April 12, 2018

Veronica Colas, Senior Associate

Food Labeling Enforcement and Compliance Priorities in the Current Environment

Role of FDA Regulations and Guidance in Class Action Litigation

Why Class Action Lawsuits

• FFDCA does not have a private right of action

• FDA is not always actively enforcing

• Many states have strong consumer protection laws

– Allow individuals to sue to enforce

– Individual consumer represents a “class” of like consumers that could make a similar claim

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• When there is no applicable FDA regulation defining a labeling claim, courts have held that lawsuits challenging such claims under state consumer protection laws are not preempted

• For example, courts consistently hold that challenges of “natural” claims are not expressly preempted by FDA’s informal policy on “natural”

• Courts have also allowed cases to go forward that allege violation of an FDA labeling regulation is deceptive or misleading under state consumer protection laws

Federal Preemption

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• Primary jurisdiction is a discretionary doctrine that allows a court to conclude that a claim would better be addressed first by an administrative agency

– Particularly applicable where the agency has specialized or technical knowledge, is in a better position to determine the issues, and/or has already undertaken to address the issue

– Court can dismiss or stay an action

• Some, but not all, courts have issued stays pending resolution of certain issues by FDA

– Evaporated cane juice

– Natural

– Yogurt standard of identity

– Whether plant-based milk should be deemed an “imitation”

Primary Jurisdiction

Class Action Litigation – New Trends

Responses to “Natural” Litigation

• Remove “natural” claims

• Reformulate to avoid use of targeted ingredients

• Tailor claims to specific ingredients (“made with natural ___”)

• Continue to make “natural” claims consistent with FDA policy

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• “no artificial ingredients”

• “nothing artificial”

• “pure”

• “real”

• “raw”

• “simple”

• “no artificial _____” (preservatives, colors, flavors, etc.)

• “free from”

• “no chemical additives”

• “no GMOs”

If we can’t say “natural,” can we say…

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• “No artificial ingredients”

– has been challenged as an implied “all natural” claim

• “No artificial flavors”

– FDA has defined artificial flavor (21 CFR 101.22(a)(1))

– Lawsuits challenging “Salt & Vinegar flavored chips” flavored with sodium diacetate and/or malic acid

• “No preservatives”

– FDA has defined chemical preservative (21 CFR 101.22(a)(5))

– Lawsuits challenging this claim where a product contains citric acid as an ingredient

“No artificial _____” claims

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• “No artificial colors”

– FDA takes the view that all colors, regardless of source, are not natural

– FDA regulations define artificial color as any color additive (21 CFR 101.22(a)(4))

– Many companies make a qualified claim: “No artificial colors – added colors from natural sources”

“No artificial _____”

“non-GMO” or “GMO free”

• No regulatory definition of these claims

• New federal legislation says certified organic products may bear a “non-GMO” claim

• “Free” could be viewed as meaning no detectable levels

• Wide variety of interpretations

– Is cheese “non-GMO” if it is made from milk from a cow that consumed GE feed?

• Chipotle sued in multiple jurisdictions for “non-GMO” and “GMO-free” claims

– Company acknowledges on its website it sells soda made with GE corn syrup and uses meat and dairy derived from animals that consumed GE feed

– Has had mixed results in defending claims

– Florida district judge held claims lack merit (but did not elaborate); California district judge held consumers could be confused about what terms mean

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USDA Will Be Establishing Disclosure Requirements

• Passed in July 2016

• The bill:

– Preempts state and local GE labeling laws

– Provides a mandatory national disclosure standard for bioengineered foods, to be implemented by USDA

– USDA must establish the mandatory disclosure standard within 2 years of the bill’s enactment

– Small businesses get an additional year after the implementation date for larger companies

• USDA must identify GE foods and the disclosure; USDA is not instructed to define “NonGMO,” “NonGE”, “GE Free” or other terms

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• Similac Advance Non-GMO Infant Formula

• Lab tests performed on the product show the product contains DNA from GMO soy

• “Abbott… represented that Similac Non-GMO was free of GMOs”

“non-GMO” - Kao v. Abbott Laboratories

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• No bright line rule

• Need a material amount, consistent with consumer expectations

– Depends on specific ingredient and food product

• Lawsuits over “made with real fruit” claims

• In assessing claim, consider:

– Graphics

– Type/form of the ingredient

– Other ingredients in the product

– Nutrient profile

“made with ___”

Slack Fill

• Lawsuits brought alleging nonfunctional “slack fill”

• Slack fill only allowed if it is functional, as defined in FDA regulation (21 CFR 100.100)

• Lawsuits particularly common where companies reduce the amount of food but maintain the same package size

– Spices

– Bottled iced coffee

– Beef jerky

– Packaged nuts

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“Real” or “Pure”

• No regulatory definition

• Must be truthful and non-misleading

• Context matters – what will consumers think the claim means?

– Standard of identity compliance?

– Single ingredient?

– No “fillers”?

– Natural

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Added Sugars Cases

• FDA established a DRV of 50 g for added sugars (~10% of daily calories)

• Lawsuits claim products with high amounts of added sugar are deceptively labeled with claims that are inconsistent with “dangers of excessive added sugar” consumption

– “Healthy”

– “Whole grain”

– “Fiber”

– “Wholesome”

– “Nutritious”

– “No high fructose corn syrup”

• Target foods with more than 5% of calories from added sugars

• Allege violations of additional regulations (e.g., health claim and nutrient content claim regulations)

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Truxel v. General Mills

• Alleges General Mills has a policy of marketing high-sugar cereals, bars, and other foods with health and wellness claims that are “incompatible with the significant dangers of excessive added sugar consumption”

– Claims cited as evidence of the policy include label statements such as “whole grain,” “fiber,” “nourish,” “goodness,” “protein,” “no high fructose corn syrup,” “long-lasting energy,” and “healthy” among others

• Alleges that consuming excessive added sugar – any amount greater than 5% of daily caloric intake – increases risk of heart disease, diabetes, liver disease, and other chronic morbidity

• Also asserts that eating sugar produces characteristics of craving and withdrawal, similar to addiction to drugs or alcohol

• Asserts that General Mills knows or reasonably should know of evidence that its high-sugar products are unhealthy but fails to warn consumers of the known dangers

• Alleges General Mills designed “deceptive opposition research to justify high amounts of sugar in its cereals”

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FDA Draft Guidance on Sodium Reductions

• Asks the food industry to voluntary reduce sodium content of foods by about 1/3 over 10 years

• Goal is to reduce population sodium intake to 2,300 mg/day

• Draft guidance sets short term (2-year) and long-term (10-year) sodium reduction targets

– (from the date a final guidance document is issued)

• Covers ~150 subcategories of packaged and restaurant foods

• Draft guidance states it is “voluntary” and does not create binding requirements

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What does “voluntary” mean?

PHOs and “0 g Trans Fat”

• In June 2015, FDA issued Declaratory Order revoking generally recognized as safe (GRAS) status of partially hydrogenated oils (PHOs)

• Since then, numerous cases have been filed challenging “0 g trans fat” claims on products containing PHOs

• Typically allege that such a claim is misleading because PHOs contain trans fat and are not safe

• In a case over the labeling of Nestlé’s Coffee-mate, the court found the allegations were preempted

– Complaint alleged sale of products containing trans fat is unlawful

– Court held the plaintiff would impose an immediate prohibition on the use of PHOs, which would conflict with FDA’s Declaratory Order allowing a three-year compliance period for removal of PHOs and Congressional appropriations law stating PHOs should not be deemed unsafe prior to compliance date

– Similarly found challenge to “0 g trans fat” claim (when product contained < 0.5 g trans fat) preempted by federal regulation

• Other cases have been stayed pending FDA’s consideration of any food additive petitions submitted to FDA

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What Can You Do about the Class Action Risk?

• Short term: Compliance with technical requirements matters more now than ever

– Audit your labels

– Closely evaluate claims similar to those being challenged in litigation

– Are you 100% compliant with technical labeling requirements?

– Can you substantiate all of your claims?

• Long term

– Remain engaged in new FDA initiatives

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• Draft guidance on voluntary sodium reduction

• Potential FDA rulemakings on “healthy” and “natural” claims

• USDA Rulemaking on GMO Disclosures

Regulatory Initiatives Worth Engagement

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