This newsletter aims to keep those in the food industry up to speed on developments in food labeling and nutritional content litigation.

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RECENT SIGNIFICANT RULINGS

FDA Delays Enforcement of FSMA

The Food Safety Modernization Act (FSMA),¹ enacted on January 4, 2011, was intended to modernize the law regulating the safety of food supply both for domestic and imported foods. Section 103 of the FSMA creates requirements for hazard analysis and risk-based preventive controls that require the evaluation of hazards and the implementation of controls designed to minimize or prevent the adulteration and misbranding of foods. Section 301 establishes a foreign supplier verification program, requiring food importers to implement programs to verify that imported food meets certain standards.

The FSMA requires the FDA to issue rules implementing these requirements. Section 103 requires the FDA to issue regulations within 18 months of passage of the FSMA, by July 3, 2012. Section 301 requires the FDA to issue guidance and regulations within one year of enactment.

More than 18 months after enactment of the FSMA, these required rules are still not in effect. The rules have been drafted, but are tied up in review by the White House Office of Management and Budget since late 2011.

On June 18, 2012, the FDA issued notices to the industry indicating that it will delay enforcement of these sections of the FSMA until it has adopted final regulations.² Given the requirements for notice and public comment, there will likely be a delay of at least several more months.

Consumer concern is mounting. On July 17, 2012, several consumer groups and families sent a letter to President Obama complaining about the delay. Stating that one in six Americans suffer from a foodborne illness each year, resulting in 128,000 hospitalizations and 3,000 deaths, the groups urged immediate release of the rules.

California Ballot Initiative Would Require Labels on GM Foods

The California Secretary of State has announced that California voters will decide whether to require food and drinks containing genetically engineered ("GM") ingredients to bear a "Genetically Engineered" label beginning in 2014. The initiative would also prohibit any food containing a GM ingredient from being labeled as "natural," "naturally made," or similar terms. The new law would also create a private cause of action for citizens to sue food companies, allowing anyone to seek an injunction without requiring the plaintiff to establish individual injury or damages. The election will be held on November 6, 2012. View text of ballot initiative

Nestlé's Boost Kids Essential Nets Win

In Scheuerman v. Nestlé Healthcare Nutrition Inc., No. 10-cv-03684 (D.N.J.), the court granted Nestlé's motion for summary judgment in a proposed class action accusing Nestlé of fraudulently advertising a kids' health drink, ruling that plaintiffs had failed to disprove the company's claim that the drink's health benefits were "clinically shown." Nestlé submitted over 40 scientific articles and studies to substantiate its "clinically shown" advertising claims for its Boost Kid Essential drinks, and plaintiffs' experts were not able to demonstrate that the "clinically shown" claims were false or misleading. The most that plaintiffs could show is that Nestlé's advertising claims were not convincing or significant, but the court ruled that the evidence was not nearly enough to establish fraud. The court granted summary judgment on four California and New Jersey claims based on fraud, as well as a claim based on negligent misrepresentation. The only claim the judge let stand was one of breach of express warranty, stating that the court did not have enough briefing on the issue. Opinion

Frosted Mini-Wheats Settlement Tossed for Excessive Attorneys' Fees

In Dennis v. Kellogg Co., No. 11-55674 (9th Cir. July 13, 2012), the Ninth Circuit rejected a $10.6 million nationwide settlement, which the District Court had approved. Plaintiffs alleged that Frosted Mini-Wheats cereal was falsely marketed as improving kids' attentiveness. The parties eventually entered into a settlement, which would have given $2.75 million to a class of consumers who bought the cereal, $2 million to plaintiffs' lawyers, and a cy pres settlement of $5.5 million in foods to charities that feed the indigent. The Ninth Circuit found the settlement to violate the "well-established" standards governing cy pres awards and to grant excessive attorneys' fees to class counsel. In effect, class counsel would receive $2100 per hour of work done, which was over 4 times their normal rates. The court also stated there were no assurances that the charities to whom the money and food would be given had any nexus to the plaintiffs' false advertising claims. According to the court, appropriate cy pres recipients would have been organizations that protect consumers from false advertising, not those that provide food to the needy, because plaintiffs' claims had nothing to do with hunger or indigents. Opinion

American Medical Association Rejects Labeling GM Foods

The American Medical Association—the nation's largest association of physicians and medical students—voted in June to adopt a policy that there is no health benefit obtained from labeling genetically modified foods. "There is no scientific justification for special labeling of bioengineered foods, as a class, and that voluntary labeling is without value unless it is accompanied by focused consumer education," the statement read in part. The AMA did endorse mandatory pre-market safety testing of GM foods, seeking to measure any changes in nutrient content or the level of toxins. According to AMA board member Dr. Patrice Harris, "The science-based labeling policies of the FDA do not support special product labeling without evidence of material differences between bioengineered foods and their traditional counterparts. The AMA adopted policy supporting this science-based approach, recognizing that there currently is no evidence that there are material differences or safety concerns in available bioengineered foods."

Plaintiff Hits Rocky Road with Dreyer's Case

In Astiana v. Dreyer's Grand Ice Cream Inc., No. 11-cv-2910 (N.D. Cal.), the court partially granted Dreyer's motion to dismiss claims that ice cream products were falsely labeled as "all natural" when they contain alkalized cocoa powder. The court rejected plaintiff's claims under the Magnuson-Moss Warranty Act, ruling that the "all natural" labels do not constitute warranties against a product defect. The court held that "just because a food contains artificial and/or synthetic ingredients, that does not make it defective." The court went on to note that the ingredients at issue were presumably purposely added and used in the process of making the ice cream—a fact that did not comport with the plain meaning of the word "defect," which primarily indicates an omission or an aberration. The court also dismissed some state law claims that were preempted by the federal Food, Drug & Cosmetic Act but declined to hold that plaintiff's claims were preempted by regulations dealing with nutrient content claims. Opinion

Bear Naked and Kashi Win Motions to Dismiss

In Thurston v. Bear Naked, Inc.,No. 11-cv-02890 (S.D. Cal.) and Bates v. Kashi Co., No. 11-cv-01967 (S.D. Cal.), the courts granted motions to dismiss class plaintiffs' breach of warranty and fraud claims arising from "all natural" labels, ruling that "all natural" labels did not constitute warranties but instead only described the contents of the food products. Defendants in both cases market and sell their food products as natural, but plaintiffs claimed that the foods contained synthetic ingredients. Nevertheless, the court dismissed claims in both cases based on the Magnuson-Moss Warranty Act, common law fraud claims, and unjust enrichment claims. As in the Dreyer's case, the court declined to dismiss claims based on California's Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. In Kashi, the court also dismissed defendant Kellogg Company, which owns Kashi, ruling that plaintiffs had not proven that Kellogg had taken over day-to-day operations at Kashi and was thus not required to be named in the suit. Kashi Opinion; Bear Naked Opinion

Supreme Court to Dukes It Out On Further Class Action Restrictions

In the last week of the Supreme Court's Spring 2012 term, the High Court granted certiorari to decide whether to expand its groundbreaking decision in Wal-Mart, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Specifically, in Comcast v. Behrend, No. 11-864 (U.S.), the Court will determine "whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a classwide basis." 80 U.S.L.W. 3442 (U.S. June 25, 2012). In Dukes, the Court suggested—but did not decide—that expert testimony must meet the standards for admission set forth in Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The Court now seems poised to decide that issue.

FDA Announces Eye-Tracking Studies

On June 15, 2012, the FDA announced that it is soliciting comments about experimental studies to explore eye-tracking technologies as a tool to create food and nutrition labels. Consumer researchers use eye tracking to determine what on food packages catches a consumer's attention. The FDA's interest in the studies is based on its potential to help inform dietary decisions by regulating nutrition information on food labels, among other activities. The FDA currently uses self-administered questionnaires to assess consumer reactions to nutrition information. View FDA notice

Ford Fights for the Reasonable Consumer Standard

The court's denial of a motion for class certification in Edwards v. Ford Motor Co., No. 11-cv-1058 (S.D. Cal.) suggests that the court may consider materiality at the class certification stage. The court relied on Ford's expert testimony about both the mechanical components of electronic vehicle systems on the psychology of car buyers in finding no predominance on the issue of materiality. Ford's expert explained that each customer places a different level of importance on safety concerns when purchasing a car and that a reasonable consumer standard could therefore not be applied on a class basis. This case suggests that class action defendants post-Dukes should utilize expert testimony at the certification stage. Opinion

SUMMARY OF NEW FILINGS

"All Natural" Claims

Larsen v. Nonni's Foods LLC, No. CGC-12-522317 (Cal. Superior Ct., San Francisco County filed July 12, 2012) (Biscotti products labeled "All Natural" when they contain synthetic ingredients, including glycerine, moncalcium phosphate, polysorbate 80, and others)

Hernandez v. Chipotle Mexican Grill Inc., No. 12-cv-5543 (C.D. Cal. Filed June 26, 2012) (restaurant advertises "naturally raised" beef and chicken when it also serves beef and chicken from "conventionally raised' animals)

Carroll v. PepsiCo. Inc., No. 12-cv-3512 (N.D. Cal. Filed July 6, 2012) (Tropicana orange juice advertised as "natural" but is processed with chemical "flavor packets" to extend shelf life)

Smedt v. The Hain Celestial Group Inc., No. 12-cv-3029 (N.D. Cal. Filed June 12, 2012) (Defendant's food products have been misbranded and marketed as health foods, including being labeled "All Natural" when they contain artificial ingredients and chemical preservatives and labeled as "No Trans Fat" when they contain excessive levels of saturated fat, sodium, or cholesterol)

Mirto v. The Quaker Oats Co., No. BC486882 (Cal. Superior Ct., Los Angeles County filed June 19, 2012) (Mother's Bumpers Cereal advertised as "all natural" but contains GMOs)

Boykin v. Simply Orange Juice Co., No. 12-cv-3168 (N.D. Cal. Filed June 19, 2012) (Defendant markets its orange juice as "All Natural" when it is processed to remove oxygen and add unnatural flavors)

Garcia v. General Mills Inc., No. 12-cv-22363 (S.D. Fla. Filed June 26, 2012) (Snack foods marketed as "natural" but contain GMOs)

Pfeifer v. General Mills Inc., No. 12-15157 (D.N.J. filed June 13, 2012) (Kix cereal advertised as made with all natural corn when it contained GMO corn)

Vermont Comm. Law Center v. Pinnacle Foods Finance LLC (Vt. filed June 19, 2012) (Log Cabin Syrup and Bird's Eye Super Sweet Corn products labeled as "All Natural" when they contain synthetic and processed substances including xantham gum)

Antioxidant/Heart-Health Claims

Clancy v. The Bromley Tea Co., No. 12-cv-3003 (N.D. Cal. Filed June 11, 2012) (Defendant's tea products are misstated as "High in Antioxidants" and "healthy" when there is no evidence of such health benefits)

Probiotics Claims

Kenney v. Jarrow Formulas Inc., No. RG12-637132 (Cal. Superior Ct., Alameda County filed June 29, 2012) (Gum labeled as "probiotic" asserts that it can support immune health without support)

Trans Fats Claims

Bryant v. Pinnacle Foods Finance LLC, No. 12-cv-5817 (C.D. Cal. Filed July 5, 2012) (Hungry-Man frozen dinner products concealed the fact that they contained high levels of trans fats)

Other Claims

Gitson v. Modesto WholeSoy Co. LLC, No. CGC-12-522338 (Cal. Superior Ct., San Francisco County filed July 12, 2012) (Soy yogurt nutrition label lists "organic" evaporated cane juice as an ingredient instead of "sugar" or "dried cane syrup")

Roemmich v. Hyland's, Inc., No. BC487547 (Cal Superior Ct., Los Angeles County filed June 29, 2012) (Children's cold medication is advertised to help with colds but the substance is only a placebo)

Everett v. Safeway Inc., No. RG12-635215 (Cal. Superior Ct., Alameda County filed June 18, 2012) (Defendant's Clover Honey was misbranded because it contained no pollen and therefore cannot be classified as honey)

Major v. Ocean Spray Cranberries Inc., No. 12-cv-3067 (N.D. Cal. Filed June 14, 2012) (Juice products state that they have "No Sugar Added" but contain concentrated fruit juice and do not state "not a low calorie food" in violation of statutory definition, and claim to contain antioxidants without scientific evidence)

Carroll v. Target Corp., No. 12-cv-3562 (N.D. Cal. Filed July 9, 2012) (Market Pantry brand honey is labeled as "pure honey" and "Grade A" when the product has no pollen and therefore cannot be classified as honey)

Wallace v. Conagra Foods, Inc., No. 12-cv-1354 (D. Minn. filed June 6, 2012) (Hot dogs labeled as "kosher" were allegedly made with procedures at meat plants that do not meet the traditional standards for being considered kosher)Perkins Coie's Food Litigation Group defends food manufacturers and others in consumer class actions and other claims throughout the country. Perkins Coie is a full service law firm with offices throughout the United States and Asia.

Footnotes

1. http://www.fda.gov/Food/FoodSafety/FSMA/ucm247548.htm

2. http://www.fda.gov/AboutFDA/CentersOffices/OfficeofFoods/CFSAN/CFSANFOIAElectronicReadingRoom/ucm310084.htm

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