food businesses, brand owners always need to find ways to distinguish their products from their competitors. And as lawyers, it's really important that we advise our clients of the potential risks, but also help them to find ways that they can get their message across in a way that's legal and truthful and will hopefully not get them in trouble. And that concludes my presentation, and I thank you very much for listening.

Presenter(s)

Lauren Handel
Principal Attorney
Handel Food Law LLC

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