On July 28, 2020, the U.S. Securities and Exchange Commission (SEC) accused six individuals and their companies with securities fraud in connection with two cannabis-related businesses in California that raised $25 million in an unregistered securities offering. The SEC’s complaint was filed in the Central District of California and seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. Read the full article on our sister blog White Collar Briefly.

California’s Attorney General (AG) releases annual summaries of Proposition 65 settlements. This settlement data provides important insight into Proposition 65 litigation trends. Here are some of the most important takeaways from the 2018 data.

First, the average settlement amount was $42,424.52. According to the state AG’s report, there were 829 settlements in calendar year 2018. Many of these settlements also entailed injunctive relief, such as the addition of new labeling or reformulation of the products. Continue Reading Proposition 65 Settlements: Lessons from 2018 Data

Welcome to the first in a multipart series of posts regarding California’s Proposition 65 (Prop. 65). This piece introduces readers to the law and its requirements. Future posts will dive deeper into analysis and trends regarding Prop. 65 litigation.

What Is Prop. 65?

California’s Safe Drinking Water and Toxic Enforcement Act of 1986, better known as “Proposition 65,” requires businesses that sell consumer products—including food—to notify Californians about certain chemicals that are in those products. Prop. 65 affects all consumer products sold or distributed in California.  The state’s Office of Environmental Health Hazard Assessment (OEHHA) administers the law. Continue Reading An Introduction to California’s Proposition 65: What is Proposition 65?

The Second Quarter of 2020 has demonstrated increased filings in the food litigation space. Amidst reduced court operations and a significant decrease to general commercial litigation filings attributable to the COVID-19 public health emergency, the number of food litigation cases filed so far this are substantially higher than this point last year. As of June 2020, more than 100 food litigation matters have been filed so far this year.

One of the surprising trends emerging in the second half of 2019 was the increase in filings in New York. Traditionally, California has been the most common destination for food litigation filings. At the end of 2019, New York courts saw more cases filed, and this trend has continued into 2020. More than 50 food litigation, or approximately half, of all food litigation matters filed year-to-date June 2020 were filed in New York courts. Continue Reading PC Food Litigation Index: Q2 2020

On July 22, 2020, the U.S. Food and Drug Administration (FDA) submitted draft enforcement guidance for cannabidiol (CBD) industry for review by the White House’s Office of Management and Budget (OMB). The draft guidance is not yet available.  No date or proposed deadline for producing a final policy, but this submission indicates that the FDA is making some progress towards long-awaited guidelines for the industry.

Perkins Coie attorneys have monitored the FDA’s ongoing efforts to regulate the CBD product market, including its public hearing last year, issuance of warning letters, and series of reports to Congress (here and here). Former FDA Commissioner Scott Gottlieb called for the agency to adopt an expedited process for legally selling CBD in food and beverage products.

Perkins Coie attorneys will continue to track this latest development and provide insights to the industry when the draft enforcement policy is available to the public.

On July 22, Perkins Coie Partner Larry Reichman and Associate Tommy Tobin presented a CLE program entitled “Food and COVID-19: Regulatory Approaches to Secure the Food System During the Coronavirus Pandemic” to the Practising Law Institute (PLI). This One-Hour Briefing covered topics ranging from food safety to securing food work environments. The program emphasized the substantial challenges facing food supply chains, especially given disruptions to foodservice operations and changing consumer demand. During the COVID-19 public health emergency, many state and federal regulators have adopted temporary changes to adapt to extraordinary conditions. The presenters explored what these changes were and whether certain changes might continue after the emergency period.

The On-Demand recording of the PLI program may be accessed here: https://www.pli.edu/programs/food-and-covid-19-regulatory-approaches

In 2011, Perkins Coie’s winning defense in Turek v. General Mills led to the first published federal appellate decision on the scope of the preemption defense under the Nutrition Labeling and Education Act (NLEA). Subsequently, the preemption defense remains strong under the NLEA and other aspects of the federal Food Drug & Cosmetics Act (FDCA), including in cases involving supplements. See Dachauer v. NBTY, Inc. 913 F.3d 844 (9th Cir. 2019). That trend continues. On May 11, 2020, the Second Circuit held that the preemption defense extends to cosmetic products regulated under the FDCA as well.

Continue Reading Notable Ruling: Lessons for Food Litigation, Second Circuit Upholds Preemption Defense in Cosmetics Case

California courts remain a top forum for food litigation matters. So many matters are heard in the Northern District of California that it has gained a reputation as the “Food Court.” Now, the California Supreme Court has held that two of the state’s most widely used consumer protection statutes must be tried by a judge rather than a jury.

California’s False Advertising Law (“FAL”), codified at Cal. Bus. & Prof. Code § 17500 et seq., and the Unfair Competition Law (“UCL”), codified at Cal. Bus. & Prof. Code § 17200, et seq., represent two of the most common vehicles for plaintiffs to bring suits alleging false product claims or purported misrepresentations on food labels. Continue Reading Notable Ruling: No Jury for False Advertising and UCL Suits, California Supreme Court Rules

Consumers’ response to COVID-19 has led to increased demand for personal protective equipment and other much-needed supplies to aid consumers and healthcare professionals in the fight against the disease.  Alcohol-based hand sanitizer is one such product, with the U.S. Centers for Disease Control and Prevention recommending hand sanitizers when soap and water are not available.   The FDA has issued recent guidance intended to provide “flexibility” for manufacturers and increase the supply of alcohol-based hand sanitizer in the marketplace.

Spurred on by the FDA’s guidance and similar guidance from other agencies, many manufacturers, such as fragrance companies and distilleries, are already pivoting production lines to make hand sanitizers or its component parts.  Yet, alcohol-based hand sanitizers are over-the-counter drugs regulated by FDA.  As manufacturers prepare to temporarily repurpose existing manufacturing facilities to enter the hand sanitizer market, they should keep several considerations in mind and maintain compliance with the FDA guidance documents.  Read more here.

With 61 new filings in the first three months of 2020, 2020 is on-track with 2019 to be a big year in food and beverage litigation. About a third of new cases allege defendants misleadingly claim their product contains vanilla, while the remainder of cases are an even mix between cases alleging misleading health misrepresentations, natural claims, false-fact, and Proposition 65.

Vanilla. We wrote about the uptick in “vanilla” cases in our 2019 Food Litigation Year in Review, and the early numbers from 2020 confirm this remains a popular area for plaintiffs. There were 21 new “vanilla” cases filed in 2020 out of 61 total cases. All but one of these cases was filed in New York federal courts by the same group of plaintiffs’ counsel—Sheehan & Associates and Reese LLP. The complaints allege that “vanilla” claims on a wide variety of products (from milk to herbal tea) are false because the products derive their vanilla flavor in part from vanilla flavoring, rather than vanilla beans or vanilla extract. Vanilla flavoring, plaintiffs allege, contains non-vanilla flavors that reasonable consumer do not expect in products labeled vanilla. Continue Reading PC Food Litigation Index: Q1 2020