This series of articles has presented two bad options for food business executives when dealing with the prospect of citric acid litigation: spend tens of thousands on litigation, or write settlement checks to plaintiffs’ firms. There is another way to mitigate this litigation risk. It’s not exciting or expensive, but it is extremely effective. A food business can prevent citric acid lawsuits with a general counsel.
A General Counsel Mitigates Everyday Risks
A general-counsel mentality manages risks before a complaint ever lands. Instead of reacting to litigation, a general counsel can structure commercial relationships to eliminate the probability of litigation. General counsel can use basic and sturdy commercial agreements to identify risks and mitigate probabilities. Below are three key areas that deserve a general counsel’s attention in any food business.
For Buyers of Raw Materials
Review supplier contracts and specifications for anything containing citric acid. The specification is a binding contract exhibit, not a brochure. You can use the specification as a warranty if the supplier will claim it is “all natural”. At minimum, tie an explicit statement of origin and character for the citric acid (e.g., fermentation-derived/non-synthetic) directly to the spec. Backstop those warranties with comprehensive indemnification covering mislabeling/deceptive practices claims, and attorneys’ fees when caused by supplier breach. Scrutinize flavor houses: citric acid often hides inside flavor systems. Require sub-ingredient disclosures and stipulate change-control notice obligations. Warranties and indemnification are all about spreading the cost of a citric acid lawsuit among the suppliers that sold the product to the manufacturer
For Sellers of Raw Materials and Finished Products
When selling food products, flip that playbook 180°. Review every product spec and flag anything containing citric acid—whether selling bulk ingredients, wholesaling finished goods, or copacking and private labeling customers. For any product that contains citric acid, undertake these steps:
- Disclose and disclaim. In any master services agreement, the purchase order terms, and on the product specification itself, clearly state that the product contains citric acid. Include an explicit disclaimer that the presence of citric acid does not support “natural flavor” claims and does not eliminate any disclosure obligations under Title 21 of the Code of Federal Regulations section 101.22. State in plain language that the customer is responsible for label compliance.
- Warranty carve-out. Maintain core quality warranties on identity, purity, and food safety, but exclude any warranty related to labeling or the “characterizing flavor” rule when the customer controls the label. State that any claims related to citric acid or characterizing flavor are outside the warranty unless they are expressly covered in a separate, written product specification.
- Indemnity allocation. Copack customers usually generate their own labeling. Require the customer to indemnify the seller for unfair and deceptive practices laws and false-advertising laws that arise from the customer’s labeling. Limit the seller’s indemnity to breaches of the seller’s own product specifications. Make clear that the seller does not indemnify the customer for the customer’s marketing statements.
Label Audit
The product label is the first line of defense. For every product in the lineup that contains citric acid, conduct a label audit. Consider whether it will be practical to substitute a “naturally sourced” citric acid for a current ingredient. Also consider the cost/benefit analysis of labeling the product “artificially flavored”.
Win the Business, Not Just the Lawsuit
When selling food products, it is exceptionally important to be explicit and thorough. Strong documents do more than mitigate legal liability. They protect something that might be even more important – the relationship with the customer. Big customers (especially big customers) will exploit any half-hearted or poorly drafted warranty. They will use their commercial leverage to get any ambiguity about citric acid resolved in their favor. A crisp, comprehensive, explicit disclaimer is about the only way to overcome the imbalance. Only a resounding “we told you so” can prevent big customers from leveraging their bad decisions onto a seller, who will otherwise be pressured to indemnify the customer just to preserve business.
To take a deeper dive into how to prevent citric acid lawsuits with a General Counsel, request a brief assessment by one of our attorneys and get a practical, product-specific plan.