Notable Ruling: Another Motion to Dismiss for Diet Soda

Just two and a half months after the Northern District of California ruled that a reasonable consumer would not be misled to believe “Diet Coke” aids in weight loss, a similar suit against Pepsi-Cola for its Diet Pepsi product has been dismissed (Manuel v. Pepsi-Cola Company). This is the fourth ruling in the past three months dismissing similar claims.

On Thursday, May 17, the Southern District of New York’s Judge Paul A. Engelmayer entered an order granting Pepsi’s motion to dismiss. The class alleged that Pepsi misrepresented its products with the label “diet,” a word that may signify to consumers that the product aids in weight loss. The Court held that nothing in Pepsi’s labeling or advertising claims suggested that the product would assist a consumer in weight loss or weight management. The Court referenced what a reasonable consumer would think – “diet does not stand in isolation,” it said. As such, the Court stated, reasonable consumers would realize that “diet” in the context of a soda means a lower caloric count and that lower caloric count does not mean weight loss.

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Industry Insights: The Ongoing Circuit Split Over Ascertainability

Over the past several years, there has been a deepening circuit split over a key issue in class action litigation: whether a class must be “ascertainable” before it can be certified. The principle involved is reasonably straightforward — before a court certifies a class, there should be some method to determine the actual class members.

The Circuit Courts of Appeal remain divided over this requirement’s applicability, however, and recent developments indicate that the Supreme Court is not yet ready to resolve the issue. But, as the decisions highlighted here indicate, in those circuits where the requirement still applies, it remains an important tool in defeating class certification. Therefore, so long as certification is denied on these grounds, the effect of the circuit split will continue to be felt — thus leaving open the possibility of renewed Supreme Court interest down the road.

The disparate approaches to ascertainability are exemplified in two decisions: Carrera v. Bayer from the Third Circuit, and more recently, Briseno v. Conagra from the Ninth Circuit.

Read the full article here.

PC Food Litigation Index: April 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.

In April, “natural” and its opposite, “artificial,” continued to be legally-contested territory in the food world. Malic acid has become a frequent target of plaintiffs’ lawyers who argue that because the ingredient can be in some instances deemed a manufactured flavoring agent, food products that contain it cannot fairly be labeled “no artificial flavors” Malic acid occurs naturally in many fruits but also can be manufactured through chemical reactions. Plaintiffs likewise continue to challenge “all natural” and “no artificial ingredients” labels on food products that contain xanthan gum, used in a wide range of foods as a thickening and stabilizing agent. Like malic acid, xanthan gum is an extraordinarily common, FDA-approved ingredient that has been in use for decades.

Despite hints from FDA Commissioner Scott Gottlieb that Agency guidance on the enduring “all natural” question is forthcoming, the Court opted to lift the stay of Tran v. Sioux Honey Association. The Court had previously stayed the action, awaiting “the outcome of FDA’s rule-making process regarding the permissible uses of the term natural in food labeling.” Responding to a direct request from the Court in a letter dated April 9th, the FDA declined to provide a determination as to “whether and in what circumstances honey containing glyphosate may or may not be labeled ‘pure’ or ‘100% Pure.’” The Court responded by lifting the stay, thus allowing the case to proceed.

A pair of similar suits contest the made with real fruit packaging of fruit bars, which the plaintiffs claim misleads consumers because of the process by which real fruit is added to the bars.

Annual Filing Trends

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Industry Insights: GMO Labeling Update

The USDA and the Agricultural Marketing Service (AMS) have set forth the National Bioengineered Food Disclosure Standard (“the Rule”) for labeling food products that have been genetically modified. The Rule requires food companies to disclose information about bioengineered food and food ingredient content by labeling such food as “BE” (bioengineered). According to its summary, the purposes of the Rule are to share information with consumers and to minimize implementation and compliance costs that would otherwise be passed on to consumers.

The USDA is proposing two lists:

  • highly adopted bioengineered crops (e.g. canola, field corn, cotton, soybeans and sugar beets); and
  • bioengineered crops that are not highly adopted (e.g. non-browning apples, sweet corn, papayas, potatoes and summer squash varieties).

Foods containing highly adopted crops would be required to be labeled as bioengineered. Otherwise, foods containing crops that are not highly adopted would be required to be labeled that they “may be bioengineered” or “may contain bioengineered ingredients.”

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Industry Insights: Doing Business in the Cannabis Industry

The cannabis industry is growing rapidly (by one estimate, the market for recreational cannabis was $9.2 billion in 2017, and is expected to grow as large as $47.3 billion by 2027). Many companies are seriously assessing the potential profit of indirect involvement in the industry by providing services to or investing in businesses that distribute, market, or otherwise sell cannabis. A significant consideration is whether the U.S. Department of Justice will enforce the federal drug laws, which ban marijuana, even in states where the substance is otherwise legal. This update, whose primary author is a former federal prosecutor who worked at the U.S. Department of Justice’s headquarters component in Washington, DC, assesses the status of the enforcement of federal drug law as to marijuana, and also offers due diligence factors that in-house counsel should consider before advising their companies regarding involvement in the cannabis industry.

Read the full article here.

 

PC Food Litigation Index: March 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.

In March, plaintiffs challenged a variety of food labeling and marketing claims, with most filings falling into the general false fact category. Claims in this category contested the labeling representations on products ranging from eggs and kombucha to quinoa snacks and spring water. As trendy, premium ingredients—like quinoa—make more frequent appearances on product labels, plaintiffs’ counsel are seeking to challenge the quantity of  those ingredients in a given product. Several claims continued the trend of targeting food and beverage labels that state or seem to suggest products or their ingredients are sourced from certain locales. Slack-fill lawsuits made up the second largest category of food litigation filings, where candy packaging remains a frequent target. Filings are down slightly from a year ago, though some jurisdiction such as Illinois have seen increased food litigation activity.

Annual Filing Trends

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Industry Insights: FDA Commissioner Scott Gottlieb Provides Comments on “Natural”

In a speech at the National Food Policy Conference today, FDA Commissioner Scott Gottlieb suggested that long-awaited guidance on the food and beverage industry’s marketing use of the term “natural” may be on the horizon. Gottlieb’s speech noted the more than 7,600 comments that landed at the FDA following its 2015 request for feedback on the “natural” label. Observing the “wide differences in beliefs regarding what criteria should apply for products termed ‘natural,’” Gottlieb stated that the Agency’s position would be science-based, aimed at ensuring truth in advertising. Last summer, the House Appropriations Committee issued a report directing the FDA to advise on actions it would undertake to move toward a definition of “‘natural’ so that there is a uniform national standard for the labeling claims and consumers and food producers have certainty about the meaning of the term.” Since that report, no such plan has been forthcoming from the FDA, leaving courts to decide whether to stay pending litigation, continuing to wait for the FDA, or to allow litigants their day in court.

Read the full speech here.

 

Industry Insights: When will the FDA define ‘natural’? Sooner than you might think…

In November 2015, the FDA announced that it was opening regulatory proceedings to define the term “natural” for food and beverage labeling. Ever since then, courts have stayed cases raising “natural” claims under the primary jurisdiction doctrine, appropriately deferring to the FDA’s deliberative process. Recently, however, plaintiffs’ counsel have filed new “natural” suits, or sought to reopen previously stayed “natural” cases, apparently impatient over the duration of the FDA’s rulemaking. The notion, implicit in these new filings, that class action lawsuits should take precedence over FDA rulemaking is wrong-headed:  Courts have long held that class actions are not an appropriate tool to set national policy, the FDA has expertise in food labeling that courts lack, and recent statements by the FDA Commissioner suggests the FDA is poised to act on “natural.”

Read the full article here.

PC Food Litigation Index: February 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.

California and New York continue to be the preferred jurisdictions for food and beverage class action filings.  The majority of the new filings in February 2018 occurred in those two jurisdictions followed by Missouri and Washington DC.  As for the type of cases filed, the trend continued with suits involving false labeling claims dominating the new filings in February 2018 followed by claims involving slack fill, “all natural” and health maintenance.   The rate of filings ticked down slightly, but the monthly numbers are very variable.

Annual Filing Trends

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New Human Rights Case Alleging Deception of Consumers Filed Against Food Companies (This Time on the East Coast)

In the wake of the 2016 dismissal of human rights cases filed against food companies in California, a new class action case was filed on February 26, 2018 in Massachusetts federal court (Tomasella v. Hershey Co.) alleging human rights violations associated with cocoa farming and processing. At its core, the complaint is premised on a theory of unjust enrichment in violation of the Massachusetts Consumer Protection Law—namely, that the defendants, by failing to disclose trafficking and child labor in their supply chains (and in fact asserting in their disclosures that they had “zero tolerance” for such activities), caused consumers to purchase their products when they never would have done so had they known about the purported trafficked and child labor taint in the products’ supply chains.

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