Food Liability Law Blog

Difficult Week for the Food Industry (Good Week for the Plaintiffs' Bar): HVP Salmonella and FDA Warning Letters

Kenneth Odza — Mon, 08 Mar 2010 11:13:35 -0800

The week of March 1 saw a double whammy hit food manufacturers.

I. Open Letter to Industry on Marketing Claims

First, on March 3, FDA sent warning letters to 16 food manufacturers concerning their labeling practices. FDA also issued an Open Letter to Industry warning against certain practices. For example, FDA warned that:

o Nutrient content claims that FDA has authorized for use on foods for adults are not permitted on foods for children under two. Such claims are highly inappropriate when they appear on food for infants and toddlers because it is well known that the nutritional needs of the very young are different than those of adults.
o Claims that a product is free of trans fats, which imply that the product is a better choice than products without the claim, can be misleading when a product is high in saturated fat, and especially so when the claim is not accompanied by the required statement referring consumers to the more complete information on the Nutrition Facts panel.
o Products that claim to treat or mitigate disease are considered to be drugs and must meet the regulatory requirements for drugs, including the requirement to prove that the product is safe and effective for its intended use.
o Misleading “healthy” claims continue to appear on foods that do not meet the long- and well-established definition for use of that term.
o Juice products that mislead consumers into believing they consist entirely of a single juice are still on the market. Despite numerous admonitions from FDA over the years, we continue to see juice blends being inaccurately labeled as single-juice products.

II. HVP Recall

A day later, on March 4, FDA announced a recall of hydrolyzed vegetable protein (HVP). As of noon on March 4, 56 products containing HVP have been recalled. Some have suggested that HVP is the "Next Peanut Butter.”

III. What Food Companies Can Do in the Wake of FDA's Warning Letters and HVP Recall

What do last week's FDA warning letters and HVP recall have in common? The answer is, of course, litigation and exposure of brand value.

The first thing any affected food seller should do is engage its crisis management team. While lawyers and public relations staff are critical in crisis response, management of the crisis should not be left solely in the hands of either. Decisions should be made holistically, examining legal, public relations, business, financial and public health implications.

As discussed previously in this blog, companies faced with putative class claims filed as a result of the FDA warning letters on labeling should develop strategies to challenge the merits of the claims and class certification at the earliest possible stage. The end game for the plaintiffs' class action law firms is to obtain class certification and use that "litigation blackmail" to enter into a settlement with a handsome payout of attorneys’ fees.

For those companies with products that include recalled HVP, the good news is that there are few, if any, reported illnesses. The bad news is that recalls are very expensive and, for some companies without recall coverage or sufficient resources, financially devastating. Many food manufacturers were driven out of business in 2009 after being overwhelmed with the expenses of recalling products that included ingredients manufactured by Peanut Corporation of America (PCA).

For those affected companies with recall coverage or financial means, proactive measures can pay dividends. For example, offering refunds to consumers mitigates against putative class claims. Setting up consumer hotlines and payment of medical expenses for persons with illnesses linked to recalled products mitigates against personal injury suits.

On the Horizon: TTB and FDA to Jointly Consider Additives to Alcoholic Beverages

Tyler Anderson — Thu, 04 Mar 2010 13:38:37 -0800

Coauthored by Susan Johnson

As we have blogged about previously, the Food and Drug Administration (the “FDA”) has been closely monitoring the appropriateness of additives to alcoholic beverages, with a particular emphasis on caffeinated alcoholic beverages. A recent release from the Alcohol and Tobacco Tax and Trade Bureau (the “TTB”) indicates that the two agencies could be working together to address this increasingly prominent issue.

The TTB release emphasizes that (1) the issue of whether or not an ingredient added to an alcoholic beverage is generally recognized as safe (“GRAS”) is within the jurisdiction of the FDA; (2) due to uncertainty as to how FDA regulations would apply to such products and the need for the TTB to provide clear guidance to the industry, the TTB believes it is appropriate to partner with the FDA on this matter so forthcoming TTB guidance will be clear and correct; and (3) as a result of the current uncertainty in the field, the TTB has temporarily suspended consideration of requests from industry members seeking guidance about the addition of vitamins and other nutrients, whether directly or indirectly through a flavor, to alcoholic beverages.

While each added ingredient will be analyzed individually by the FDA to determine whether or not it is GRAS, the agency’s action in November 2009 with respect to caffeinated alcoholic beverages could be an indication of its future posture. As we noted in our discussion of that issue, the agency explained in letters to manufacturers of caffeinated alcoholic beverages and a press release detailing the rationale for its action that under the Federal Food, Drug, and Cosmetic Act, any substance intentionally added to food is deemed unsafe and is unlawful unless its specific use has been approved by an FDA regulation, the substance is subject to a prior sanction, or the substance is listed as GRAS. While caffeinated alcoholic beverages carry with them a number of specific health and public policy concerns, this recent action indicates that manufacturers of alcoholic beverages with added ingredients should be prepared to justify their rationale for inclusion.

Cleaning Up the Docket - Northern District of California Dismisses Lanham Act Claim Alleging Mislabeling of Personal Care Products

Tyler Anderson — Mon, 01 Mar 2010 15:37:13 -0800

As we have blogged about, litigation regarding product labeling has been a hot topic within the food and beverage industry. A recent decision from the Northern District of California could hold interesting implications for Lanham Act claims centering on the labeling of products as “organic.” While the case, One God Faith, Inc. v. Hain Celestial Group, Inc., involved personal care products rather than agricultural products, the rationale used by the court in reaching its decision to dismiss the claims of the plaintiff is illustrative for the general category of “organic”-labeled products.

In One God Faith, plaintiff, a manufacturer of personal care and cosmetic products, including soap labeled as United States Department of Agriculture (“USDA”) certified “organic” or “Made with Organic” oils in compliance with USDA National Organic Program (“NOP”) standards, sued multiple defendants under § 43(a) of the Lanham Act alleging defendants falsely, misleadingly, and confusingly labeled and advertised similar products as “organic” even though they did not meet NOP standards for the designation, resulting in a loss of sales for plaintiff.

As we blogged about in our discussion of the POM v. Ocean Spray decision, pursuing a false advertising claim under the Lanham Act can be a difficult task for plaintiffs. When Congress enacted the Organic Food Products Act (“OFPA”) in 1990, the legislation that authorized the USDA to implement the NOP, it expressly declined to create a private right of action to enforce the statute or any of its implementing regulations. The plaintiff in One God Faith argued that the OFPA by its statutory language applies only to “agricultural products,” and the USDA has made clear that its comprehensive regulatory scheme governing the use of the term “organic” does not apply to personal care products, the category of products at issue in the case.

However, the court in One God Faith was not persuaded by this argument. While the court did find that it was undisputed that the USDA has declined expressly to impose the NOP standards on personal care products, this was not sufficient to justify the exercise of subject-matter jurisdiction by the Northern District. The court noted that the issue of amending existing regulations to include “organic” claims with respect to personal care products has generated significant recent discussion and that the USDA has asserted its authority over personal care products in other significant ways, including allowing producers and handlers of such products (including the plaintiff) to seek USDA certification under the NOP. As stated by the court, the mere fact that the USDA has not to date expressly imposed the NOP standards does not excuse plaintiff from exhausting available remedies under the USDA’s administrative appeal procedure. Consequently, the court held that granting the plaintiff its requested injunctive relief would negate the legislative bar on private actions and effectively enforce the NOP standards against defendants. As such, plaintiff’s complaint was dismissed for lack of subject-matter jurisdiction.

Takeaways from 2010 GMA Food Litigation Conference

Kenneth Odza — Fri, 26 Feb 2010 21:20:16 -0800

Stoel Rives was a sponsor of this year's GMA food litigation conference in Austin from February 22 to 25. The slide deck from Ken Odza's presentation on consumer fraud class claims can be viewed by clicking on the image to the left.

Some of the takeaways from my presentation and those by others at the conference include:

Assure Marketing Is in Sync with R&D (to Avoid Exposure from Consumer Fraud Class Claims) (Ken Odza, Paul Benson, Richard Fama)
The point was underscored in several presentations that exposure on consumer fraud class claims often comes from unsupported marketing claims (health claims in particular). Marketing departments should make sure not only that claims are supported but that the supporting research is not contradicted by other credible internal or external research.
Iqbal/Twombly Makes FRCP 12(b)(6) Motions More Attractive (Ken Odza, Richard Famas)

The Supreme Court has overruled the Conley standard on Rule 8 notice pleading. "Plausibility" is the new pleading standard on a Rule 12(b)(6) motion to dismiss. If the operative allegations are not factually specific and the complained-of-conduct can be explained by another obvious reason, the complaint may be dismissed.
Class Certification in Consumer Fraud Cases Not Likely If Individualized Reliance/Causation Need to Be Proven (Ken Odza)

A court should deny class certification in a consumer fraud case under the FRCP 23(b) "predominance" standard (1) when the proposed class includes multiple states with materially different statutes or (2) where the applicable state law requires an individualized showing of reliance/causation for each class member.

Inexorable Pursuit of Zero, and the EPA Asserting Itself in Food Safety (Scott Rickman, Bob Brackett)

As technology improves and chemicals can be detected at lower and lower levels, regulators are looking at stricter standards and lower thresholds. EPA, for example, has a renewed emphasis on risk assessments that will inevitably affect food regulation.

FALCPA Does Not Apply to Restaurants, but "Allergen-Free" and "Gluten-Free" Claims Must Be Supported (Joseph Bottiglieri)
Pros and Cons Of MDLs (Paul LaScala)

Paul La Scala provided a thorough and thoughtful analysis of the pros and cons of Multi-District Litigation (MDL) from a defendant's perspective.

FDA Recall Procedures Manual Is a Great Resource and Can Be Found Online (Tom Mazziotti)

The FDA's regulatory procedures manual (or at least the chapters related to recalls) should be mandatory reading as part of any company’s recall preparedness program.

Class Actions and Mass Torts on the Rise Internationally with More Countries Passing Plaintiff-Friendly Laws (Greg Fowler)

American companies selling products abroad need to be aware of and prepared for litigation abroad with rules that are increasingly unfriendly to business.

One Lesson From Fitzpatrick v. General Mills: Class Cert. Tough To Oppose In Consumer Fraud Cases When Plaintiffs Don't Have To Demonstrate Individualized Reliance/Causation

Kenneth Odza — Wed, 17 Feb 2010 13:25:01 -0800

Last month Judge Paul Huck of the U.S. District Court for the Southern District of Florida granted in part and denied in part class certification on claims brought in Fitzpatrick v. General Mills. Judge Huck granted class certification on claims asserted under Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) but denied class certification for claims of breach of express warranty.

The named plaintiff asserted violations of FDUTPA and express warranties for purchases of Yo-Plus yogurt. Plaintiff "alleges that eating Yo-Plus does not provide any digestive health benefits that cannot be obtained from eating normal yogurt."

Judge Huck ruled that in Florida, unlike in many other jurisdictions, consumer fraud claims do not require a showing of actual causation and reliance. Rather, in Florida "each plaintiff is required to prove only that the deceptive practice would—in theory—deceive an objective reasonable consumer." And for that reason, the court found that causation under the FDUTPA does not defeat the predominance requirement of class certification.

While FDUTPA does not require individualized causation and reliance, claims of UCC breach of express warranty do require individualized showing of "the particular promise that created the express warranty," according to the court. For that reason, the court held that "individual issues would predominate as to the breach of express warranty claims."

The Fitzpatrick ruling illustrates the difficulties defendants have in resisting class certification for consumer fraud claims in jurisdictions where the court finds no requirement of individualized reliance or causation.

Bagged Salads: Consumers Union Weighs In, Perishable Pundit Replies

Richard Goldfarb — Fri, 12 Feb 2010 09:00:00 -0800

The motto of Consumers Union, the publisher of Consumer Reports, is "working for a fair, just and safe marketplace for all." The motto of Jim Prevor's Perishable Pundit is "where the subject may be perishable but the insight isn't." When Consumer Reports publishes a report, it nearly always becomes widespread news. When Jim Prevor publishes a report, it will be carefully read and commented upon within the confines of the produce industry, but it is not often that it reaches national attention. Let us now match the insight of Jim Prevor against the values of Consumers Union. The subject: bagged salad.

Bagged salad is one of the most successful take-home convenience foods ever. The produce industry loves it, because it greatly expands the market for fresh produce. The packaging industry loves it, because it only works with special packaging that extends the product's shelf life. The grocery industry loves it, because it is high-margin, high-volume product that goes in the produce aisle. And consumers love fresh salad they don't need to prepare. Win-win-win-win.

Until Consumers Union comes along.

Consumers Union has published a report that is entitled, "Bagged Salad: Better Standards and Enforcement Needed." A shorter article is in the March issue of Consumer Reports, entitled, "Bagged Salad: How Clean?" Both are based on a study, funded in part by Pew Health Group, that examined samples of bagged salad purchased, as Consumers Union ordinarily does, in grocery stores near its Yonkers, New York headquarters. It found levels of bacteria they called "indicator organisms" that exceeded standards set by a number of other countries, since there is no federal standard in the United States. No E Coli O157:H7, listeria or salmonella was found.

From the study, Consumers Union concluded that the United States needed to adopt food safety legislation pending in Congress (about which we reported here), needs to declare known pathogens in leafy greens "adulterants" (even though the study didn't find any), and set satefy standards for indicator organisms. In addition, Consumer Reports recommended that consumers should:

Buy packages as far from their use-by date as possible
Even if the salad is pre-washed, wash it again
Prevent cross-contamination with other foods (although the link the article does not, as it appears to promise, go straight to a how-to list for that)

Since this is of great concern to the produce industry, Jim Prevor sent the report to Dr. Trevor Suslow of the University of California at Davis., a plant pathologist. Apparently a number of other readers of the report did so as well, because Dr. Suslow's response printed in the Perishable Pundit is broader than Jim's questions. Dr. Suslow makes some very cogent points about the Consumers Union report.

"We eat lots and lots of microbes all the time." And generally don't die from them. Leafy greens are colonized by microbiota, not contaminated by them.
The specific number of microbes on a leaf do not relate well to risk of illness.
Higher numbers closer to the use-by date are expected, particularly if the product was subject to significant changes in termperature. More specifically,

Because all the samples were taken from retail stores, the numbers of bacteria (not that fact that they were present) may tell us more about the temperature history of the product than provide clear evidence of poor sanitation.

Additional washing of pre-washed greens can lead to cross-contamination and is not recommended. He cited a 2007 study to that effect which concluded,

additional washing of ready-to-eat green salads is not likely to enhance safety. The risk of cross contamination from food handlers and food contact surfaces used during washing may outweigh any safety benefit that further washing may confer

His ultimate recommendation was that a consumer should check both the way the bagged salads are placed in the store (vertical in a row, not placed on top of one another in a stack) and get a feel for the temperature at which they are stored (both the air and the bag should feel "very cool").

As I read the report and the rejoinder from Dr. Suslow, it would seem the Perishable Pundit has the better of it. What Consumers Union proposed would seem to lead to a lot of regulation and attendant expense, leading to a false sense of security in consumers. What Dr. Suslow proposed would seem to enable consumers to make senisible choices for themselves.

Consumer Fraud Class Claims Presentation at GMA

Kenneth Odza — Thu, 11 Feb 2010 09:18:31 -0800

In just a couple of weeks (Feb. 23-25), I’ll be in Austin for the GMA Food Claims & Litigation Conference. Let me know if you plan to attend. I’ll be presenting with Scott Rickman from Del Monte Foods on consumer fraud class claims arising from food product labeling and marketing. Anyone in the business of selling branded food products should be tracking the trends in consumer fraud class claims. Thanks to the erosion of preemption defenses and increased FDA enforcement action, we’re see many more of these claims, and more result in protracted litigation.

If you’re interested in a preview of the consumer fraud issues that we’ll cover, look at the related posts here. If you can’t be in Austin, let me know and I’ll be happy to share the PowerPoint slide deck and supplemental materials.

Also, if there’s something related to consumer fraud claims or food liability that we haven’t covered in the blog or that you’d like to see more coverage on, please let me know. We at foodliabilitylaw.com would love to hear your feedback. Thanks!

Court's Decision on CR 12(b)(6) Motion In Zupnik: FFDCA Preemption Under Further Attack and Twombly Ignored

Kenneth Odza — Thu, 04 Feb 2010 09:45:10 -0800

We previously cited the motion to dismiss in Zupnik, et al. v. Tropicana Products, Inc. as an example of good pleading practice in a putative consumer fraud class case. United States District Judge Dale S. Fischer apparently disagreed with our assessment, this week issuing an order denying the motion.

Tropicana’s lead argument was a failure of pleading. Tropicana attacked the complaint both on the basis of Rule 9(b), and under the Supreme Court’s recent decision in Twombly. The Twombly decision requires the federal court on a Rule 12(b)(6) motion to determine whether operative factual allegations are “plausible” and more than simply “conclusory.”

Judge Fischer rejected summarily Rule 9(b) arguments. She completely disregarded Tropicana’s Twombly arguments, failing even to mention the Supreme Court’s decision.

Tropicana also moved to dismiss based on federal preemption. Most of Judge Fischer’s decision is devoted to the preemption argument. She ruled that since California’s Sherman Law is substantively identical to 21 U.S.C. § 343(a) of the FFDCA, the preemption argument fails.

Judge Fischer theorized that even though plaintiffs could not point to anything on Tropicana’s label that violated any FDA regulation, the FDA could bring an enforcement action “to target specific false or misleading labels.” If the FDA can bring that kind of action under 21 U.S.C. § 343(a), plaintiffs, according to Judge Fischer, should also be able to bring a private right of action under the identical California law. Query whether Judge Fischer’s reasoning negates any FFDCA preemption defense to a claim brought under California’s Sherman Act?

Media Headlines and Food Labels Each Might Be Misleading (Film at 11)

Richard Goldfarb — Fri, 29 Jan 2010 09:20:43 -0800

A recent headline in the Huffington Post breathlessly importuned:

"Restaurant Food Has Up to 200% More Calories Than Advertised."

If you only read the headline, you might think this was some important information that might change your eating habits. If you read the article, you would discover a balanced set of conclusions from a fairly limited study.

First, the limitations. The study tested a total of 29 dishes at 10 chain restaurants, plus some frozen supermarket meals from nationally-distributed brands. That's hardly a study of "restaurant food" in general.

Now the facts from the actual article:

The only item that came up at 200% over the published calorie count was Denny's "grits and butter." Denny's responded to the study by pointing out the serving size for its calorie count was a four-ounce serving and the one used in the study was a 9.5 ounce serving. So you can pretty much discount the headline already.
The average variation in calorie counts was nowhere near 200%; it was 18%. Or, according to my calculation, 1111.11% overstated.
The Food and Drug Administration permits a variation of 20%, so even with the Denny's grits and butter (which was, to repeat, apparently not an appropriate comparison), the food in the aggregate met the government standard.
Reasonable minds--in the person of two professors of nutrition--can differ about whether the calorie numbers on restaurant menus should be relied on.
Some of the variation can easily be explained by such simple things as the fact that a different amount of mayonnaise may come off the spatula on different sandwiches.

One thing I know is that the reporter, who in this case appears to have done a careful and balanced job, is not the headline writer, whose job is to grab attention. And grab attention the headline did. If you read the article, you learned a lot. If you only read the headline, you learned nothing and might have been misled.

For the record, when my name is on the byline, I wrote the headline, too.

Where to Eat in Dodgy Places: Advice from a Real World Traveller

Richard Goldfarb — Fri, 22 Jan 2010 10:00:42 -0800

Joel Putnam is a world traveller in his early 20's. He recently reached Africa, his seventh continent in his travels around the world. As is typical of his generation (he is, in the interests of full disclosure, a friend of my son), he is blogging about it. His blog is very well-written, and the captions on his photographs are always witty and often downright hilarious.

Joel has apparently been reflecting more broadly on his experiences, and he penned an entry entitled "Travel Tip: Street Food Primer" that includes some excellent advice on how to select a place to eat anywhere in the world.

Here are some excerpts:

Lesson number one: In the developing world, street food is often safer than restaurant food. Yes, you read that correctly. Street food. The food that has made me the most sick while traveling has almost all come from restaurants. The reason why, is that with street food, you see it get cooked right in front of you, and you see who is cooking it. In restaurants, you see neither.

This is an important insight, although as readers of this blog know, you can get sick at the most sanitary of street stalls, or in the best restaurant on earth.

Lesson number two: usually, if the tap water isn't safe, neither is the ice. This is seems obvious when written, but it's one a lot of of people forget in practice. There are a few countries, mostly in Asia, where ice is actually factory made from safe water. But please take the extra step and check that that's the kind of ice floating in your drink.
Lesson number three: what's safe for the locals isn't necessarily safe for you, yet. . . . We all have little local beneficial bacteria running around our digestive tracts that helps us handle the local food. This differs from place to place. So take it easy for the first few days in a new place to develop your own. Legend has it local yogurt helps with this (though beware, yogurt that hasn't been refrigerated properly or that has expired is a fast way to making you sick). After you've been eating tame food (like vegetarian dishes) in a place for a bit, then try moving on to the more interesting stuff.
Lesson number four (this one is important): if the place is crowded, the food is probably good, and it's almost definitely being cooked fresh. This is an excellent way to pick street food vendors and restaurants. We'll call it the sheep method. The reason is that deserted restaurants and vendors are much more likely to leave things like meat lying around in temperatures that let nasty things start growing in it. Then when you order it, it'll get quickly reheated and served. Popular vendors, on the other hand, are having to constantly cook fresh batches to meet demand. And if it's in that much demand from the locals, it's probably because the food is especially good.

From the introduction to his blog entry, I might add a lesson number five: avoid hubris. He recounts the tale where he bragged to some fellow travellers that he had eaten so many different things in China that he should have no trouble in Mongolia. The natural result of that was that he had 12 hours of indigestion from his first Mongolian street food. But fortune follows the brave, since one of those fellow travellers from Wales was a doctor.

Joel's common sense advice can be used anywhere. We all have internal sensors that tell us when it's good to eat or drink something--our eyes, our noses, our taste buds, our ears. This is good supplementary information for how to deploy them in unfamiliar places.

I commend Joel's blog to you and not just for the travel insights. If you care to do so, vote for his blog as Travel Blog of the Year in the Blogger's Choice Awards. I also thank him for the delicious photograph accompanying this entry. I think we may safely assume he didn't get sick from that meal.

Hold the Salt: The Gathering Push for Sodium Reduction in Food Products

Tyler Anderson — Fri, 15 Jan 2010 08:29:58 -0800

By Guest Blogger Tyler Anderson

The issue of sodium content in food has been a hot topic in recent months, as our own Ken Odza has blogged about in reporting on the class action lawsuits filed against Denny’s in New Jersey and Illinois. Now the New York City Department of Health and Mental Hygiene is addressing the issue. On January 11, the Department unveiled the National Salt Reduction Initiative, targeted toward reducing the salt levels in products offered by restaurants and food companies.

This initiative reflects a voluntary goal led by New York City to reduce the salt levels in packaged and restaurant foods by 25 percent over five years. According to the initiative, accomplishing this benchmark would reduce the nation’s salt intake by 20 percent and prevent up to 800,000 premature deaths nationwide and 23,000 in New York City alone. According to Dr. Sonia Angell, director of the Cardiovascular Disease Prevention and Control Program at the Department, the average American adult consumes 3,400 to 3,500 milligrams of sodium per day, while most individuals need about only 1,500 milligrams to satisfy their health needs. The initiative has gathered a wide range of support from parties including the American Heart Association, the American Medical Association, Oregon Department of Human Services, and the Washington State Department of Health.

While the National Salt Reduction Initiative reflects a shot across the bow on the subject of sodium reduction in food products, some industry players have been moving in this direction on their own. However, as a recent Wall Street Journal article points out, many of these food manufacturers have been taking a measured approach with regard to the issue of sodium reduction and the manner in which they communicate such changes to consumers. For example, by next summer ConAgra Foods, Inc.’s Chef Boyardee canned pasta will have decreased its sodium content by roughly 35 percent over the last five years. Campbell Soup Co.’s original flavor of V8 100% Vegetable Juice has dropped its sodium content by 32 percent over eight years. Neither of these brands has made any mention of this decrease in sodium content on its packaging.

The reasoning behind this initially surprising silence is, according to food industry executives quoted in the Wall Street Journal article, that dramatic reductions in sodium content often result in different tastes and consumer dissatisfaction that manifests itself as reduced sales. According to Douglas Balentine, Unilever NV’s North American director of nutrition and health, a gradual reduction in sodium allows consumers to adjust to a less drastic change in taste as sodium content is reduced over time. This allows manufacturers to avoid problems such as those faced by the Kellogg Co. in the early 1980s when the company launched low sodium versions of its popular Corn Flakes and Rice Krispies breakfast cereals. According to Celeste Clark, senior vice president of global nutrition for Kellogg, consumers were not satisfied with the flavor of the products and the new brands were scrapped after four years. This balance between health benchmarks and industry performance will continue to shape the regulation of sodium content as this issue continues to grow in prominence.

Third Circuit Rules that Food Service Management Companies and Distributors are Not Competitors for Robinson-Patman Act Analysis

Richard Goldfarb — Fri, 08 Jan 2010 17:00:00 -0800

If a manufacturer is selling the exact same goods to someone else for 59% less than it will sell to you, it would seem natural that you'd pick up the phone and call your lawyer and sue someone, wouldn't it? In particular, this would seem to be a classic violation of the Robinson-Patman Act,15 U.S.C. Section 13. Feesers, Inc., a food distributor, found itself in just that situation in buying liquid eggs from Michael Foods, Inc. It sued Michael Foods and Sodexo, Inc., the food service management company that was getting that huge discount, in federal court. Both sides brought high-priced legal talent to bear and the case marched up and down the federal courts until, on January 7, the U.S,. Court of Appeals for the Third Circuit ruled that Feesers was wrong. Because Sodexo was not, in its opinion, a competitor of Feesers, the Robinson-Patman Act was not violated.

The case is complex, as is much Robinson-Patman litigation, but essentially it hinges on when the actual sales to Feesers or Sodexo might occur. Feesers is a classic food distributor. In connection with liquid eggs, that means that it sells to what are called "self-ops", or businesses that run their own food services, such as a college dorm or a retirement home. Sodexo, on the other hand, is a food service management company, which provides essentially turnkey services to businesses that are not interested in running their own food services. The critical fact, to the Third Circuit, is this: while Feesers and Sodexo may compete for the same customers, the competition between them is over when the customer decides to be a self-op or to use a food service management company. And, critically, that competition takes place before as single liquid egg is sold to the winner by Michael.

The Third Circuit relied on a recent U.S. Supreme Court case, Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc. and its own decision in Toledo Mack Sales & Service, Inc. v. Mack Trucks, Inc., both of which had held that the question of whether two entities were in competition was to be construed both narrowly and formally.

In sum, because any competition between Feesers and Sodexo occurred at the time an institution was deciding whether to self-operate or hire a food service management company, and any resulting sale of Michaels’s products would have to occur after that competition, Feesers cannot show that it was a competing purchaser of Sodexo. The evidence produced by Feesers only further confirms the futility of its RPA claims, because such evidence—evidence showing consistent favoring of another purchaser over the plaintiff over time by a manufacturer in a bid market—was rejected in Toledo Mack. Such evidence cannot support an inference of competitive injury in a bid market. Finally, the Supreme Court’s instructions to narrowly construe the RPA also compel us to reject Feesers’s RPA claims.

Future plaintiffs faced with what seems to be a price differential for what they consider at first glance to be their competitiors will be well-served to engage in a deeper analysis prior to suit. Where you stand in the food chain will need to be pretty much exactly where your price-advantaged competitor stands or the benefit of Robinson-Patman may be denied you.

Dairy Industry Moving Towards A Sustainable Future: MOU with USDA Signed

Kenneth Odza — Wed, 06 Jan 2010 08:55:46 -0800

By Guest Blogger Joel Dahlgren

The dairy industry continues to move forward with its objectives of creating a sustainable future and of responding to concerns for green house gas emissions. On December 15, 2009, Secretary of Agriculture Tom Vilsack and Thomas Gallagher, CEO of Innovation Center for U.S. Dairy (Innovation Center) and Dairy Management Inc. (DMI) signed a Memorandum of Understanding (MOU) providing for coordination between the USDA and the Innovation Center.

The dairy industry launched a sustainability initiative in 2008. The initiative’s first priority is to reduce greenhouse gas emissions twenty five percent (25%) by the year 2020. Leaders from approximately eighty percent (80%) of the dairy chain – including farmers, cooperatives, processors and manufacturers – have endorsed this commitment.

The Memorandum of Understanding establishes a relationship reflecting the commitment of the USDA and the Innovation Center to create a sustainable future for the dairy industry. Two goals are recited in the Memorandum of Understanding. First, the parties will work toward reducing green gas emissions as described above. Second, the parties will accelerate and streamline the process for adopting anaerobic digesters by U.S. dairy producers through USDA programs.

Click here for the Innovation Center’s website.

Consumer Fraud Claims: Examples of Good and Bad Motion Practices

Kenneth Odza — Mon, 04 Jan 2010 06:29:52 -0800

The Good: Tropicana recently brought a motion to dismiss the Zupnik putative consumer fraud class claims pending against it. Zupnik alleges that Tropicana misled consumers in the promotion of its “Pure 100% Juice Pomegranate Blueberry Flavored Blend of 5 Juices from Concentrate with other Natural Flavors” because its front label did not include pictures of fruits other than pomegranates and blueberries.

Tropicana’s motion, brought under both FRCP 9(b) and 12(b)(6), appears as a good example of how putative consumer class claims can be challenged at the outset of the case. Though we don’t yet know whether Tropicana will be successful, its pleading is a sharp attack on the plaintiff’s complaint and takes advantage of the heightened pleading requirements announced recently by the Supreme Court.

Tropicana moved on the basis that the complaint lacks particularity required under Rule 9(b) (the rule requires pleading of the “particularity of the fraud”). It also challenged whether the plaintiff had any injury in fact or alleged any reliance on particular advertising. Finally, Tropicana argued that Zupnik’s claims were expressly preempted by federal law.

Tropicana cites to Twombly to urge the court to disregard “plaintiffs legal conclusions . . . even when made, as here, in the guise of factual allegations.”

Tropicana also attacks Zupnik’s complaint on the basis that “she got what she paid for.” Tropicana points out that its product sold for far less than juice with a higher level of pomegranate or blueberry juices. Because she got what she paid for (presumably regardless of whether she understood it at the time of purchase), she lacks standing to bring a claim for consumer fraud.

The Bad: Coincidently, in another case involving a putative consumer fraud class claim over depictions of fruits on a label, Judge Gorton of the United States District Court for the District of Massachusetts in Wiley v. Gerber Products Company granted Gerber’s motion to transfer to the Southern District of California for consolidation with the Williams case pending in California. (The Williams case was previously discussed in this blog.)

The lesson from Wiley v Gerber: if your strategy is to avoid transfer of venue, think about this when pleading. For example, do not include allegations in the complaint about a nationwide class and the application of different states’ consumer protection laws.

Wiley argued against transfer, contending that the “Court’s familiarity with Massachusetts law, under which several claims are brought weights against transfer.” The problem is that “in her amended complaint, Wiley added several claims under New Jersey state law which only undermines her contention that this Court is especially competent to adjudicate the state laws at issue in this dispute.” Wiley also alleged a nationwide class. The court found that the plaintiff’s choice of forum mattered little when she alleged a nationwide class.

The Ninth Circuit's iPod Opinion and the Warranty of Merchantability

Richard Goldfarb — Thu, 31 Dec 2009 15:32:46 -0800

The warranty of merchantability is a favorite tool of plaintiff's attorneys in food liability cases. We have blogged a good deal about it.

In a case that does not involve food at all, but is sure to get a lot of publicity, the Ninth Circuit yesterday ruled that the common iPod does not breach the warranty of merchantability even if it can be used to damage your ear while wearing ear buds. The decision in Birdsong v. Apple, Inc. will be very helpful in defending future claims of breach of the warranty in many areas, including in relation to food.

The plaintiffs in Birdsong did not allege any injury to themselves. Rather, they alleged that the iPod earbuds were capable of producing 115 decibels of sound, that consumers may listen at unsafe levels and that iPod batteries last 12 to 14 hours and may be recharged, meaning that a consumer may listen for a long time. The plaintiffs requested relief in the form of iPods being modified to have noise-reduction features, better warnings and a decibel meter. The court was having none of it.

The plaintiffs do not allege the iPods failed to do anything they were designed to do nor do they allege that they, or any others, have suffered or are substantially certain to suffer inevitable hearing loss or other injury from iPod use. Accordingly, the district court correctly determined that the plaintiffs failed to allege sufficiently the breach of an implied warranty of merchantability.

The court's analysis may apply equally well to many of the recent food liability cases we've examined where the plaintiffs allege no specific injury to themselves or any inevitable injury to someone consuming the food they have targetted. The warranty of merchantability does not work to protect a consumer from misuse of an item, or use of the item in an absurd, unnatural or harmful way. No one should play heavy metal music on an iPod for 14 hours straight at full volume, and should not claim a breach of the warranty of merchantability if they do. And no one who has been diagnosed with any particular health condition should expect to be able to order anything off the menu at a national chain restaurant, in any quantity, and assume it will not exacerbate that condition.

The noted New York restaurateur and curmudgeon Kenny Shopsin takes this attitude toward people who expect his restaurant to cater to their health needs:

Some people tell me they're deathly allergic to something and that I have to make sure it's not in their food. I kick them out. I don't want to be responsible for anyone's life-or-death situation. I tell them they should eat in a hospital.

Most restaurateurs, big and small, are more accommodating than Kenny (whose autobiography/cookbook has the title Eat Me for a reason). But ultimately, they are providers of food, not doctors, dieticians, the FDA or the Health Department.

Happy (and healthy) New Year, everyone.

Who Ordered the Christmas Pudding? Please Sign Here

Richard Goldfarb — Tue, 29 Dec 2009 15:06:29 -0800

Christmas pudding is an English delicacy with a long tradition. One of those traditions is that small coins or little silver charms are baked into the pudding, which are supposed to be sources of good luck for the coming year. Small coins and little silver charms, of course, can be swallowed or can crack teeth. This has, presumably, been going on for a long time without anyone bringing lawyers into it.

Until, that is, some lawyers started talking to the owner of High Timber Restaurant in London. High Timber is "the only restaurant in the City of London with tables on the banks of the Thames," which means that it is likely to attract a lot of lawyers as clientele, since the Inns of Court are just steps away. And some of those lawyers started advising owner Neleen Strauss about the risk of chipped tooth lawsuits. And what, in their opinion, to do about it.

So, before your server brought you Christmas Pudding at High Timber on Christmas, you were first asked to sign a waiver. The Huffington Post (or whomever they collected the article from) points out that other restaurants in the UK apparently require you to sign a waiver before eating rare meat, and that a restaurant in Chicago required waivers before serving chicken wings made from Red Savina Habanero peppers, which come in at a whopping 577,000 Scoville heat units. In some cases, it may be the waiver is used to generate publicity rather than necessarily providing legal protection.

I can't imagine anything more offputting than to be presented with a waiver to sign before being served dessert in a fine dining restaurant. This is a restaurant that doesn't have a wine list but instead suggests you make an appointment to view the cellar. Based on their online menu prices, the Christmas pudding probably cost about $12 US. For that, I'd expect a dining experience unmarred by the need to sign anything other than a credit card receipt. Would the other diners mind if I made a cell phone call to my English solicitor to have her interpret the waiver for me?

Food isn't the only place where the movement to turn every transaction into a legal confrontation is evident. Some years ago, consumer groups advocated that there be a required explanation for the fine print in every consumer lease transaction. Rental car companies pointed out that, in order to comply with such a requirement, they would have to show a fifteen minute video before allowing you to leave with your rental car. That quashed that movement pretty quickly.

One of J.R.R. Tolkien's lesser-known but quite delightful works is Smith of Wooton Major. In the town of Wooton Major, the Master Baker, as the culmination of his career, makes a "Great Cake" to be shared by 24 children. In each slice of cake is baked a surprise, one for each child. One child, Smith, does not find a surprise in his slice; instead he swallows it. The surprise, though, is a special star that, having been swallowed, appears on Smith's forehead, and that star is his passport to meeting the king and queen of Faery.

I worry that if this trend keeps up, and I read this story to my as yet unborn grandchilden, one of them will ask, "Did the children have to sign a waiver before they could eat the cake?"

Food Liability 2010: More of the Same and Landmark Change?

Kenneth Odza — Tue, 22 Dec 2009 16:42:33 -0800

We’re in the “crystal-ball” season—time to look forward and assess what’s coming in 2010 and beyond. The most likely scenario: more of the same and landmark change.

More of the Same

The last few years have seen growth in both the number of food-borne illnesses detected and the variety of foods affected. This is because more resources are being put into detection (though the CDC recently reported an overall decline in epidemiological capacity by the states) and technology is continuing to advance (think Next Generation Sequencing). There’s little reason to believe these trends will abate in 2010. Expect more outbreaks. Expect to hear about recalls of products not previously implicated in food-borne illness.

Landmark Change

Nobody doubts that we’re in the midst of the most significant legislative and regulatory changes in food safety in generations. Most believe that Congress will pass some form of food safety legislation (e.g., S 510 or HR 2749) in the new year. It will likely include the most comprehensive food safety reform in decades. Among other things, this legislation is likely to give FDA mandatory recall power and great authority for risk-based inspections, and require FDA to create a traceability program.

FDA and USDA are already pushing the boundaries of their current authority to become more aggressive on food safety and labeling enforcement. Examples include USDA moving toward classification of Salmonella as an adulterant, more aggressive rules on ground beef safety, and increased retail enforcement. FDA is already studying how traceability could work, being more aggressive in identifying products and retailers in the event of recalls, reexamining the effectiveness of current nutritional labeling requirements, and investigating whether front of pack nutrition labeling (FOP) practices need to be regulated.

And on the heels of legislative reform and increased regulatory enforcement come the lawyers. Action by the government creates new avenues for the plaintiffs’ bar. Food litigation will likely increase in prevalence both in product liability claims (i.e., food contamination) and in putative consumer fraud class claims into 2010 and beyond.

New Reporting Requirements For Companies That Make Payments to Medicare Recipients in Personal Injury Lawsuits or Workers' Compensation Claims

Kenneth Odza — Thu, 10 Dec 2009 16:14:07 -0800

By Guest Blogger Emily Grande

A few weeks ago, I attended the Grocery Manufacturer Association’s webinar on Consumer Complaint Management – Current Issues and Effective Procedures. One important topic covered was the new Medicare reporting requirements for self-insured companies that are defendants in personal injury lawsuits or that are paying workers’ compensation claims. If a company satisfies a judgment or settles with a personal injury plaintiff who is a Medicare recipient, the company must report the payment to Medicare, as required by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. These new reporting requirements were enacted to save the government’s health care programs money by arming them with the information needed to recover payments made to Medicare recipients for medical expenses in personal injury and workers’ compensation cases. In such cases, the defendant, not Medicare, is responsible for the plaintiff’s health care bills. The eye-popping penalty for a company’s failure to report payments to Medicare recipients is $1,000 per day per claim. In addition, Medicare can pursue legal action against the settling company if it fails to ensure that Medicare is reimbursed regardless of whether the company has already paid the plaintiff. As if that weren’t enough, Medicare can pursue double damages.

The registration deadline for the program was September 30, 2009, but there do not appear to be penalties for failing to register on time. The first required reporting period is the second quarter of 2010. All personal injury settlements made after January 1, 2010 must be reported, and all workers’ compensation claims considered “open” on January 1, 2009 must be reported.

A guide for responsible reporting entities can be found at the Centers for Medicare & Medicaid Services website.

The presenter at the GMA’s webinar was attorney Thomas S. Thornton III and his presentation slides are available here.

The Wall Street Journal on "Bagel-Related Injuries"

Richard Goldfarb — Wed, 02 Dec 2009 09:14:45 -0800

Where I grew up, there was a bagel bakery, or "bagel factory" as we called them, in every strip mall. One of them was owned by the husband of my high school English teacher, and one day in class she demonstrated to us proper bagel sliciing technique. It must have made an impression, because I remember it--and use it--to this day. What you do is to slice halfway into the bagel toward you, and then turn the bagel around to slice outward from the middle. I don't recall ever cutting myself while cutting a bagel.

According to the Wall Street Journal, I'm in the minority, and "bagel-related injuries" are a prime source of danger, with 1,979 people showing up in emergency rooms in 2008 because of improper bagel slicing technique. This obviously does not include those who cut themselves but did not require a visit to the emergency room.

There is a small industry of bagel-slicing devices intended to help you avoid bagel-related injuries. The Journal article has a whole video on them. Because I make my own bagels, I've been given many of them as gifts over the years, including the Brooklyn Bagel Slicer featured in the article. I still just prefer to slice the bagel with a knife however.

According to the article, there are more "chicken-related injuries" than any other food injuries. These are compiled by the National Electronic Injury Survey System, an arm of the U.S. Consumer Products Safety Commission. As far as I can tell, the chicken-related injuries must have been injuries from the use of some kind of tool when cooking chicken, not, say, getting a bone caught in one's throat, because the NEISS Coding Manual says not to code injuries from food.

Levine v. Vilsack: The Ninth Circuit Rules the Humane Methods of Slaughter Act Provides No Remedy

Richard Goldfarb — Tue, 01 Dec 2009 16:20:16 -0800

When Congress passes a statute and the Secretary of Agriculture issues a notice in the Federal Register interpreting the statute, it might seem self-evident that someone who believes that interpretation is wrong can appeal that interpretation in court and get a judgment on the merits. On November 18, the Ninth Circuit Court of Appeals said "not so fast."

The decision is a valuable reminder that just because you might allege a wrong, you will not necesarily be entitled to a remedy. The Ninth Circuit does a good job of making sure that the threshold question of standing must be answered satisfactorily before any other allegations in a complaint are reached. When, as here, it finds it not satisfied, the case is over.

The case was Levine v. Vilsack, and it involved what seemed at first a straightforward issue of statutory interpretation. The Humane Methods of Slaughter Act of 1958 ("HMSA of 1958") is the bedrock federal statute dealing with the means of slaughter of livestock. The key provision of the act, 7 U.S.C. Section 1902, provides as follows:

No method of slaughtering or handling in connection with slaughtering shall be deemed to comply with the public policy of the United States unless it is humane. Either of the following two methods of slaughtering and handling are hereby found to be humane:
(a) in the case of cattle, calves, horses, mules, sheep, swine, and other livestock, all animals are rendered insensible to pain by a single blow or gunshot or an electrical, chemical or other means that is rapid and effective, before being shackled, hoisted, thrown, cast, or cut; or
(b) by slaughtering in accordance with the ritual requirements of the Jewish faith or any other religious faith . . . .

The simple question presented in Levine was whether the phrase bolded above, "and other livestock", included fowl. Almost from the time the statute was first enacted, and most recently in 2005, the Secretary of Agriculture ruled that it did not. Levine along with a host of other plaintiffs, including The Humane Society of the United States, sued to overturn this interpretation.

The district court dismissed the case, treating it as a relatively straightforward case of statutory interpretation and agency discretion. The Ninth Circuit (perhaps wary of Justice Scalia's well-known dislike of legislative history) took a different tack.

The issue it confronted is in general known as standing. It derives from Article III of the Constitution, which grants the judiciary the power to decide "cases" and "controversies." The Ninth Circuit relied on a U.S. Supreme Court case called Lujan v. Defenders of Wildlife and its own decision in Salmon Spawning & Recovery Alliance v. Gutierrez to apply a three-part test to the standing issue in Levine.

(1) that plaintiffs had suffered an injury in fact that was concrete and particularized, and actual or imminent; (2) that the injury is fairly traceable to the challenged conduct; and (3) that the injury was likely to be redressed by a favorable court decision

It was on the third of these tests, whether the alleged injury was likely to be redressed by a favorable court decision, that plaintiffs' claims fell.

The problem lies in the statutory history of the HMSA of 1958 and a companion statute, the Federal Meat Inspection Act (the "FMIA"). Initially, the HMSA of 1958 had a enforcement provision in that the federal government was prohibited from buying meat that was not slaughtered in accordance with its terms. However, in 1978, Congress passed a new Humane Methods of Slaughter Act ("HMSA of 1978"), which repealed that provision of HMSA of 1958. As part of HMSA of 1978, Congress also amended the FMIA (initially passed in 1907 in reaction to Upton Sinclar's "The Jungle") to provide inspection requirements for slaughtering. Essentially, those inspection requirements became the replacement enforcement mechanism for the HMSA of 1958. But inspection requirements under the FMIA applied only to "cattle, sheep, swine, goats, horses, mules, and other equines." Without the "other livestock" language of HMSA of 1958, there was no argument that the FMIA inspection requirement could conceivably apply to poultry. However, in 2005, the FMIA was amended once again, deleting the specific list of animals and replacing it with the phrase "amenable species." As the court noted,

Amenable species was defined to include “those species subject to the provisions of this chapter on the day before November 10, 2005" as well as "any additional species of livestock that the Secretary considers appropriate."

Plaintiffs ultimate difficulty, the one they could not overcome, was that they sued for an interpretation under HMSA of 1958, and not to require or overturn agency action interpreting the phrase "amenable species" under the FMIA. As a result, regardless of the harms they claimed and regardless of the proper interpretation of "other livestock" under HMSA of 1958, there was no remedy the court could order for them based on the actual claims in their complaint.

The plaintiffs tried a lot of arguments to avoid this result. In a footnote (it's footnote 8 that continues over pages 15456-67 of the case), the court deals with the plaintiffs' argument that "if she prevailed, 'the number of chickens and other birds slaughtered inhumanely will be reduced, thus decreasing her risk of contracting food-borne illness . . . .'” The court points to other statutes that allow federal inspectors to reduce food-borne illness in poultry slaughterhouses. But it returns to the main point, which is that it has no power to order the Secretary to make a ruling under one statute when the complaint asks for relief under a different statute.

In federal court, standing is the gatekeeper of issues. Without standing under Article III, without being a party that has a real case or controversy in accordance with precedent, no case can proceed. In Levine, the plaintiffs tried unsuccessfully to straddle the gap between two statutes, as to one of which it claimed an incorrect agency interpretation, but under the other of which it would have had to look for relief. It was right of the Ninth Circuit not to give it a helping hand out of that gap.