Food and Beverage Labeling and Marketing Litigation Continues to Play out in the Courts and Legislatures | Skadden
consumer class actions attacking various aspects of the labeling and
marketing of products. Advertising and marketing claims by manufacturers
that a product is “All Natural” have been an especially frequent
target, with plaintiffs pointing to the inclusion of synthetic
ingredients or genetically modified organisms (GMOs) or the processing
of the product as grounds for suit. Many of these cases have been filed
in California, where state laws are viewed as favorable to plaintiffs,
although cases are pending throughout the country.
Consumers have contended that “All Natural” claims are false,
misleading or deceptive under states’ applicable consumer fraud
statutes, but several such claims have been stymied by plaintiffs’
inability to explain what, exactly, “All Natural” means. In the absence
of an established, uniform legal definition, courts are sending mixed
signals through conflicting rulings that will require careful
consideration by industry participants seeking to avoid or minimize
litigation risk.
Drug Administration, the U.S. Department of Agriculture has issued draft
guidance on the subject. In the absence of an FDA definition, courts
often have reached conflicting conclusions regarding what constitutes an
“All Natural” product and whether a legal challenge should proceed. For
example:
definition courts may look to USDA standards for organic foods to
determine whether an ingredient is natural. The court in Kashi noted that consumers often equate natural with “organic” — or hold organic to a higher standard. For example, in Thurston v. Bear Naked, another decision from the Southern District of California, the court
refused to certify a class of consumers who sought to challenge certain
ingredients in granola products labeled “All Natural,” explaining that
those ingredients are permitted in organic foods.
Genetically Modified Organisms. The inclusion of GMO
ingredients in foods also has been litigation fodder for consumer
plaintiffs. The lack of a definition of “All Natural” sometimes provides
plaintiffs free rein to attack the processing of a food or beverage
product without specifying how the processing converts natural
ingredients into an unnatural product.
For example, the U.S. District Court for the Northern District of California recently rejected a motion to dismiss in Parker v. J.M. Smucker Co.
The plaintiff alleged that the defendant’s labeling of various Crisco
cooking oils as “All Natural” misled consumers because of the chemical
processing the oils had undergone. The court deemed the plaintiff’s
allegation that this processing results in the oils no longer
“retain[ing] the chemical composition occurring in nature” sufficient to
withstand the motion to dismiss, despite defendant’s argument that
merely describing the processing didn’t explain how the oils had been
“chemically altered.” On the other hand, the court in Pelayo
dismissed a challenge to an “All Natural” labeling claim involving the
defendant’s processed pastas, commenting that consumers of the pasta
certainly must have understood that it was not “springing fully-formed
from Ravioli trees and Tortellini bushes.”
Looking to the FDA to weigh in on GMOs as a defense strategy has not
proven successful. In early January, the FDA informed courts overseeing
the class actions against three major food manufacturers that the agency
was declining “to make a determination … regarding whether and under
what circumstances food products containing ingredients produced using
genetically engineered ingredients may or may not be labeled
“‘natural.’” Indeed, the U.S. District Court for the Eastern District of
New York recently rejected a motion to dismiss in In re Frito-Lay North America, Inc. All Natural Litigation.
The case is a purported class action in which the plaintiffs alleged
violation of state and federal laws based on the manufacturer labeling
SunChips and Tostitos “All Natural,” despite the fact that GMO corn is
an ingredient. The plaintiffs argued that “unnaturalness” is a defining
characteristic of GMOs, and the court allowed the case to proceed,
refusing the defendant’s request for a stay to obtain guidance on the
question from the FDA.
Raw Foods. Another emerging labeling controversy
involves one of the latest trends in nutrition: raw foods. A group of
plaintiffs championing the “raw foodist” movement recently brought suit
against a juice manufacturer in the U.S. District Court for the Southern
District of New York, alleging that the high-pressure processing (HPP)
with which the defendant’s BluePrint Juice and BluePrint Cleanse
products are treated destroys “vital” enzymes and nutrients. The
plaintiffs claim that the defendant’s “100% raw” and “never-heated”
labels mislead consumers, who pay nearly $10 for a single bottle of
juice. Little guiding precedent or regulation exists concerning how a
product subject to HPP may be labeled or characterized; it is unclear
whether the court in that case will allow the suit to proceed. The
increasing popularity of HPP among food manufacturers marketing to
health-conscious consumers indicates that this issue could present a new
wave of litigation.
decide cases involving “All Natural” claims. Some courts have stayed
class actions pending FDA comment, but others have refused to do so
based on the FDA’s 2010 statement that natural labeling is low on the
agency’s list of priorities. The recent FDA letter makes it clear that
the agency has no intention of issuing such guidance in the near future.
With no imminent solution at the federal level, legislation has been
proposed in various states, like Proposition 37 in California and
Initiative 522 in Washington, that would disallow labeling genetically
modified food as natural and/or require that genetically modified food
be labeled as such. While the California and Washington proposals
recently failed to pass, similar labeling legislation in Vermont and
Connecticut has the potential to change the landscape for food and
beverage labeling in coming years; the Vermont proposal is awaiting
state senate approval in January 2014, and the Connecticut proposal
passed but requires a three-part “trigger” (including that four other
states must enact similar legislation).
as manufacturers develop new methods of processing foods and
ingredients, this issue will become even more complex. In the coming
year, attention likely will be focused on the FDA and state legislatures
to see whether and how they weigh in on labeling; but in the meantime,
manufacturers must make important decisions about how to market their
products. Some companies are opting to remove, or refrain from the use
of, the “All Natural” label, while others are stepping up their
health-conscious labeling to appeal to certain consumers’ increasing
interest in what are perceived to be healthier ingredients. In addition,
the impact and effect of FDA guidance — or lack thereof — will garner
more attention given the Supreme Court’s recent grant of certiorari in POM Wonderful, LLC v. The Coca-Cola Co., a case that involves the interplay between false advertising claims, the FDA, and the Food, Drug, and Cosmetic Act.
________________________
*This article appeared in the firm's sixth annual edition of Insights on January 16, 2014.
Intellectual Property and Technology ›
Litigation ›
January 16, 2014 | *Skadden's 2014 Insights - Global Litigation
Lauren E. Aguiar, Anthony J. Dreyer, Xiyin Tang, Michael M. Powell
The food and beverage industry has experienced a recent spate of Lauren E. Aguiar, Anthony J. Dreyer, Xiyin Tang, Michael M. Powell
consumer class actions attacking various aspects of the labeling and
marketing of products. Advertising and marketing claims by manufacturers
that a product is “All Natural” have been an especially frequent
target, with plaintiffs pointing to the inclusion of synthetic
ingredients or genetically modified organisms (GMOs) or the processing
of the product as grounds for suit. Many of these cases have been filed
in California, where state laws are viewed as favorable to plaintiffs,
although cases are pending throughout the country.
Consumers have contended that “All Natural” claims are false,
misleading or deceptive under states’ applicable consumer fraud
statutes, but several such claims have been stymied by plaintiffs’
inability to explain what, exactly, “All Natural” means. In the absence
of an established, uniform legal definition, courts are sending mixed
signals through conflicting rulings that will require careful
consideration by industry participants seeking to avoid or minimize
litigation risk.
Court Interpretations
Although the term “All Natural” is not defined by the U.S. Food andDrug Administration, the U.S. Department of Agriculture has issued draft
guidance on the subject. In the absence of an FDA definition, courts
often have reached conflicting conclusions regarding what constitutes an
“All Natural” product and whether a legal challenge should proceed. For
example:
In Pelayo v. Nestle USA, the U.S. District Court for the
Central District of California dismissed a proposed consumer class
action on the grounds that the plaintiff failed to offer an objective or
plausible definition of “All Natural.”
However, in Astiana v. Kashi Company, the U.S. District Court
for the Southern District of California refused to grant the
defendant’s motion to dismiss and certified two classes of consumers who
purchased Kashi products labeled “All Natural” or “Nothing Artificial”
on the basis that certain of the challenged ingredients either were
synthetic or were not permitted in organic foods.
definition courts may look to USDA standards for organic foods to
determine whether an ingredient is natural. The court in Kashi noted that consumers often equate natural with “organic” — or hold organic to a higher standard. For example, in Thurston v. Bear Naked, another decision from the Southern District of California, the court
refused to certify a class of consumers who sought to challenge certain
ingredients in granola products labeled “All Natural,” explaining that
those ingredients are permitted in organic foods.
Genetically Modified Organisms. The inclusion of GMO
ingredients in foods also has been litigation fodder for consumer
plaintiffs. The lack of a definition of “All Natural” sometimes provides
plaintiffs free rein to attack the processing of a food or beverage
product without specifying how the processing converts natural
ingredients into an unnatural product.
For example, the U.S. District Court for the Northern District of California recently rejected a motion to dismiss in Parker v. J.M. Smucker Co.
The plaintiff alleged that the defendant’s labeling of various Crisco
cooking oils as “All Natural” misled consumers because of the chemical
processing the oils had undergone. The court deemed the plaintiff’s
allegation that this processing results in the oils no longer
“retain[ing] the chemical composition occurring in nature” sufficient to
withstand the motion to dismiss, despite defendant’s argument that
merely describing the processing didn’t explain how the oils had been
“chemically altered.” On the other hand, the court in Pelayo
dismissed a challenge to an “All Natural” labeling claim involving the
defendant’s processed pastas, commenting that consumers of the pasta
certainly must have understood that it was not “springing fully-formed
from Ravioli trees and Tortellini bushes.”
Looking to the FDA to weigh in on GMOs as a defense strategy has not
proven successful. In early January, the FDA informed courts overseeing
the class actions against three major food manufacturers that the agency
was declining “to make a determination … regarding whether and under
what circumstances food products containing ingredients produced using
genetically engineered ingredients may or may not be labeled
“‘natural.’” Indeed, the U.S. District Court for the Eastern District of
New York recently rejected a motion to dismiss in In re Frito-Lay North America, Inc. All Natural Litigation.
The case is a purported class action in which the plaintiffs alleged
violation of state and federal laws based on the manufacturer labeling
SunChips and Tostitos “All Natural,” despite the fact that GMO corn is
an ingredient. The plaintiffs argued that “unnaturalness” is a defining
characteristic of GMOs, and the court allowed the case to proceed,
refusing the defendant’s request for a stay to obtain guidance on the
question from the FDA.
Raw Foods. Another emerging labeling controversy
involves one of the latest trends in nutrition: raw foods. A group of
plaintiffs championing the “raw foodist” movement recently brought suit
against a juice manufacturer in the U.S. District Court for the Southern
District of New York, alleging that the high-pressure processing (HPP)
with which the defendant’s BluePrint Juice and BluePrint Cleanse
products are treated destroys “vital” enzymes and nutrients. The
plaintiffs claim that the defendant’s “100% raw” and “never-heated”
labels mislead consumers, who pay nearly $10 for a single bottle of
juice. Little guiding precedent or regulation exists concerning how a
product subject to HPP may be labeled or characterized; it is unclear
whether the court in that case will allow the suit to proceed. The
increasing popularity of HPP among food manufacturers marketing to
health-conscious consumers indicates that this issue could present a new
wave of litigation.
Regulatory Developments
The absence of FDA guidance arguably gives courts wide latitude todecide cases involving “All Natural” claims. Some courts have stayed
class actions pending FDA comment, but others have refused to do so
based on the FDA’s 2010 statement that natural labeling is low on the
agency’s list of priorities. The recent FDA letter makes it clear that
the agency has no intention of issuing such guidance in the near future.
With no imminent solution at the federal level, legislation has been
proposed in various states, like Proposition 37 in California and
Initiative 522 in Washington, that would disallow labeling genetically
modified food as natural and/or require that genetically modified food
be labeled as such. While the California and Washington proposals
recently failed to pass, similar labeling legislation in Vermont and
Connecticut has the potential to change the landscape for food and
beverage labeling in coming years; the Vermont proposal is awaiting
state senate approval in January 2014, and the Connecticut proposal
passed but requires a three-part “trigger” (including that four other
states must enact similar legislation).
******
The use of “All Natural” labels already is fraught with difficulty, andas manufacturers develop new methods of processing foods and
ingredients, this issue will become even more complex. In the coming
year, attention likely will be focused on the FDA and state legislatures
to see whether and how they weigh in on labeling; but in the meantime,
manufacturers must make important decisions about how to market their
products. Some companies are opting to remove, or refrain from the use
of, the “All Natural” label, while others are stepping up their
health-conscious labeling to appeal to certain consumers’ increasing
interest in what are perceived to be healthier ingredients. In addition,
the impact and effect of FDA guidance — or lack thereof — will garner
more attention given the Supreme Court’s recent grant of certiorari in POM Wonderful, LLC v. The Coca-Cola Co., a case that involves the interplay between false advertising claims, the FDA, and the Food, Drug, and Cosmetic Act.
________________________
*This article appeared in the firm's sixth annual edition of Insights on January 16, 2014.
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