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Food Fraud Archive

The Supreme Court’s POM v. Coca-Cola Decision: Complying With FDA Labeling Rules Is No Longer Good Enough

July 7, 2014

by Laura Gaudreau

With a 8-0 decision on June 12, the Supreme Court welcomed another player to question the legality of food and beverage labels: competitors. In Pom Wonderful, LLC v. The Coca-Cola Company, the Court unanimously held that competitors may bring federal Lanham Act claims alleging unfair competition from false or misleading food product labels, even if those labels comply with FDA regulations.

POM Wonderful, a marketer of pomegranate juice products, sued a competitor, Coca-Cola, alleging that the labeling of Coke’s pomegranate blueberry flavored juice blend was deceptive and misleading under §43 of the Lanham Act and hurt POM’s sales. Coke’s product label prominently featured the words “Blueberry Pomegranate” even though the beverage consisted of 99% grape and apple juice, and was only about 0.2% blueberry juice and 0.3% pomegranate juice. Significantly, Coke’s labeling was permissible under the extensive FDA rules governing juice product names.

The issue before the Supreme Court was not the label itself, but the intersection between the Food, Drug, and Cosmetic Act (FDCA) and the Lanham Act.  The FDCA prohibits the misbranding of food through false or misleading labels. Private parties may not bring enforcement suits under the FDCA, so the FDA has nearly exclusive enforcement authority. In contrast, the Lanham Act confers private rights of action, allowing business to sue competitors for unfair competition and false advertising. The Court evaluated whether FDA’s extensive regulation of food labeling under the FDCA precludes private claims challenging food labels under the Lanham Act.

The lower courts sided with Coca-Cola, which claimed the FDCA precludes a Lanham Act claim because the Lanham Act may not be used to preempt or undermine the FDA’s authority. Essentially, Coca-Cola claimed if the juice label satisfied the rules of the FDA, it had the stamp of approval for sale, and could not be challenged through private action via other statutes.

The Supreme Court disagreed with the lower courts, holding that competitors are allowed to bring Lanham Act claims alleging unfair competition from false or misleading food product labels. Justice Kennedy wrote the opinion, noting the two statutes are complementary. The FDCA is concerned primarily with public health and safety, while the Lanham Act protects commercial interests from unfair competition.

This decision potentially opens the door for a high volume of litigation over food labels, and puts substantial power in the hands of competitors. In his decision, Kennedy noted that competitors’ “awareness of unfair competition practices may be far more immediate and accurate than that of agency rule makers and regulators” due to their knowledge of how “consumers rely upon certain sales and marketing strategies.” Likewise, competitors have a financial incentive and possibly greater resources than FDA to challenge deceptive food labeling. Moving forward, food manufacturers must now be concerned not only with whether their labeling complies with FDA regulations, but also with whether it may invite lawsuits from competitors.

Imported Extra Virgin Olive Oil Is Still Adulterated, Italian-Americans Cheer

June 26, 2013

California extra virgin olive oil is the best agricultural product in America that you are not buying. No doubt that California olive farmers are talented, but a lot of the credit needs to be shared with the California Olive Oil Council. The Council grades and certifies olive oils produced within the state and awards the use of its “Certified Extra Virgin” trademark to products that meet strict acidity and ultraviolet absorbency standards.

This privately operated grading and certification regime is the best insurance you, as a consumer, have against the rampant fraud permeating the international olive oil trade. Almost all of the imported olive oil you buy in the United States is no where near “extra virgin”. Tom Mueller, author of “Extra Virginity: The Sublime and Scandalous World of Olive Oil”, is the last word on the subject of olive oil fraud. (Buy that book). The ambition of the Olive Oil Council is to help domestic olive growers and consumers distinguish California oils from the criminally adulterated products on your supermarket shelves. I’ll bet that because of the objective quality standards they apply to oils produced in the region, in 10 years, California will do for the global olive oil trade what they once did to wine.

Up until now, the work of rehabilitating the reputation of the “extra virgin” label against adulterated imports has been assumed entirely by the Council, a nonprofit corporation. The latest Farm Bill sought to create a nationwide, federally sponsored “marketing order” for olive oil. A marketing order establishes standardized quality characteristics for agricultural products, and they are each regulated by the USDA’s Agricultural Marketing Service. The marketing order for olive oil would also have meant a modest tax to fund the interdiction and inspection of the imported foreign sludge. Two congressmen from New York, however, opposed the provision.

We put our money where our mouth is.

The ironic bit about this New York Post piece about the collapse of the olive oil marketing order in Congress is the alliance of the various lawmakers of “Mediterranean stock” that shot it down. I take it that these lawmakers were convened ostensibly because of their constituents’ cultural affinity for olive oil. None of them stopped to think that a more stringent inspection regime would help ensure they purchase legitimate extra virgin olive oil like Nonna used to have, instead of the adulterated biodiesel coming out of Spain and North Africa. I guess some people don’t mind being lied to so long as the lies are cheaper than the truth.

How Olive Oil Producers Are Protecting Their Products from Food Fraud

April 9, 2012

Via Huffington Post, the Journal of Food Science reported in its April issue that olive oil is one of the most adulterated and diluted agricultural products on the market. No surprises there – olive oil fraud is one of my favorite topics. It was also the main theme of a pretty awesome book last year, Extra Virginity: The Sublime and Scandalous World of Olive Oil, by Tom Mueller.

I perceive that there are two reasons for the increasing media attention to fraud in the olive oil industry:

1. Food provenance is increasingly important to consumers. (See “Pink Slime”)

2. Domestic production is ratcheting-up to become a dominant force in thew world olive oil market.

Also in the news on Friday, Pompeian Olive Oil became the first olive oil importer to use the new USDA Quality Monitoring Service logo on its extra virgin olive oil products. Much like the “USDA Organic” seal, the new rules will create a special mark that may be applied to qualified olive oil products.

This has been the second time in recent history that the USDA has tweaked the standards for olive oil in an attempt to prevent fraud. In October of 2010, the USDA introduced new standards for classifying grades of olive oils. If I can overcome my reflexive disdain for new regulation, stricter quality parameters are a good thing. For the US olive oil industry to compete with cheaper imports from say, North Africa, they will have to do so on the basis of quality, purity, and freshness. Federal standards will allow domestic producers to define the “other”.

My one criticism is purely practical. It will be tough to build a brand for the new certification mark as an indicator of quality  if no one is marketing the symbol itself. So far no coordinated marketing campaign has been launched to tell us how the symbol represents useful information to the consumer. It took me a while just to Google around to figure out what this mark even looks like.

There is no point to using symbols to sell product unless someone takes the time and money to explain its utility to the consumer, which is how brands are made. The USDA won’t spill the dough to market this seal of approval. If an olive oil business went through the expense, they would just create a hold-out problem for themselves.  Though I hope to see this symbol tell consumers the difference between the real deal and the biodiesel, I’m skeptical.

California Extra Virgin Olive Oil Certification, The Best Food Idea You’ve Never Heard Of

October 19, 2011

The New York Times today has an excellent article on the California olive oil industry. For the last few years, the industry trade association, The California Olive Oil Council, has tried to distinguish the truly extra virgin products of its membership from the flood of mislabeled imports stocked on supermarket shelves.

The Council tries to underscore the distinction between these cheap imports and its members’ products in a number of ways. They sponsored the UC Davis study cited above which let you know just how dreadful the competition is.

The Council also has its own certification system to identify those domestic oils that are qualitatively superior to competitors. Qualifying products are marked with this symbol. These oils are superior in every measurable way to the yellow jugs of biodiesel you get at Costco.

The problem with the system is that you have never heard of it. Your olive oil purchases should be predicated on the presence or absence of the certification symbol, yet as a typical consumer you do not know to even look for the seal on the bottle.

Trademark law is an astonishingly powerful way to unite growers from across an entire agricultural industry, unite them behind a single production standard, and then fund a comprehensive marketing message to consumers. Idaho potatoes and Florida citrus use trademark law and licensing to promote their members’ products. Trade shows, trade publications, product placement, full page ads in Saveur, all of that stuff is funded through collective certification mark licensing fees which are paid by membership. California has no such system in place yet, which is probably the reason why you are still putting biodiesel on your salad.

For what it is worth, I have tried lots oils bearing the Council’s mark and they rock. If you can find a bottle of it, buy it.

Food Fraud: Honey Laundering

August 24, 2011

Fake Chinese honey is in the news again. Because the tainted stuff is purchased in bulk commodity sizes, I gather that illegal honey is more of a problem for the Suebee/Golden Blossom consumer. If you buy from the farmer’s market, you are probably immune from this kind of fraud. A social distance of zero will protect you from leaded honey.

Regional honey brands should see the advent of tainted imports as a mortal threat. They sell a lot of volume on supermarket shelves right alongside Big Honey, yet most have the same puritanical scruples as your local farmer’s market honey producer. The regionals are one lead-poisoning incident away from financial ruin unless they act to distinguish themselves.

Food law could help the large but scrupulous brands maintain and possibly expand their market share. Honey producers could benefit from a collective certification process designed to distinguish the regionals from the nationals. A  trade association can establish a single production, quality, and country of origin standard, then pursue a certification trademark with the USPTO to represent the uniform standard. The trade organization can then license the use of the mark to producers who conform to the standard. Revenue generated from trademark licensing can fuel a national marketing campaign aimed at explaining to the public how its members’ honey is different, superior even, to the bulk stuff of unknown provenance. (The California olive oil industry is doing something similar, but for the purpose of distinguishing members’ products from low quality imports that are intentionally mislabeled “extra virgin”.) In the event of a melamine-type scare in the honey biz, this kind of process could insulate participants from the consequences.