Notable Ruling: No Article III Standing to Challenge Krill Oil Label Claims

On March 25, 2019, Judge Gary L. Sharpe of the Northern District of New York dismissed a putative class action against CVS and Lang Pharma alleging that the labeling of defendants’ CVS Omega-3 Krill Oil is deceptive and misleading.  Plaintiff in the lawsuit, James Gaminde, alleged that CVS Omega-3 Krill Oil contained only sixty percent of the 300mg of Omega-3 Krill Oil represented by the label, and therefore violated New York’s General Business Law sections 349 and 350, as well as claims for breach of express warranty, implied warranty, unjust enrichment and fraud.  The court ruled that plaintiff lacked Article III standing stating that plaintiff’s “failure to allege that he tested his bottle of CVS Krill Oil—indeed, his failure to make any allegation regarding how he knows that it was mislabeled—is fatal.”  The court held that plaintiff’s conclusory and unsubstantiated allegations failed to demonstrate that he suffered an ‘injury in fact’ which is concrete and particularized, a requisite to establish Article III standing.  Noting that any amendment would be futile, the court granted defendants’ motion to dismiss with prejudice and entered judgment for defendants.  Defendants were represented by the Perkins Coie food litigation team.

James Gaminde v. Lang Pharma Nutrition, et al –  Case No. 18-cv-00300-GLS (N.D.N.Y)

Notable Ruling: Glyphosate Verdict—Implications for Food Litigation

As you all know, the Northern District of California jury found earlier this week that Monsanto’s Roundup herbicide product was a “substantial factor” in causing a plaintiff’s non Hodgkin lymphoma. The defendants and industry were all very optimistic that the trial, which focused solely on causation and not knowledge or company conduct, would result in an impartial scientific analysis. Unfortunately, the jury ignored a very substantial body of literature that glyphosate, the active ingredient in Roundup, is safe. It also ignored the conclusions of virtually every regulatory or public health group, including the Environmental Protection Agency (EPA), subcommittees off the World Health Organization (WHO) and the European Food Safety Authority (EFSA). Unfortunately, hundreds of similar cases are pending and a state court jury in Alameda also rendered a verdict against Monsanto.

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Food Litigation Year in Review 2018

Perkins Coie is pleased to present its third annual Food Litigation Year in Review, offering a summary of the year’s key litigation outcomes, regulatory developments, and filing data. Last year, pointing to uncertainty at the appellate level, Perkins Coie predicted continued litigation in 2018. Using metrics from our proprietary database, developed by our food litigation team in order to track and understand trends in this area, 2018’s Year in Reviewagain reports an increase in class action litigation—indeed, one of the most active years on record, with 158 new lawsuits.

Lawsuits continued to challenge the use of the term “natural” (yet undefined by the FDA) on food and beverage product labels. In particular, these claims continued to apply the theory that foods containing trace amounts of pesticides should not be labeled “natural,” notwithstanding the general skepticism of the courts toward such arguments. Lawsuits alleging slack fill in the packaging of candies, bake mixes, and other foods also continued unabated, despite notable early victories in several such cases. While the courts have seemed increasingly unwilling to adopt plaintiffs’ theories, class action litigation persisted and grew.

For several years, Perkins Coie has been a leader in defending food litigation cases, securing favorable, precedent-setting results for its clients. 2018 was no different, with several important victories, including a pathbreaking decision in the Proposition 65 case Post, et al. v. Superior Court. The California Court of Appeals held that Proposition 65 warnings for cereal based on the presence of acrylamide in those foods would conflict with the FDA’s longstanding policies encouraging the consumption of whole grain cereals. The court granted summary judgment to the food industry’s leading cereal manufacturers, a decision that withstood attempted appeal to the state’s highest court. Consistent with the trend of the past several years, the number of Proposition 65 pre-suit notice letters continues to increase, 2018 seeing more than 530 such notices. Given the proliferation of pre-suit notices, litigation in this area is bound to increase.

PC Food Litigation Index: December 2018

Consumer class action suits continue to target food products that plaintiffs allege don’t actually contain the ingredients highlighted in their labels. For example, in one such false fact case last month, the plaintiff argued that the labels for Panera Bread’s blueberry bagels are misleading; allegedly, the bagels do not contain blueberries at all, only pieces of dyed sugar and flour meant to look like blueberries. (Similar past lawsuits have targeted blueberry-labeled products sold at Dunkin Donuts and Krispy Kreme.)

Another similar false fact action, Lima v. Trader Joe’s, alleges that the name of Trader Joe’s Honey Nut O’s cereal conveys the false impression that the product is primarily sweetened by real honey, even though the plaintiff says it is sweetened mostly by sugar. In Morrison v. Nuts ‘N More, the plaintiff argued that the defendant’s White Chocolate Peanut Spread is unfairly and deceptively marketed, leading consumers to believe that it contains real white chocolate, defined as at least 3.5 percent milk fat. The defendant’s product allegedly “uses non-fat dry milk.” Continue Reading

Industry Insights: What Does the 2018 Farm Bill Mean for the Hemp and CBD Businesses?

On December 20, 2018, President Trump signed the Agriculture Improvement Act of 2018 (popularly known as the 2018 Farm Bill) into law.

  • Among the broad-ranging provisions included in the law, it legalizes the cultivation and sale of hemp at the federal level, effective January 1, 2019.
  • Hemp and cannabidiol (CBD) businesses have thrived in numerous state jurisdictions in which such products are legal. Federal legalization means that hemp producers and businesses that deal in hemp and hemp-derived products, such as CBD, are now free to pursue their businesses more aggressively, and with less concern that a seismic shift in enforcement priorities could result in their investigation or prosecution by federal authorities.

To find out more about the 2018 Farm Bill and the implications for those participating in the hemp and CBD industries, please click here.

PC Food Litigation Index: November 2018

Each month we will be sharing the PC Food Litigation Index, a summary of latest class action filings in the food and beverage industry. This data is compiled by Perkins Coie based on a review of dockets from courts nationwide.

November saw a high number of new class action complaints advancing familiar challenges to the “all natural” claims affixed to pasta, ice cream, potato chips and other products. Due to the lack of regulatory guidance around use of the word “natural” on food products, that term continues to be a target for plaintiffs’ suits.

For example, in Rodriguez v. Coolhaus, Inc., the plaintiff claims that several of the defendant’s ice cream products are falsely labeled as “all natural” because they contain allegedly unnatural ingredients like soy lecithin and stabilizers that use dextrose and guar gum.

The popular ingredient malic acid remains at the center of many new “natural” cases. In Lepaine v. UTZ Quality Foods LLC, the plaintiff argues that the defendant’s salt and vinegar potato chips are falsely labeled as flavored only with natural ingredients, because they contain malic acid. Similarly, the plaintiff in Augustine v. Talking Rain takes issue with the “natural” labels on juice products that contain the ingredient. Juice and beverage products are often implicated in these malic acid “natural” suits. Another case filed this month, Anderson v. Outernational Brands Inc., contains substantively similar allegations about a beverage product that is labeled “all natural” and “no artificial color or flavors,” yet contains malic acid.

Plaintiffs are increasingly citing health-related claims on food products as false or misleading, unsupported by scientific evidence. As food manufacturers angle for more health-conscious consumers, their products’ labels are coming under increased scrutiny. For example, coconut oil products have been a frequent target, challenged for labels that describe them as healthy—or at least healthier than other cooking oils such as vegetable oil.

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Notable Ruling: What’s In Your Water?

In its recent ruling in Weiss v. Trader Joe’s Company, the Central District of California faced the question of whether certain statements on product labels promoting high-alkalinity water were false and misleading or simply puffery. Among these statements were claims that the water is “ionized to achieve the perfect balance.” Plaintiff Dana Weiss argued that the claims found on the actual product, together with advertising statements made in the defendant’s “Fearless Flyer” marketing brochure, amount to unfair competition and false advertising because no scientific evidence exists supporting the claimed health benefits of drinking water with high alkalinity. Despite the absence of specific health-related promises, Weiss argued, simply noting the water’s alkalinity content on the label implies a health claim. Trader Joe’s Company moved to dismiss, contending that such claims are no more than puffery, and such claims would not deceive or mislead a reasonable consumer into believing that the product offers unsubstantiated health benefits.

Though the court hinted that Weiss’s claims would fail as lack-of-substantiation claims (impermissible as private causes of action under California law), it nevertheless proceeded to analyze them under the reasonable consumer test. The court found that the statements and symbols on the label—a plus sign, the words “refresh” and “hydrate,” and a simple definition of alkalinity—would not deceive a reasonable consumer. The court also rejected Weiss’s argument that the statement “water and then some” gives rise to “a contextual inference that Alkaline Water of Trader Joe’s provides more health benefits and better hydration than normal water.” Even assuming the statement “water and then some” was more than mere puffery, the court concluded that a reasonable consumer would read the “and then some” language as referring to either the electrolytes added to the water or to the product’s elevated pH level. The court thus dismissed each of Weiss’s claims. The court did, however, grant Weiss leave to amend one of the claims in the complaint (a claim implicating a statement of the water’s pH level), concluding that it may be possible for Weiss to plead the falseness of that statement with the requisite particularity.

Notable Ruling: Alien Tort Statute Focus in Aiding and Abetting

On Tuesday, October 23, 2018, the Ninth Circuit Court of Appeals issued an important opinion reviving a decade-old Alien Tort Claims Act (ATS) suit based on alleged aiding and abetting slave labor in cocoa farms on the Ivory Coast. Doe 1 v. Nestle, et al., No. 17-55435, 2018 WL 5260852 (9th Cir. Oct. 23, 2018). In doing so, the Court ruled that even if the ATS applied only to domestic conduct, the facts alleged in the case could be used, if properly plead, to support an ATS suit against domestic corporations. This lawsuit was initiated over a decade ago by former child slaves who were kidnapped and forced to work on cocoa farms. The complaint alleges that defendants, large food manufacturers, purchasers, processors, and retailers of cocoa beans, provided financial support and technical farming aid despite allegedly knowing that the farmers with which the defendants had exclusive buyer/seller relationships were utilizing child slave labor in violation of the law of nations.

The United States Supreme Court, in Jesner v. Arab Bank, ––– U.S. ––––, 138 S.Ct. 1386, 1407, 200 L.Ed.2d 612 (2018), ruled that the ATS, which gives District Courts “original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States,” is not extraterritorial and applies only to domestic conduct. Invoking this doctrine, defendants urged the Ninth Circuit to focus on the location where the principal offense or injury occurred, rather than the location where the aiding and abetting allegedly occurred. The Ninth Circuit disagreed, finding (1) that the focus of the ATS can be on conduct that constitutes aiding and abetting another’s violation of the law of nations, and (2) that aiding and abetting in and of itself can constitute a tort committed in violation of the law of nations. The Court stated that defendants’ alleged provision of spending money from the United States to Ivory Coast farmers to maintain buyer/seller relationships was “outside the ordinary business contract” and was done for the purpose of receiving cocoa at a price that could not be obtained without employing child slave labor, which the Court likened to “kickbacks.” Furthermore, the Court noted that defendants sent representatives to regularly inspect operations in the Ivory Coast and “report back” to headquarters in the United States. Thus, these actions were “both specific and domestic.”

In sum, the Court reversed and remanded, allowing plaintiffs to amend their complaint to remove foreign corporations and to specifically allege what conduct is attributable to which domestic defendants. The court also permitted the plaintiffs to re-allege their aiding and abetting claims in accordance with recent precedent Jesner and RJR Nabisco, Inc. v. European Community, ––– U.S. ––––, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016).

PC Food Litigation Index: October 2018

Each month we will be sharing the PC Food Litigation Index, a summary of latest class action filings in the food and beverage industry. This data is compiled by Perkins Coie based on a review of dockets from courts nationwide.

October 2018 filings continued an upward trend exceeding 2017’s pace.  As in the later months of 2017, October 2018 filings focused on false labeling, slack-fill, and all-natural. Both slack-fill claims filed this month pertained to products in opaque bags—Justin’s mini peanut butter cups and Harvest Snap snack products. Natural claims targeted La Croix sparkling water, Hershey fruit-flavored chocolate, and maple syrup.

White chocolate and pasta sauce were popular targets also. Plaintiffs in Ruiz v. Living Intentions LLC and Rafael v. Starbucks Corp. sued in New York over products that allegedly do not contain white chocolate as defined by the FDA. Plaintiffs in Illinois and California, (Kubilius v. Barilla America, Inc. and Flolo v. Cucina & Amore Inc.) sued claiming that that the defendants’ pasta sauces, which are advertised as containing no preservatives, actually contain citric acid—a chemical both plaintiffs allege constitutes a preservative. Mr. C.K. Lee of the Lee Litigation Group represents all four sets of plaintiffs in the white chocolate cases and the pasta sauce cases.

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Industry Insights: The New Nutrition Facts Panel

The Food and Drug Administration (FDA) is implementing changes to the Nutrition Facts Panel for food and beverage labels. Manufacturers are required to comply with the new requirements by January 1, 2020, although manufacturers with less than $10 million in annual food sales have an additional year, until January 1, 2021. Key changes include the following:

  • Serving sizes are being changed to reflect the amounts typically consumed. In addition, larger packages may now be considered a single serving.
  • The amount of added sugars must be stated in addition to total sugar.
  • The nutrients that must be listed will now include Vitamin D and Potassium, replacing Vitamins A and C.
  • Calories from fat will no longer be required.
  • Daily values for certain nutrients have changed based on updated science.
  • The format and look of the NFP is being changed to draw attention to certain information, such as calories and serving size.

 Learn more about these changes here

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