Food Liability Law Blog

A "Surprise" for Your Sweet Tooth: FDA Revisits Inedible Objects in Candy

Claire Mitchell — Wed, 27 Mar 2013 13:52:48 -0800

Many of you may be familiar with the famous confection known as the Kinder Surprise or Kinder Egg, a toy-filled chocolate that is touted as the single largest children’s candy category in the world. The treat is manufactured by the Italian company Ferrero and has risen to nearly cult status in certain countries. Kinder Eggs are sold worldwide; however, U.S. consumers have likely only tried the confection while traveling abroad or through some other surreptitious means. The candy has been banned in the United States for decades.

This Spring, though, U.S. consumers might see something similar to the Kinder Egg in their Easter baskets. Kevin Gass, one of the founders of Candy Treasure LLC located in New Jersey, has developed a safe alternative to the Kinder Egg that meets the approval of both the U.S. Food and Drug Administration (FDA) and the Consumer Product Safety Commission (CPSC).

The FDA has long viewed the practice of intermingling confectionaries with trinkets with apprehension because of the potential choking hazard it presents. In fact, Section 402(d)(1) of the Federal Food, Drug, and Cosmetic Act expressly states that a confectionery is deemed to be adulterated “if it…has partially or completely imbedded therein any nonnutritive object,” unless the nonnutritive object has a functional value and would not be injurious to health.

It is clear that the agency’s thinking on this subject has not changed. Most recently, in April 2012, the FDA reissued its import alert against Kinder Eggs and other similar products containing imbedded, non-nutritive objects, being offered for sale in the U.S. In the alert, FDA explained that “[t]he imbedded non-nutritive objects in these confectionary products may pose a public health risk as the consumer may unknowingly choke on the object.” Individuals attempting to smuggle Kinder Eggs across the border are subject to refusal of admission and a could face a potential fine of $2500 per egg.

Despite these restrictions, Gass announced earlier this month that his company’s product has been approved for sale in the U.S. Candy Treasure makes a confection called the Choco Treasure, which, like the Kinder Egg, is a chocolate egg that contains kid-friendly toys, such as figurines, full decks of mini playing cards, 3D puzzles and spinning tops. So how did this New Jersey company circumvent the country’s longstanding ban on the sale of confectionery that has a partially or completely imbedded non-nutritive object?

Gass explains that the Choco Treasure candy egg has a specially designed yellow egg-shaped capsule that contains each toy. There is a plastic ridge around the capsule which physically separates the two halves of the chocolate egg. It also alerts children that there is something hidden inside the chocolate. The capsule has a button that must be pushed in order to break it apart. In addition, the inedible toys contained inside the capsule are larger than those typically found inside the European equivalent. You can see how the concept works at the company’s website here: http://www.chocotreasure.com/how-it-works/.

This modification to the traditional Ferrero Kinder Egg is considered acceptable and is permitted for sale in the U.S. Ferrero's similar confection remains illegal, on the hand. FDA explained in a Compliance Policy Guide that if the trinkets are physically separated from candy item by some form of wrapping, this would be a sufficient safety precaution.

So this weekend you can enjoy your confection with nonnutritive objects legally. Or, if you are so inclined, you can sign the petition currently pending to lift the ban on Kinder Eggs.

Turn your Bar Bill Into a Federal Case

Richard Goldfarb — Mon, 25 Mar 2013 17:00:00 -0800

A guy walks into a bar . . .

No, seriously, a guy walks into a bar. He orders a couple of beers and a couple of drinks. His bill comes. He pays his bill. He leaves.

Sounds like something that happens everyday, thousands of times a day, right? Let's try it again.

A guy walks into a bar. He orders a couple of beers and a couple of drinks. He doesn't ask what the drinks will cost. The person who waits on him does not tell him. His bill comes. He pays his bill. He leaves. He sues.

If you're wondering what he's suing about, you're not alone.

Learn what happened after the jump.

The bar is the Houlihan's in Brick, New Jersey and the case is Pauly v. Houlihan's Restaurants, Inc. As far as can be told from the court's decision, Mr. Pauly's complaint is that the prices charged were unreasonable. Since the prices of drinks were not on the menu, he claims, Section 2-305 of the Uniform Commercial Code declares that the price should be "a reasonable price."

On a motion to dismiss for failure to state a claim, a federal district judge in New Jersey agrees. Section 2-305(1)(a) of the UCC provides:

The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if: (a) nothing is said as to price . . .

This is a basic principle of Article 2 of the UCC: so long as the parties intended to create a contract, they can leave certain terms of the contract--price, certain aspects of quantity, delivery time and place, whether there is to be a warranty--open, and still have created an enforceable contract. The UCC will fill in those terms they have left open with so-called "gap filler" provisions, such as 2-305, and such a contract is enforceable. On a 12(b)(6) motion to dismiss, the judge is required to take all the facts in the complaint as true. If it is true that "nothing was said as to price", then the UCC says the price should be a reasonable price.

That does not mean that the plaintiff will win his case. He paid his bill, which he claimed he did under legal compulsion because New Jersey law makes it a crime to leave a bar or restaurant without paying your bill. On the motion to dismiss, the court agreed, saying,

It would be unreasonable and inequitable to hold that a person must risk criminal exposure in order to challenge a restaurant's policy of omitting prices from their menus and ultimately charging unreasonable and discriminatory rates for their food and beverages.

I can sort of see this on a motion to dismiss, but seriously? The complaint makes noise about "'menu engineering' - the deliberate and strategic construction of menus to exploit consumer psychology and manipulate customer perceptions." Or, in other words, the restaurant would like to sell you stuff you may not have come in for. This doesn't sound like a cause of action to me.

The defendant’s mistake, it seems to me, was to bring the motion to dismiss. In deciding a motion to dismiss, the court is required to accept all facts pled in the complaint as true. In the complaint, the plaintiff asserted, “Plaintiff’s order for beverages offered for sale on a menu that failed to disclose prices for those beverages manifested assent on behalf of Plaintiff to pay Defendant a good faith reasonable price for the beverages.” If this were true (and remember, the court had to assume it was true), then the plaintiff’s theory, that 2-305(1)(a) applies, would be generally correct.

I asked Professor Scott Burnham of Gonzaga Law School for his thoughts on the case. This is what he said,

This is not a situation where the price is not agreed upon and defaults to a reasonable price. The price has been established by the seller and the customer knows that. The seller did not disclose the price and the buyer did not request it, but I don't think that is at all an unusual situation. Often parties, not just at bars and restaurants, think they know enough and treat their limited knowledge as sufficient. Unless the seller has not acted in good faith, I think the buyer bears the risk of being mistaken in its assumption about the price. If I go into a bar and order a beer, I don't ask the price because I have a reasonable expectation of what it will be. If it is a dive bar, I might expect to pay $2, and if it is the Plaza, I might expect to pay $10. If I get a bill for $25, then I think I have a claim that this was not within my reasonable expectations and the seller had a duty to point the price out to me when I ordered it.

To elaborate on Professor Burnham’s comment, the law that most likely will be found to apply to this situation after the dust settles is not 2-305(1), but 2-305(2): “A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.” Official Comment 3 to this section of the UCC elaborates on the principle:

Subsection (2), dealing with the situation where the price is to be fixed by one party rejects the uncommercial idea that an agreement that the seller may fix the price means that he may fix any price he may wish by the express qualification that the price so fixed must be fixed in good faith. Good faith includes the observance of reasonable commercial standards of fair dealing in the trade if the party is a merchant. But in the normal case, a “posted price” or a future seller’s or buyer’s “given price,” “price in effect,” “market price” or the like satisfies the good faith requirement.

There are allegations in the complaint that the bar actually charged different prices to different customers for the same drink. If true, there is a real issue of good faith. But in the more usual circumstance, where there is a “stated price” listed in the computer that totals up the bill, and the wait staff simply presses the button for “Bud Light" or "Samuel Adams Utopia" (which sells for $190 a bottle) and it comes up on the bill at that fixed price, that is all 'good faith" requires.

Professor Burnham pointed me to an article in the New York Times about a similar dispute, but one that was handled in a far different way. Three people dined at a restaurant where the price of their meal, which included a special whose price was "market price" (just like the comment to 2-305 suggests), shocked them. Their bill was $400, $275 of which was this one pasta dish. They complained to the manager, who knocked 25% off the tab, and then wrote to the New York Times "Haggler", and got another 25% knocked off. No legal system was harmed in the handling of this complaint.

The reason I contacted Professor Burnham in the first place is that in the back of my mind the fact that the plaintiff had paid the bill without complaint--despite the judge's position that he did so under some form of compulsion, although such a compulsion would never stop him from asking to see the manager to register a complaint--was material. Professor Burnham, who is a world expert on the doctrine of accord and satisfaction, disagrees:

UCC 1-308 [which is 1-207 in New Jersey, which has not adopted the latest amendments to Article 1] provides a mechanism for accepting with reservation of rights. If the buyer disputed the bill, it would have been a good idea for him to make clear that he was preserving his defenses by writing something like "paid under protest" on the bill. But the fact that one accepts performance without a reservation of rights does not mean that he has waived those rights. If in fact he was overcharged (i.e. charged more than the price on the menu or an amount beyond reasonable expectations), he would still have a claim absent something like accord and satisfaction. I don't see anything here that would constitute an accord. There was payment of the price demanded, not an agreement to pay less to resolve a dispute.

How, then, did someone get a lawyer for this case, and how did it end up in federal court (where there is a minimum "amount in controversy" of $75,000 for diversity suits)? Apparently by making this into a class action, they allowed the defendants to remove it. We've blogged about class actions involving food in the past. Under the Class Action Fairness Act, you can get into federal court if the total claims of the class would be $5 million or more. But, as one of my colleagues, when discussing this case, remarked, how would they find the class members? If you paid for your meal with cash, Houlihan's has no record of you (or at least I hope they don't). And the class is of people who were charged an unreasonable price for their drinks. If no one ever complained (or any complaints were resolved in the time-honored way of talking to the manager), the plaintiff here may be a class of one. And it's hard to get to $75,000, let alone $5 million, if that's the case.

Professor Burnham's final advice is:

The fact that this has come up a couple of times indicates that restaurants might do more to practice a bit of preventive law. They might make sure the customer is given a menu, or that one is placed on the table, or that a nearby wall displays the prices. When the waiter rattles of the non-menu specials, they should include the price. That kind of practice would be an inexpensive way to keep these problems from arising.

This is where he, as a law professor, and I, as a practitioner, must part ways. Houlhan's, or any other restaurant, must balance legal issues like this against the restaurant experience they impart to their customers. So long as the wait staff would give true information about the prices of drinks that are not listed on a menu (as, in a bar, they often are not), and complaints like this are rare, it is perfectly reasonable, when you order a beer, that the response remains, "I'll be right back with your Bud Light" rather than "that will be $2.75, are you sure you want it?"

So, a guy walks into a bar and a lawsuit ensues. Makes you long for a rabbi, a minister or a priest on whose shoulder to cry.

FDA Cracks Down on Company's Facebook "Likes"

Claire Mitchell — Mon, 18 Mar 2013 13:02:55 -0800

Social media has become a critical component of a company’s product marketing and promotion. However, based on FDA’s increased enforcement action around social media activity, it is a risk to be carefully considered.

The Food and Drug Administration (FDA) recently published a December 11, 2012 warning letter on its website that cited a dietary supplement company for its improper social media activity, among other things. Specifically, the warning letter explained that the supplement company’s “liking” of a consumer testimonial posted to its product Facebook page was a violative claim in that it established the product as a drug intended to cure, mitigate, treat, or prevent a disease. The FDA noted in its warning letter that the liking of the following March 10, 2011 Facebook post by the company constituted an impermissible disease claim:

“[Product]has done wonders for me. I take it intravenously 2x a week and it has helped me tremendously. It enabled me to keep cancer at bay without the use of chemo and radiation.”

The company has since removed this content from its Facebook page.

This is not the first time that FDA has scrutinized a company’s use of social media. In the past two years, over a dozen companies have been cited by FDA for making improper claims on the company or product Facebook page or Twitter account. However, this is the first time FDA has interpreted that a “like” implies endorsement of an unapproved claim.

There is some speculation that a crackdown on similar social media activities, such as “retweeting” a post on Twitter or “+1” on Google+, might be next on FDA’s agenda. In light of this regulatory risk, companies should ensure consider drafting formal social media policies and thoroughly vetting all social media marketing strategies to avoid enforcement action.

New York "Big Gulp" Ban Bites It For Now

Richard Goldfarb — Thu, 14 Mar 2013 17:00:00 -0800

Among the ironies connected to New York's attempt to ban large cups of soda is the fact that the last time I was in the city, before the advent of 7-11 to its precincts, the one thing I really craved was a really large cup of Dr Pepper. When I visit New York, on business or for pleasure, I typically walk miles and miles, and on a hot day an icy cold cup of soda (I prefer the Diet) is what I need to refresh myself. I think I found one place that had it, but then again Dr Pepper is less common in the East.

A lot has been written about this ban both before and after a New York Supreme Court judge struck it down on Monday. Some of it has been fairly misleading and some of it has been relatively accurate. The case has nothing to do with equal protection under the U.S. Constitution, or indeed the U.S. Constitution at all. Rather, it was mainly decided based on an interpretation of a document that is, in its origins, older than the Constitution: the New York City Charter, a document that began in the reign of James II, the man for whom the city and state were named. Ultimately, the question was not so much the wisdom of the ban, but whether the Board of Health, a body appointed entirely by the Mayor without even City Council ratification, had the power to institute it, or whether that power was held by the City Council or the New York State Legislature, each of which had failed to pass similar legislation. Unless you are seriously concerned about the separation of powers doctrine under New York law (city or state), the vast majority of the case is of little interest and creates no precedent for what other jurisdictions may or may not do.

Much attention has been given to the judge's alternative ruling that the ban was "arbitrary and capricious" because it covered only some establishments and because it exempted certain drinks. The former of these is really a question of the authority of the Board of Health, which by a "memorandum of understanding" has ceded jurisdiction over grocery stores and convenience stores, as opposed to restaurants, to the state authorities. The court hints, however, that one problem with the ban is that that Board of Health did not seek, before imposing it, to coordinate with the state, which the MOU apparently required.

The latter can certainly be criticized. If you can get unlimited refills of a 16 ounce cup, have you accomplished anything? Some would argue that you have. Alcoholic beverages and milk-based beverages were exempt, which raises other issues. An article on the Bloomberg website, of all things, suggests that the result of the judge's action might be a broader ban. The director of the World Health Organization's Orwellian-sounding "Center on Public Health Law and Human Rights" argues that the ban was "legal and right." Mayor Bloomberg, not surprisingly, vows to succeed on appeal.

More interesting is the number of different ways in which New York restaurants had chosen to comply with the ban, and the cost of being required to be in a position to comply only to have the ban struck down just before it went into effect. 16 oz. cups were at a premium in the city before the ban was struck down; as the case goes through appeal, there will be more uncertainty about what those subject to the former ban may do, and if the mayor wins on appeal, how quickly they would have to comply with a reintroduced ban. While the organizations that challenged the law clearly had the right to do so, for many New York restaurant owners the real concern is certainty. They'd rather know what their duties are far in advance of having to implement them because they can't change their practices on a dime. This appeal doesn't do them any favors at all.

The Case That Makes You Go "Ewww"

Richard Goldfarb — Wed, 20 Feb 2013 17:00:00 -0800

You've heard about this case. It's the story of the cop whose burger was spat on in Vancouver, Washington.

The Washington Supreme Court's decision in Bylsma v. Burger King Corp., which covers a tiny but critical part of the policeman's lawsuit, has gotten a lot of publicity. Let me give you three quick points that most of the reporting misses:

The guy who spat on the burger pled guilty to assault and was sentenced to 90 days in jail, was fired, and is not a defendant in the lawsuit.
The lawsuit, as it currently stands, has nothing to do with respondeat superior or whether the restaurant was negligent in hiring the guy who spat.
The case was decided under Washington law, and the real impact will be under Washington's Products Liability Act, which gives restaurants like the Burger King franchise here, and Burger King itself, few defenses to this action.

Much more after the jump.

A quick review of the facts. On March 29, 2009, the plaintiff, a Vancouver, Washington unifomed officer, took his marked patrol car through the drive-through of the Burger King owned by one defendant and franchised by Burger King Corp., the other defendant. He bought a Whopper with cheese and drove away, but for some reason he had, per the complaint, "an uneasy feeling." He pulled into a parking lot down the street, opened the wrapping, lifted the bun, and saw the notorious spit.

There are plenty of lawsuits claiming that food was intentionally tainted by spit and sometimes worse. But there are two differences between Officer Bylsma's case and most of the others. First, he had the spit tested for DNA and then traced the DNA to a specific employee at the restaurant. I don't think most individuals have either access to a DNA lab nor will law enforcement ordinarily issue the kind of warrant needed to obtain DNA samples for a simple alleged misdemeanor. And, second, Officer Bylsma did not taste the burger, so he cannot claim any form of physical harm from ingesting it.

All he alleges is "emotional distress, including vomiting, nausea, food aversion, and sleeplessness". The question is whether this is sufficient to give him a remedy at law. And it's here where the peculiarity of Washington's Product Liability Act takes over. This law was enacted in 1981 to "provide a single cause of action for 'harm caused by the manufacture, production, making, construction, fabrication, design, formula, preparation, assembly, installation, testing, warnings, instructions, marketing, packaging, storage or labeling of [a] product.'" It provides for liability on a negligence basis for some defects and provides for strict liability "if the claimant's harm was proximately caused by the fact that the product was not reasonably safe in construction or not reasonably safe because it did not conform to the manufacturer's express warranty or to the implied warranties under" Article 2 of the Uniform Commercial Code.

RCW 7.72.030(2)(a) is the key to plaintiff's case:

A product is not reasonably safe in construction if, when the product left the control of the manufacturer, the product deviated in some material way from the design specifications or performance standards of the manufacturer, or deviated in some material way from otherwise identical units of the same product line.

Here, the restaurant itself is the "manufacturer." So, to follow the language applied to this case, when the burger left the restaurant, it deviated in a material way from the design specifications or performance standards of the restaurant, because it included a glob of spit.

How does Burger King get sued? Under the Products Liability Act, a product seller who is not the manufacturer is liable in a number of different cases, one of which is "The product was marketed under a trade name or brand name of the product seller." So Burger King is is in the same boat as its franchisee.

Is there any defense? The federal magistrate in Oregon, applying Washington law, believed that there was a complete defense. Three dissenting justices of the Washngton Supreme Court agreed. The defense hinged on the definition of the word "harm" in the Products Liability Act. The definition, as the court recognized, is circular: " 'Harm' includes any damages recognized by the courts of this state." In other words, the Legislature expressly allowed for the creation of judge-made law here.

Note that this definition differs from the Model Uniform Product Liability Act, upon which most of the Product Liability Act was based. Its definition of "harm" is "The UPLA defines "mental anguish or emotional harm" only if "attendant to . . . personal physical injuries" or "caused by . . . being placed in direct personal physical danger and manifested by a substantial objective symptom." Under the model act, Officer Bylsma would have lost his case. But the Washington Legislature wanted its courts to define harm over time. And this they did.

Also note that this case came to the Washington Supreme Court on a certified question from the Ninth Circuit Court of Appeals, which was reviewing the magistrate's dismissal of the case, which had been agreed to by the district court judge in Oregon. So the Washington court was answering a hypothetical question on a federal case in another state, but the implications, because of Washington's peculiar statute, apply, other than to Officer Byslma's case, initially only in Washington.

The question asked was whether the Products Liability Law "permits relief for emotional distress damages, in the absence of physical injury, caused to the direct purchaser by being served and touching, but not consuming, a contaminated food product." What the court held was that the Products Liability Law "permits relief in such circumstances, but only if the emotional distress is a reasonable reaction and manifest by objective symptomatology." But the court answers the first question itself, apparently as a matter of law: "Thus, when a food manufacturer serves a contaminated food product, it is well within the scope of foreseeable harmful consequences that the individual served will suffer emotional distress." So the only real defense left to the restaurant and franchisor is "objective symptomology." A good trial lawyer will consider that a speed bump, and not a large one.

The court engaged in the fiction that it was just finding the law, not making it. It did not--and was probably not briefed to--consider the implications of applying strict liability in this context to the food industry. But those implications can be large. When there is a need for a recall, ordinarily retailers are happy when customers return the potentially contaminated food unused and unopen for a refund. Suddenly, in Washington, those customers are potential plaintiffs ready to complain of how their lives are ruined because they can't walk down the produce aisle or past the meat counter without getting the heebie-jeebies over the food they returned. Every hair found on a salad may need to be handled not by an adjustment to the bill and a free drink coupon, but also a release. It is hard to see how the cost-benefit analysis really favors this tort. Short of the Washington legislature acting, however, the Washington Supreme Court has had the final word on this issue.

Register Today for FDA's Public Meetings on Two Major FSMA Proposed Rules

Claire Mitchell — Wed, 13 Feb 2013 13:49:38 -0800

Earlier this year, the Food and Drug Administration (FDA) made some progress toward implementing the Food Safety Modernization Act (FSMA) by issuing two new proposed food safety rules. Specifically, the agency published proposed rules to establish standards for (1) growing, harvesting, packing, and holding of produce for human consumption (the “Produce Safety Rule”) and for (2) current good manufacturing practice and hazard analysis and risk-based preventive controls for human food (the “Preventive Controls for Human Food Rule”).

These two proposed rules are just the first step for establishing the framework for the modern food safety system called for by FSMA. Eventually, the FDA intends to release additional proposed rules addressing importer foreign supplier verification, preventive controls for animal food, and accreditation of third party auditors. A helpful overview of the proposed Produce Safety Rule and the Preventive Controls for Human Food Rule can be found here.

The FDA is currently in the process of soliciting comments on the proposed rules from industry stakeholders. The public may offer comments to the proposed rules over the course of the next several weeks. To facilitate that process FDA is planning to host two additional public meetings in Chicago, IL and Portland, OR in March. These meetings are the second and third in a series of public meetings announced in the January 31, 2013 Federal Register Notice and on FDA’s FSMA website. The first public meeting will be held February 28-March 1, 2013, at the U.S. Department of Agriculture in Washington, DC.

Stakeholders will be permitted to submit oral comments during the public meetings. In addition, the meetings aim to inform the public about the FDA rulemaking process (including how to submit comments, data and other information to the rulemaking dockets), and respond to questions about the proposed rules.

In Chicago, the forum will be held on March 11-12, 2013 at The Westin on Michigan Avenue. The meeting in Portland will take place on March 27-28, 2013 at Crown Plaza Portland Downtown Convention Center. To register for either event visit FDA’s registration page: http://ppleventreg.com/FDA-FoodSafety-IL-OR/.

Initiative 522 Forwarded to the Washington State Legislature

Claire Mitchell — Wed, 06 Feb 2013 15:16:04 -0800

After reviewing the voter petitions filed in support of Initiative 522 (I-522), the Washington Secretary of State’s Election Division announced last Friday that the measure received enough signatures and has been certified. The official certification was signed by Secretary of State Kim Wyman.

I-522, also known as “The People’s Right to Know Genetically Engineered Food Act,” concerns the labeling of genetically engineered foods. Similar to Proposition 37 that was recently rejected by California, I-522 would require most raw agricultural commodities, processed foods, seeds and seed stocks, if produced through genetic engineering, to be labeled as such when offered for retail sale.

Now that initiative has been certified, it will be forwarded to the Legislature. Legislators have three options on an initiative sent their way: (1) pass it into law as is; (2) take no action, resulting in it going to the November ballot for a public vote; or (3) send it and a legislative alternative to the ballot and let voters decide which, if either, they support. Lawmakers commonly take the second approach and pass the initiative along to the public for a vote.

Final updates for I-522 can be seen here.

Stoel Rives Opens Office in Washington, D.C.

Claire Mitchell — Tue, 05 Feb 2013 16:51:24 -0800

We are pleased to announce that we have opened a satellite office in Washington, D.C. Our new address, effective immediately:

Stoel Rives LLP
1020 19th Street NW, Suite 375
Washington, DC 20036
Phone: (202) 398-1795 / Fax: (202) 621-6394

The new office is headed by firm partner Greg Jenner, a former Deputy Assistant Secretary of the U.S. Treasury for Tax Policy and Tax Counsel to the U.S. Senate Committee on Finance.

Click here to read the press release.

Food Processors from Around the World Visit the NWFPA Expo

Claire Mitchell — Mon, 14 Jan 2013 10:03:38 -0800

Today begins the annual NWFPA Expo event that draws food processors from around the world. The three day event is taking place at the Portland Convention Center and will include educational sessions as well as an exhibition hall. Stoel Rives attorneys will be attending the event and hope to see you there.

Another GMO Labeling Iniative on the Horizon, This Time in Washington

Claire Mitchell — Fri, 11 Jan 2013 14:49:41 -0800

Last week on January 3, 2013, sponsors of Initiative 522 (I-522), a measure that would require the labeling of certain genetically engineered foods, filed their petitions with the Washington Secretary of State’s Office for review.

The filing of I-522 comes in the wake of Proposition 37, a similar initiative that was ultimately rejected by California voters in November 2012. If enacted, I-522 would require that any food offered for retail sale in Washington that is, or may have been, entirely or partly produced with genetic engineering to be labeled as follows:

In the case of a raw agricultural commodity, the package offered for retail sale must clearly and conspicuously display the words “genetically engineered” on the front of the package, or where such a commodity is not separately packaged or labeled, the label appearing on the retail store shelf or bin where such a commodity is displayed for sale must display the words “genetically engineered;”
In the case of any processed food, the front of the package of such food must clearly and conspicuously bear the words “partially produced with genetic engineering” or “may be partially produced with genetic engineering;” and
In the case of any seed or seed stock, the seed or seed stock container, sales receipt or any other reference to identification, ownership, or possession, must state clearly and conspicuously that the seed is “genetically engineered” or “produced with genetic engineering.”

Like Proposition 37, I-522 exempts certain food from the genetically engineered labeling requirements. Specifically, the following certified organic products, alcoholic beverages, medical foods, food sold for immediate consumption such as in a restaurant, products unintentionally produced with genetically engineered material, food made from animals fed or injected with genetically engineered material but not genetically engineered themselves, food processed with or containing only small amounts of genetically engineered ingredients, and any processed food that would be subject to the labeling requirement solely because one or more processing aids or enzymes were produced or derived with genetic engineering.

Now that the petitions have been filed, they must be reviewed to confirm that the sponsors of the initiative have obtained the necessary 241,153 valid signatures of Washington registered voters. Once the signatures are verified, the initiative will then be turned to the Washington State Legislature for further action:

The Legislature can adopt the initiative as proposed, in which case it becomes law without a vote of the people;
The Legislature can reject or refuse to act on the proposed initiative, in which case the initiative must be placed on the ballot at the next state general election; or
The Legislature can approve an alternative to the proposed initiative, in which case both the original proposal and the Legislature's alternative must be placed on the ballot at the next state general election.

The Washington Legislature will convene on Monday, January 14, 2013 and will be in session until April 28, 2013. Stoel Rives attorneys will report on the status on I-522 as it moves through the Legislature.

In addition to Washington's I-522, a bill that would mandate the labeling of food and commercial feed containing "genetically modified material" has been pre-filed in the New Mexico State Senate. Senate Bill (SB) 18, sponsored by Sen. Peter Wirth (D-Santa Fe), seeks to amend the New Mexico Food Act to require a disclosure label on any product containing more than one percent of a genetically modified material.

FDA Releases Two New Proposed Food Safety Rules

Claire Mitchell — Mon, 07 Jan 2013 16:19:25 -0800

On January 4, 2013, exactly two years after the Food Safety Modernization Act (FSMA) was signed into law by President Obama, the Food and Drug Administration (FDA) published two new proposed food safety rules that will be available for public comment for the next 120 days.

The first rule on “Preventive Controls for Human Food” sets safety requirements for facilities that process, package or store food to be sold in the United States, whether produced at a foreign or domestic-based facility, for human consumption. A separate rule will be issued for animal food in the near future. The rule will require that food facilities implement “preventive controls,” a science-based set of measures intended to prevent foodborne illness similar to Hazard Analysis and Critical Control Points (HACCP) systems that are already required by FDA for juice and seafood processors. Each covered facility would be tasked with preparing and implementing a written food safety plan, which would include the following:

Hazard analysis;
Risk based preventive controls;
Monitoring procedures;
Corrective actions; verification; and
Recordkeeping.

The FDA is also seeking public comment on a second proposed rule, which proposes enforceable safety standards for the production and harvesting of produce on farms.

This proposed “Standards for Produce Safety” rule proposes science- and risk-based standards that would address the major areas of concern for the fruit and vegetable industry including:

Irrigation and other agricultural water;
Farm worker hygiene;
Manure and other additions to the soil;
Intrusion of animals in the growing fields;
Sanitation conditions affecting buildings, equipment and tools.

FDA indicated that the effective date of both proposed rules would be 60 days after the final rule is published. However, in order to allow all businesses, particularly small and very small facilities, adequate time to comply with the new requirements of the rule, FDA plans to adjust the compliance dates based on the facility’s size.

Although many in the food industry believe these rules are long overdue, FDA notes that it conducted extensive outreach to the produce industry, the consumer community, other government agencies and the international community. Since January 2011, FDA staff have toured farms and facilities of all sizes nationwide and participated in hundreds of meetings and presentations with global regulatory partners, industry stakeholders, consumer groups, farmers, state and local officials, and the research community. The goal was to develop proposed rules that could be applied to small and large food facilities alike.

FDA intends to release additional proposed rules addressing importer foreign supplier verification, preventive controls for animal food, and accreditation of third party auditors.

The attorneys at Stoel Rives will be providing more details about the proposed rules implementing FSMA here at the Food Liability Law Blog in the coming weeks. Stay tuned.

Battle Over Labeling Genetically Modified Food Continues

Nathan Moceri — Wed, 19 Dec 2012 16:39:55 -0800

Our colleague Claire Mitchell recently published an article in Law360 that discusses a recent class action lawsuit filed against Pepperidge Farm, Inc. in Colorado on November 6, 2012. The complaint alleges that Pepperidge Farm misrepresented its Cheddar Goldfish crackers as “natural” when, in fact, they contain Genetically Modified Organisms (GMOs). The lawsuit is one of many class action suits that have been brought against food and beverage companies over the past few years claiming that the marketing of certain products as “natural” is false and misleading.

Claire explains possible ways for companies to avoid this type of litigation as well as the importance of being prepared for a lawsuit. She writes:

“Natural” labeling and advertising litigation has been both costly to food and beverage companies and damaging to their reputation. In order to avoid litigation, companies should take preventative measures such as reviewing their products’ ingredients for the presence of synthetic preservatives or other artificial or “unnatural” ingredients; examining product labeling, advertising, marketing and other promotional materials to ensure that all claims being made are accurate and compliant; and perhaps even considering whether the use of the term “natural” is worth the potential exposure to litigation.

It is also important for food and beverage companies to be prepared to defend against such lawsuits. Several possible defenses — such as removal to federal court under the Class Action Fairness Act (CAFA), forceful challenges to class certification and challenges to the pleadings under Rule 12(b)(6) — can be effective in defeating this type of class action lawsuit early in the process.

You can read the full text of her article here.

FDA Extends Food Facility Registration Deadline Until January 31

Claire Mitchell — Mon, 17 Dec 2012 09:52:55 -0800

The Food and Drug Administration (FDA) has extended the deadline for food facilities to submit their registration until January 31, 2013.

Under the FDA Food Safety Modernization Act (FSMA), domestic and foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States are required to renew their facility registration by December 31, 2012, and every two years after that. FSMA directed that the food facility registration portal would be available starting on October 1, 2012.

However, FDA experienced a delay in implementing the biennial registration renewal for the 2012 cycle. As a result, the registration renewal portal did not become available until October 22, 2012. Food industry members requested that FDA extend the time to register in order to allow companies a full three-month window to complete the renewal requirement. In a new guidance document issued on December 12, 2012, FDA noted that it would exercise its enforcement discretion with respect to registration renewals submitted to FDA after December 31, 2012 for a period of 31 days, until January 31, 2013.

Failure to register a facility, renew the facility registration, or update required registration information can have serious consequences. For instance, the U.S. can bring a civil or criminal action in federal court against a company that handles food without a proper facility registration. In addition, if food being imported or offered for import into the U.S. is from a foreign facility for which registration has not been submitted, the food could be held at the port of entry and may not be delivered to the importer, owner, or consignee of the food until the foreign facility is registered with FDA.

Along with the month-long extension, the FDA released an updated question-and-answer on facility registrations, and a shorter, simplified compliance guidance document for small businesses.

FSIS Tells Ground Poultry Producers to Reassess Their Food Safety Plans

Claire Mitchell — Thu, 06 Dec 2012 20:08:16 -0800

The U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) issued a press release on Wednesday, December 5, 2012, announcing that companies producing raw ground chicken and turkey and similar products will be required to reassess their sanitation procedures and pathogen control plans over the next few months. Specifically, over the next 90 days, producers of raw ground chicken and turkey must conduct a thorough examination of its current Hazard Analysis and Critical Control Points (HACCP) to confirm its ability to identify hazards and better prevent foodborne illness. After the 90 day period, FSIS inspection program personnel will begin verifying that establishments that manufacture raw ground turkey or chicken products have indeed reassessed their HACCP plans.

FSIS will be documenting whether establishments made any changes to their HACCP plans in response to the required reassessment and will later evaluate those changes. Later, the agency intends to publish guidance materials for the industry on best practices to reduce Salmonella in ground and comminuted (further processed by mechanical separation or deboning and chopped, flaked, minced or broken down) poultry.

In making this announcement, officials at FSIS are hoping to lower the prevalence of Salmonella contamination within these types of products. This attention to the ground poultry product industry with a focus on Salmonella comes as a response to recent outbreaks that have sickened hundreds across the country in the past few years. Just in the last two years there have been two major Salmonella outbreaks associated with ground poultry products that affected consumers nationwide.

In conducting these reassessments, FSIS is advising companies to look at, among other things, the following:

[E]stablishments should evaluate the adequacy of their sanitation procedures for processing equipment, including grinders, blenders, pipes, and other components and surfaces in contact with the product. Thus, Sanitation SOPs, other prerequisite programs, or HACCP plans should address procedures that ensure that all slaughter and further processing equipment, employee hands, tools, and clothing, and food contact surfaces are maintained in a sanitary manner to minimize the potential for cross contamination within and among lots of production. In addition, FSIS expects establishments to ensure that slaughter and dressing procedures are designed to prevent contamination to the maximum extent possible. Such procedures should, at a minimum, be designed to limit the exterior contamination of birds before exsanguination, as well as minimize digestive tract content spillage during dressing process.

Other FSIS recommendations include validating cooking instructions, examining lotting practices that minimize contact between lots, and requiring suppliers to show that they have used a Salmonella intervention step.

In FSIS’s notice, the agency also announced that it will be expanding the Salmonella verification sampling program to include other raw comminuted poultry products, in addition to ground product; it will be increasing the sample size for laboratory analysis from 25 grams to 325 grams to provide consistency as the Agency moves toward analyzing samples for Salmonella and Campylobacter; and it will be conducting sampling to determine the prevalence of Salmonella in raw comminuted poultry products.

Although these new procedures are intended for producers of ground or comminuted chicken and turkey products, FSIS is recommending that manufacturers of comminuted products derived from cattle, hogs, and sheep or comminuted poultry products derived from poultry other than chicken or turkeys also consider assessing whether their food safety systems present food safety vulnerabilities.

Pepperidge Farm Facing Potential Class Action Lawsuit Over All Natural Claims

Claire Mitchell — Mon, 19 Nov 2012 16:47:39 -0800

Although California’s Right to Know Genetically Engineered Food Act, better known as Proposition 37, failed earlier this month when put to a vote, food companies still remain vulnerable to attacks over the use of genetically engineered ingredients in their products.

Specifically, it appears that marketing a food as “all natural” when it contains a genetically engineered (GE) ingredient continues to generate class action litigation. The latest lawsuit challenging the use of the word “natural” on a product label was filed by plaintiff Sonya Bolerjack on November 6, 2012 in U.S. District Court for the District of Colorado against Pepperidge Farm, Inc. The class action complaint alleges that the company “mistakenly or misleadingly represented that its Cheddar Goldfish crackers are ‘Natural,’ when in fact, they are not, because they contain Genetically Modified Organisms (GMOs) in the form of soy and/or soy derivatives.” In particular, the plaintiff asserts that the product is not natural due to the presence of soybean oil.

The plaintiff claims that Pepperidge Farm violated Colorado’s Consumer Protection Act by engaging in deceptive trade practices; breached express warranties including that the product is natural even though it contains GMOs; and negligently misrepresented to the public through its packaging and labeling that the product is natural even though it contains GMOs.

In bringing this class action suit, the plaintiff is seeking certification on behalf of a class defined in the complaint as “all United States persons who have purchased Pepperidge Farm Cheddar Goldfish crackers containing Soybean Oil, for personal use, during the period extending from November 6, 2008, through and to the filing date of this Complaint.” Currently, a decision as to whether to grant or deny an order certifying that the action may be maintained as a class action is pending.

These class action lawsuits involving challenges to the use of “natural” or “all natural” language on a product label have been both costly and damaging to reputation. It also appears likely that they will continue. In order to avoid litigation, companies should review their products and labeling for synthetic preservatives or artificial ingredients included in or added to the food, so that product labeling is accurate.

ABC Files Motion to Dismiss BPI's Defamation Lawsuit

Claire Mitchell — Tue, 13 Nov 2012 10:17:50 -0800

A few months ago, I wrote about a $1.2 billion defamation lawsuit filed by Beef Products, Inc. (BPI), a South Dakota-based meat processor, against ABC News Inc. found here. The most recent development in the case occurred on October 31 when lawyers for ABC filed a motion to dismiss.

In September, BPI, along with Technology, Inc. and Freezing Machines, Inc., collectively filed suit against American Broadcasting Companies Inc., ABC News Inc., ABC news anchor Diane Sawyer and ABC correspondents Jim Avila and David Kerley in Circuit Court in Union County, South Dakota claiming that ABC’s news coverage of lean finely textured beef (LFTB), or what became infamously known by the nickname “pink slime,” was defamatory and ultimately devastating for the company’s reputation and business. Since being filed, the case has been removed (PDF) to the U.S. District Court for the District of South Dakota. The complaint also named as defendants Gerald Zirnstein, the U.S. Department of Agriculture (USDA) microbiologist who called the product “pink slime,” Carl Custer, former federal food scientist, and Kit Foshee, a former BPI quality assurance manager who was interviewed by ABC.

Earlier this year, on March 7, 2012, ABC began reporting during its World News program that much of the ground beef we buy at the supermarket contains the product that the industry calls LFTB and others call “pink slime.” Over the next month, ABC continued to report on the story, both online and on its television news programs.

In its later complaint, BPI alleged that the news agency, in reporting on LFTB, had knowingly and intentionally published false and disparaging statements regarding BPI and its product and improperly interfered with BPI’s business relationships. BPI argued that the statements made by ABC were not only inconsistent with information provided to them by BPI but were also contradictory to the findings of the USDA’s Food Safety and Inspection Service (FSIS), the Food and Drug Administration (FDA), food safety organizations, and many beef industry experts. BPI claimed that ABC’s news reports constituted common law defamation, product disparagement, and tortious interference. In addition, BPI alleged a cause of action under South Dakota’s statutory Agricultural Food Products Disparagement Act (AFPDA).

Most recently, on October 31, 2012, lawyers for ABC News submitted a motion to dismiss BPI’s lawsuit (PDF). In its memorandum in support of the motion to dismiss, ABC asserts that none of BPI’s claims are viable. Specifically, ABC argues that BPI cannot state a claim under South Dakota’s AFPDA, because that law only authorizes an action for statements that question the safety of a product. ABC claims that it did not question the safety of the product as BPI claims, but instead stated that LFTB is safe to eat.

Secondly, ABC maintains that BPI cannot state a claim for product disparagement because “any such claim is preempted by AFPDA, and because the ABC News reports would not be actionable under traditional common law standards in any event.” For instance, ABC explains:

[R]eporting that critics call LFTB pink slime is not actionable: that term, while unflattering, does not convey false facts about the color or texture of LFTB and is precisely the kind of “imaginative expression” and “rhetorical hyperbole” that is constitutionally protected. And the ABC News reports cannot reasonably be understood to imply that LFTB is “not safe for public consumption” or “not nutritious.” The reports repeatedly state that LFTB is “safe to eat,” though “not as nutritious as ground beef” a viewpoint BPI does not challenge. BPI’s other claims are based on quibbles with specific language that do not affect the “substance” or “gist” of the reports.

Lastly, ABC states that BPI’s claims of libel and of tortious interference with business relationships both fail. A decision on the motion is currently pending.

Proposition 37 Rejected In California, But Other GMO Labeling Initiatives May Be On The Horizon

Claire Mitchell — Wed, 07 Nov 2012 15:56:40 -0800

The high profile battle over Proposition 37 is now officially over. The California voter initiative, also known as the California Right to Know Genetically Engineered Food Act, would have required certain raw and processed foods that have or may have been “entirely or partially produced with genetic engineering” to be labeled as such. However, California officials reported early on Wednesday morning that voters had rejected the ballot initiative, 53% to 47%.

Despite Proposition 37’s failure in California, GMO labeling issues seem like they may be here to stay. Earlier this year, two Washington legislators introduced bipartisan GMO labeling bills in the Washington State House and Senate. The Senate bill (SB 6298), sponsored by Senator Maralyn Chase (D-Shoreline – 32nd District), and House bill (HB 2637), sponsored by Representative Cary Condotta (R-Wenatchee – 12th District), were identical. Although the bill was referred to the respective Washington State House and Senate Agriculture committees for hearings, legislators took no action.

Later, on June 29, 2012, Washington citizens Chris and Leah McManus filed a proposed Initiative to the Legislature that would require most agricultural commodities, processed foods, and seed and seed stocks, if produced using genetic engineering as defined, to be labeled as genetically engineered when offered for retail sale. In order to force the Washington State Legislature to reconsider GMO labeling legislation, the proposed Initiative 522 must first be certified by obtaining at least 241,153 registered voter signatures no later than 5:00 PM on January 4, 2013. Afterward, should Washington lawmakers fail to enact some sort of GMO labeling law, we might just see another GMO labeling initiative go to the voters in November 2013. would require most raw agricultural commodities, processed foods, and seeds and seed stocks, if produced using genetic engineering as defined, to be labeled as genetically engineered when offered for retail sale.

Californians to Decide Tomorrow Whether Prop 37 Sinks or Swims

Claire Mitchell — Mon, 05 Nov 2012 14:21:28 -0800

Tomorrow, California voters will be asked to decide the fate of Proposition 37, a voter initiative that would require certain raw and processed foods that have or may have been “entirely or partially produced with genetic engineering” to be labeled as such, if sold in California. Proposition 37 contains a number of exemptions from the labeling requirement. Specifically, if passed, the following foods would be not be required to comply with the mandatory labeling provisions of the initiative:

certified organic products;
alcoholic beverages;
medical foods;
food sold for immediate consumption, such as in a restaurants;
products unintentionally produced with genetically engineered material;
food made from animals fed or injected with genetically engineered material but not genetically engineered themselves; and
food processed with or containing only small amounts of genetically engineered ingredients.

Initially, Proposition 37 was supported by more than two-thirds of Californians who said they intended to vote on November 6, according to a poll from the California Business Roundtable and Pepperdine University’s School of Public Policy. On October 30, however, their latest poll indicated that support had dropped to approximately 39% and opposition had increased to almost 51 percent.

In addition to being the center of heated debate here in the U.S. over the past several months, the initiative has also received international attention. A recent article in The Guardian noted that “California’s ballot initiatives often take on huge importance. Often they are seen as laboratories for new ideas, that are adopted later in the rest of the country.”

Stoel Rives attorneys will be watching the outcome of the polls in California and will report on the results later this week.

California's Proposition 37 and WTO Agreements

Claire Mitchell — Mon, 29 Oct 2012 09:08:18 -0800

Recently, I attended the annual American Agricultural Law Association (AALA) Conference in Nashville, TN. A topic on many of the attendees’ minds was California’s Proposition 37 or “The California Right to Know Genetically Engineered Food Act.” A previous discussion of Proposition 37 can be found here.

If passed in November, the voter initiative would require certain raw and processed foods that have or may have been “entirely or partially produced with genetic engineering” to be labeled as such. In addition, Subsection 110809.1 provides that if a food is “genetically engineered” or “processed” as those terms are defined under the initiative, the food’s label may not, in California, state or imply that the food is “natural,” “naturally made,” “naturally grown,” “all natural,” or use any words of similar import that might mislead any consumer.

As election day nears, the debate over Proposition 37 has reached fever pitch. Proponents of the initiative urge that consumers are entitled to make informed choices about the foods they purchase. On the other hand, opponents argue that the initiative would be burdensome on both producers and retailers and would result in excessive litigation.

While attending the AALA Conference, I had the pleasure of chatting with Drew Kershen, the Earl Sneed Centennial Professor of Law (Emeritus) at the University of Oklahoma College of Law. Professor Kershen recently published an article on a unique and important issue involving California’s Proposition 37. The article addresses whether Proposition 37 complies with World Trade Organization (WTO) Agreements and discusses the compatibility between the two.

In analyzing the relationship between Proposition 37 and WTO Agreements, more specifically the Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) and the Agreement on Technical Barriers to Trade (the TBT Agreement), Professor Kershen concludes that the initiative “raises significant and difficult questions about whether it complies with the SPS Agreement or the TBT Agreement.” As a result, he notes that Proposition 37 can be challenged by member states to the WTO Agreements as well as the United States as a violation of WTO Agreements. However, it remains unclear as to whether those parties will act against Proposition 37.

Professor Kershen’s essay is a reduced version of a previously published article: “Would State-Mandate Labels for Biotech Foods Violate World Trade Agreements?,” Critical Legal Issues WORKING PAPER No. 181 (Wash. Lgl. Fndt., Sept. 2012), available at www.wlf.org/.

Stoel Rives attorneys continue to track the progress of Proposition 37 in California. Stay tuned for more updates as election day approaches.

FDA Now Accepting Registration Renewals

Claire Mitchell — Mon, 22 Oct 2012 09:03:59 -0800

This morning, the Food and Drug Administration (FDA) announced that as of 12:01AM this morning, the updated food facility registration system is now accepting food facility registration renewals. The renewal period was expected to open on October 1, 2012, however, FDA delayed the registration after receiving numerous requests from the Grocery Manufacturers Association and other trade associations seeking further guidance in meeting the registration requirements.

Registration renewal is a new requirement mandated by the Food Safety Modernization Act (FSMA). Originally, food facilities were required to register only once. The law now requires that food facilities re-register every 2 years with FDA, during the period beginning on October 1 and ending on December 31 in even numbered years. Even if a food facility is already registered with FDA, the facility is still obligated to renew registrations during the October 1-December 1 timeframe.

To register, update, or renew a registration, food facilities must submit the paper Form 3537 by mail or fax or register online at www.fda.gov/furls. FDA encourages online registration as the least costly, quickest, and most efficient means for food facility registration.