Eater has a story with insights from Lauren Handel on legislation to change the restaurant menu labeling requirements.
- There is a fantastic article in Inc.com on the rise of GT’s Kombucha, the company credited with creating the kombucha product category we know today. They hit a few legal snags along the way, which we will discuss in a blog post next week, but otherwise it’s an inspiring story of a bootstrapped, profitable, privately and closely held company with a dominant market share.
- Farmanddairy.com describes the regulatory challenges faced by nonprofit seed libraries, where farmers, gardeners, and growers can exchange self-pollinating seeds rather than buy them from the catalogue or the hardware store. Laws in several states make no distinction between these small, informal groups and larger commercial seed companies – both are regulated as seed distributors and must comply with inspection and labeling requirements.
- A California lawmaker is considering a law to include warning labels on soft drinks. The label will state: “contributes to obesity, diabetes, and tooth decay.”
- KVNO News does a really good job of explaining why Country of Origin Labeling (COOL) is so important for farmers and ranchers. As you might know, in October the World Trade Organization determined that US COOL labeling constituted an unfair restrain on world trade. COOL is important to US farmers, who understand that that consumers will have a natural bias for meat raised domestically. COOL is less important to meat packers, who prefer to fill their orders with meat produced as cheaply and efficiently as possible, no matter where it is raised. Read the whole thing.
- Fun fact: AMTRAK’s food and beverage service lost an average of $87 Million in the years between 2006 and 2012. A bill before the House will require AMTRAK to eliminate the operating loss within 5 years.
- Agriview covers the story of a farmer who fled falling prices for commodity milk and started producing artisanal cheeses for the direct market.
- NPR delves once again into immigration status and farm labor. One farmer interviewed for the piece tacitly admits that he prefers to have the immigration status of his workers remain indeterminate. Farming, he says, is an industry where illegal immigrants can work and remain off of the radar. If they were to become legal, “that pressure is off. Now they can go to the cities and look for construction jobs, or manufacturing jobs” and thus create acute employment problem for him. That’s admirably candid of him, but unfortunate for the laborer.
- Michele writes about our declining appetite for red meat and the factors leading to our decreasing consumption in Al Jazeera America.
- Finally, an extended read for the weekend fireside. Washingtonian writes about the spectacular implosion of Serendipity 3 in 2014. It all started with a bad partnership agreement, then some stuff got broken and everybody got mad and someone almost went to jail but then no one ate ice cream anymore and it was sad.
by Jason Foscolo
The American Academy of Pediatrics published a study of physical activity calorie equivalent labeling (PACE) as a possible strategy to encourage parents to order meals with fewer calories and promote physical activity. PACE labeling would show for example that 1 burger equals so many minutes on a treadmill. Parents surveyed reported that they were more likely to encourage their kids to exercise if menus had PACE labeling for each item. They were also likely to order fewer calories, too.
I’d propose that in addition, the label also calculate how long it would take to burn-off the food if the kid were to remain absolutely motionless, which seems to be the natural state of kids these days. I’m not being cynical – the comparison between active and passive calorie expenditure would make poor menu choices even more stark when compounded by other lifestyle choices.
by Jason Foscolo
Labels that do not comply with federal regulations are a significant source of legal liability for food businesses. Even established giants like Bumble Bee Foods fail to understand this from time to time.
Bumble Bee is currently engaged in a lawsuit alleging that its canned and pouched tuna product labels were misbranded and mislead consumers. At the time when the lawsuit was filed, Bumble Bee claimed that its product was an “Excellent Source” of omega-3 fatty acids. As we know from having reviewed lots of labels for clients over the years, omega-3 claims are tricky to make on a food label.
Claims like “excellent source,” which characterize the level of a nutrient in a food, are always defined as a percentage of the daily value for the nutrient. An “excellent source” claim may be made when a food contains at least 20% of the recommended daily intake (RDI). Therefore, if there is no established daily value for a nutrient, it is not permissible to claim that a food is “high in,” an “excellent source,” or “rich in” the nutrient. While the FDA has established RDIs for certain nutrients, including sodium, vitamin C, and fiber, there is no established RDI at present for omega-3 fatty acids generally. For that reason, Bumble Bee’s claim – regardless of the actual Omega-3 content of the product – was facially defective.
As discussed on our blog, FDA announced this past summer that it would not take exception to “high,” “good source,” and “more” claims specifically for ALA, an omega-3 fatty acid, in certain circumstances. However, all other claims that characterize the level of omega-3s are prohibited.
There is a way to talk about the omega-3 content of the product without the legal exposure. A manufacturer may make a statement about a nutrient for which there is no established daily value as long as the claim specifies only the amount of the nutrient per serving and does not implicitly characterize the level (such as, by saying “high” or “excellent source”) of the nutrient in the product. Such a claim might be “x grams of omega-3 fatty acids.”
This seems like a simple distinction to make but getting it wrong has big implications. No claim should ever go onto a food label without a thorough review from someone familiar with the regulations.
by Michele Simon
These days health-conscious consumers are increasingly seeking out food products not only with fewer ingredients and a “clean label”, but also foods produced in a manner that minimizes harm to the environment, among other ethical business practices. And it’s not enough to claim your product is healthy or sustainable with just words; to get that much-needed boost in a highly competitive marketplace, many food companies are spending the extra money to obtain third-party certification for various claims.
But before jumping on the “seal of approval” bandwagon, it’s important to understand the legal implications of various types of certification. For example, some seals are legally defined and require third-party certification while others are just voluntary.
Organic Seal: Federally Defined, Certification Required
Let’s start with the most rigorously-defined seal under federal law: organic. The U.S. Department of Agriculture requires strict adherence to various production practices for a farm or food product to obtain USDA organic certification. While the USDA itself does not certify, the agency maintains a list of approved third-parties. You must choose a certifier from this list to obtain organic approval.
In addition, USDA only allows its official organic seal for products that are either “100 percent organic” or for products containing 95 percent organic ingredients, in which case the product can be labeled simply “organic”. Also, the name of the third-party certifier must appear on the label. Products containing at least 70 percent organic ingredients can say, “made with organic ingredients”, but are not allowed to use the official USDA seal – an important distinction for marketing purposes.
Gluten-Free: Federally Defined, No Certification Required
Another popular claim being made on food products is “gluten-free.” Until recently, this claim had no legal definition. Then in August, the U.S. Food and Drug Administration began requiring food companies making gluten-free claims to adhere to specific federal regulations. However, in contrast to the USDA organic program, the FDA does not approve third parties for gluten-free certification, nor is certification required to make the gluten-free claim. Food companies are free to obtain gluten-free certification from a reliable third-party of their choosing, as long as that certifier uses the FDA definition at a minimum. (Some certifiers go further.)
Non-GMO: Not Legally Defined, Rapidly Changing
A good example of a seal program that is neither defined nor overseen by a government agency is the non-GMO label. Despite—or perhaps because of—recent controversy over genetically-engineered ingredients, the FDA has so far not required the labeling of foods containing GMOs. A significant response to this federal void in the wake of rising consumer demand has been an explosion of products on the market seeking to make “non-GMO” claims. The popular third-party certifier, the Non-GMO Project, claims to be “North America’s only independent verification for products made according to best practices for GMO avoidance.”
With several states (see the list here) already enacting GMO labeling bills and more being considered, along with ongoing litigation over “natural” labels on products containing GMO ingredients, pressure on the feds to act is mounting. In other words, this issue continues to be legally volatile. Also, remember that even though the federal government has not expressly defined “non-GMO”, such claims (along with any advertising) must still meet general federal rules to be truthful and non-misleading.
Additional certification programs cover kosher, vegan, and labor practices. I also recently wrote about “benefit corporations”. Some states allow a corporation to include ethical business practices in its legal charter. Companies can also obtain a related private certification by becoming a “B Corp”, and use that symbol as a marketing tool.
However you want to stand out in the marketplace with a seal of approval, it’s important to choose only legally-defensible claims and reliable third-party certifiers that adhere to current federal and state laws, as well as best marketing practices.
(This article has also been published at circleup.com)
by Michele Simon
With far too much to regulate and too few resources, the U.S. Food and Drug Administration has to be selective in enforcing deceptive marketing laws. Similarly, the Federal Trade Commission, which oversees all advertising, can’t police everybody. But while the feds have better things to do than troll the supermarket aisles looking for the latest dubious health claim, that doesn’t mean food marketers can get sloppy.
That point was brought home recently when the National Advertising Division announced it was referring Talking Rain Beverage Company to the FTC for making deceptive claims. If you’ve never heard of the NAD, you should. Part of the Council of Better Business Bureaus, it’s a self-regulatory body for advertising oversight. Competitors or consumers can file a complaint. The idea is to provide advertisers an alternative to litigation and government action.
In this case, a complaint was filed by a pretty big competitor: Nestle Waters North America. The king of bottled water complained about several claims made by Talking Rain’s “Sparkling ICE” drink that implied the product was just water, including its description as “Naturally Flavored Sparkling Mountain Spring Water.” Although it ruled in July that consumers were not likely to be misled by these words, NAD was not happy about several of the drink’s tag lines, including “the bold side of water,” given that the product is not just water. In September, NAD “determined that calling the products a ‘… side of water’ could be reasonably understood by consumers to mean that the products are water, when in fact they contain numerous additives and sweeteners.”
The self-regulatory system works best when companies agree to participate. In this case, Talking Rain refused, and that’s why NAD referred the case to FTC. The beverage company is taking its chances that FTC is too busy to act, but the agency does occasionally go after the natural product industry. For example, FTC recently settled a $3.5 million case against a coffee bean extract maker over questionable weight loss claims. The National Advertising Division also works in collaboration with the Council for Responsible Nutrition to police the supplement industry, as another recent adverse action, this time against “Cerebral Success” regarding questionable performance claims, demonstrates.
While some smaller companies may be able to avoid federal oversight, beware that your competitors are watching closely. A company the size of Nestle has plenty of resources to keep watch and file claims that threaten their competitive edge. That’s why all companies should market responsibly; you could be targeted next.
by Michele Simon
A new organization that’s yet to even formally announce itself made news for declaring its intention to define natural. The new group, called the Organic and Natural Health Association (ONHA), plans to hold a series of meetings as part of a transparent process that engages consumers as well as industry.
At a time when more shoppers than ever are seeking healthier products, the natural products industry is coming under increasing pressure to define the squishy term. No wonder, with so many food companies jumping on the “all natural” bandwagon, sometimes for products that bear little resemblance to anything found in nature, leaving many consumers confused and often duped.
Meanwhile the Food and Drug Administration has made it painfully clear it has no intention of defining natural, and given the undue political influence in Washington, that’s probably a good thing.
As I wrote about for New Hope Natural Media last year, in the wake of FDA inaction, class action lawyers have been filing lawsuits against food companies that use the natural label in a deceptive manner. Whatever you might think of this approach, in some cases it has forced manufacturers to do the right thing. For example, as a result of being sued over GMO ingredients in its “all natural” cereals and snacks, Barbara’s Bakery is now obtaining third party verification from the Non-GMO Project.
But litigation is not a long-term solution to an industrywide problem. So maybe the time has come for someone to step up?
I recently spoke to Karen Howard, the new group’s director, who explained that ONHA’s structure is unique in that it includes representation from both industry and consumers, and that the mission is much larger than just defining natural. The group will set standards for natural certification in four sectors: food, pet food, supplements and cosmetics, in just 90 days from its first open meeting at the Supply Side West trade show in October. When I asked Howard about undercutting organic standards, she told me the group is “100 percent committed to organic” and that the natural certification will complement organic, not replace it.
Still, many questions remain, such as how will this intersect with existing guidelines, such as those from Whole Foods Market or New Hope’s standards department? And will this new certification process truly educate consumers or will yet another seal on a box just add to the confusion? Also, will companies even participate? If they don’t, lawsuits are likely to continue to fill the void.
-by Jason Foscolo
The haphazard legalization of hemp and particularly cannabis is creating an unpredictable legal environment for entrepreneurs. By “haphazard,” I mean that legitimizing marijuana as an industry does not simply stop at decriminalization. There are other aspects of law having nothing to do with criminal justice that can thwart the progress of the marijuana entrepreneur. Here are a few issues we’ve seen in the news and in our legal practice lately:
1. In the rush to create hemp industries, legislatures make sloppy mistakes. South Carolina recently made it legal to grow industrial hemp if the grower was “licensed,” but neglected to create a licensing scheme for interested growers. The statute thus creates an economically tantalizing but unobtainable opportunity for the state’s farmers.
2. Branding for marijuana and marijuana-based products, like soft drinks and gummy bears containing THC extracts, is very difficult to trademark. To qualify for federal trademark registration, the use of a mark in commerce must be “lawful.” Thus, any goods or services to which the mark is applied must comply with all applicable federal laws. So long as marijuana or its derivatives remain controlled substances at the federal level, producers of marijuana-based products will not be able to avail themselves of federal trademark protection. Trademark protection is absolutely fundamental to a successful brand, and the powerful range of anti-infringement benefits that come with it are denied to marijuana-based businesses.
3. While we are on the subject of edibles, food safety is a new area of regulation for marijuana entrepreneurs. Even after they become legit, some marijuana manufacturers seem to have trouble dropping some of their old habits, like processing bubble hash in old washing machines. This may be an example of a few bad apples, but it doesn’t help foster a positive image of an industry that is trying to legitimize itself. When the trade was illicit, inspectors didn’t scrutinize manufacturing processes because they never had the chance to do so. Now that they are starting to poke around with their swabs and thermometers, they are not thrilled about the safety of the food products being offered to the public.
4. The biggest potential obstacle by far for medical marijuana is drug labeling. Too many drug references on a food or beverage product label can earn a Warning Letter from the FDA stating that it is a “street drug alternative” and therefore, a drug as defined by the Food Drug & Cosmetic Act. The stakes are raised when particular health claims are associated with medical marijuana consumption. Marketing a link between marijuana and a given ailment is central to the idea of medicinal marijuana, but marketing anything as a drug is tightly controlled by the FDA. Though marijuana entrepreneurs may be very tempted to make the claim that, say, THC may alleviate some of the symptoms of conditions like Alzheimer’s Disease, they are in no position to assert the same kinds of claims that prescription drug manufacturers make on drugs that have been through the approval process. The FDA does not seem to be going after marijuana entrepreneurs for the claims that they are currently making, but that can change at any time. In the interim, the safest course of action would be to not make any medicinal claims.
The most important thing to remember is that just because the Department of Justice has de-emphasized prosecution of certain marijuana crimes does not mean that other agencies necessarily will grant a “pass” on the regulations within their domain to marijuana entrepreneurs. Growers and processors in this burgeoning industry need to assess regulatory risk from every angle.
Today, we are proud to announce that attorney and public health advocate Michele Simon is joining the firm in an of counsel capacity. Michele’s practice will focus on food and alcoholic beverage labeling and marketing compliance. Michele brings more to the firm than just her comprehensive knowledge of marketing regulations. As someone with great experience identifying the problems in food industry marketing tactics, she brings integrity and a unique perspective to help clients who want to do better.
by Michele Simon
Over the past 18 years as a lawyer and public health advocate, I have scrutinized the ways that food companies use misleading or illegal marketing to unfairly influence consumers. I will continue to call out these deceptive practices as long as the industry continues to use them.
Fortunately, the food industry is changing. More companies are entering the marketplace with healthier options that are less processed and contain higher quality ingredients. These companies lead with their values and seek more meaningful connections with their customers. This new breed of food producer, which places integrity over profit, is vital to help shift the marketplace.
One obstacle to success is regulation. Any new company has to abide by the rules to succeed. Marketing is the most important tool these companies have because it enables them to distinguish their products from those of Big Food. Most of the marketing terms that such companies want to use, such as organic, gluten-free, or high fiber, are strictly regulated. Others, such as non-GMO, may soon be regulated, and require a keen eye to avoid greenwashing or other deceptions.
Making sure a food or beverage meets with federal and state legal requirements is just the first step. These days, it’s entirely possible to meet the letter of the law but still get into other trouble. Food companies need to consider the potential risk of being targeted by advocacy organizations, class action attorneys, the competition, the media, and bloggers, all getting amplified by social media. Based on my years of advocacy experience, I can help companies avoid such scrutiny. My ongoing role as an advocate ensures that I will keep my finger on the pulse of new policies at the federal and state levels, as well as demands from advocacy groups and other key developments.
There is a compelling and urgent need for legal services for good food. After being immersed in marketing strategies and policy for almost two decades, the time is right for me to direct the benefit of my experience towards companies who want to do the right thing. In addition to my continuing work as a public health advocate, I am now offering legal guidance on food and beverage marketing. As a licensed attorney in California, I will begin taking and advising clients on:
- Comprehensive label review for FDA, USDA, and TTB (alcohol) compliance
- Compliance with the FTC Act and California consumer protection laws
- Marketing claims review for legal compliance and beyond
- Recommendations for reliable certifications such as organic and gluten free
- Becoming eligible under USDA guidelines for federal programs such as school food
- Compliance with emerging regulations such as menu labeling and revised Nutrition Facts
- Compliance with industry self-regulatory standards such as the National Advertising Division
- Rapid responses to competitor complaints to self-regulatory bodies
- Rapid responses to attacks by advocacy groups, food bloggers, or media
- Rapid responses to adverse legal action, such as FDA warning letters for marketing claims
I am excited to be collaborating with Foscolo & Handel PLLC on this important work. It’s an honor to work with Jason and Lauren, two talented lawyers who themselves have a tremendous amount of integrity, along with a healthy dose of passion and commitment to a better food system. I see this new direction as the private sector supplement to my public advocacy work and look forward to this new venture.
Please help me spread the word.
For legal services, reach me at: Michele@foodlawfirm.com / 510-465-0322
The Supreme Court’s POM v. Coca-Cola Decision: Complying With FDA Labeling Rules Is No Longer Good Enough
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.