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Litigation Archive

Food Labeling: Why Every Product Needs Attorney Label Review

October 27, 2014

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 Omega 3

Going All-In on the Omega Claim

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.

Why you should fear competitors more than the feds

October 16, 2014

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.

Midland-Ross-Water-1

“Really, it’s just water, guys.”

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.

Is a new organization to define “natural” a good idea?

October 7, 2014

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.

The Sriracha Saga

August 11, 2014

by Jack Hornickel

The saga of Sriracha, the addictive sauce that waters my eye just at hearing the name, came to a close earlier this summer. The manufacturer of liquid fire, Huy Fong Foods, Inc., had come under increasing legal pressure from its host city, Irwindale, California, to turn down the spice — not in the product itself, but in the surrounding airspace. The city had attempted enjoin Sriracha production as a public nuisance after receiving numerous complaints from the factory’s neighbors. In response, hot sauce junkies and restaurateurs were shocked and took to hoarding the familiar rooster-clad, green-capped bottles. Ultimately, after some legal and commercial posturing, the parties came to an undisclosed agreement to keep the Sriracha facility up and running, and the city dismissed its lawsuit.

chasing the rooster

chasing the rooster

Sriracha is truly an American success story. David Tran, a Vietnamese immigrant, launched Huy Fong in 1980. Named after the vessel that carried its founder to the United States, Huy Fong began production in Los Angeles and later moved to Rosemead, CA. In 2010, the company broke ground on a new $40 million, 650,000-square-foot factory in Irwindale, CA that would at least triple its production capacity.

It took less than two years for the complaints to start rolling in. Neighbors bemoaned of standard respiratory ailments − coughing, sneezing, burning throats  − but also more alarming agitations –  headaches, bloody noses, even swollen glands. According to Irwindale residents, the chili sauce production really disrupted daily life. One resident resorted to popping heartburn medication before her morning jog. Others reported a looming red cloud of terror, a la John Carpenter’s The Fog. Overall, at least 18 households filed formal complaints with the city.

The antagonizing odor was allegedly caused by the production of Huy Fong’s flagship Sriracha sauce. Moreover, the trouble was intensified by Huy Fong’s production methods. In order to preserve the fresh spiciness of its red jalapeno peppers, the saucier grinds an entire year’s worth of peppers in the three months of harvest season! At peak production, about 40 truckloads of California red jalapenos are delivered and processed each day. During these months, residents report that the offensive odor can be irritating half of a mile away.

On October 21, 2013, after the conclusion of that year’s harvest season, the City of Irwindale filed a complaint against Huy Fong. It alleged that the sauce manufacturer constituted a public nuisance by creating conditions that were injurious to public health, or were indecent and offensive to the senses, such that it interfered with the comfortable enjoyment of life and property. A judge then granted a preliminary injunction on November 26, halting any Sriracha operation that would cause emission of offensive odors. Despite recognizing the lack of credible evidence proving causation, the court reasonably inferred that the irritating odors were a result of Huy Fong’s hot sauce. (Ya think?) The court then determined that the city and its residents would be irreparably harmed if the plant continued to operate pending trial.

As this year’s pepper harvest season approached, on March 21, 2014, Irwindale turned up the heat and amended its complaint to include a breach of contract claim. The city alleged that Huy Fong violated its operating permit by emitting the offensive odors. City attorneys stressed that this was not a separate attack, but rather an additional legal theory by which the city could halt the extreme irritation of its residents. Yet, of the available remedies for a breach of contract, a court is least likely to order specific performance. Thus, Irwindale was most likely adding this theory to its case so that, even if it lost on the theory of public nuisance, it could hold the threat of monetary damages over the hot sauce producer.

During the court proceedings, Huy Fong did its fair share of posturing. Employing 60 full-time and 200 seasonal workers, the sauce manufacturer is an economic staple in the city populated by about 1,400. Leveraging its position as a coveted manufacturing-sector job-creator, Huy Fong hosted a group of Texan officials from the state’s agricultural, economic development, and tourism departments, a clear indication that it was considering a move. Sufficiently spooked, the City of Irwindale, with the assistance of the California Governor’s Office of Business and Economic Development, brokered a deal in a closed-door meeting. The details of the bargain are yet unknown, but Irwindale dismissed its lawsuit on June 4th, and Huy Fong has been engaged in another chili melee this summer.

The lesson: If your food production creates a public nuisance, you’d better be properly represented, employ a lot of people, and make a damned good product.