A current trend in consumer class action litigation across the country focuses on food and beverage labeling.  Plaintiffs will allege that products labeled as “all natural,” being a good source of a certain nutrient, or having “no artificial ingredients” are deceptive and violate various unfair competition laws.  The United States District Court for the Northern District of California has become a particularly active forum for these claims, earning the nickname, “the food court.”  That court often denies motions to dismiss and grants class certification, largely relying on California’s consumer-friendly False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act.  A recent decision on one of the earliest “all natural” class actions, however, emphasizes that defendants can succeed against these claims even after losing the motion to dismiss and motion for class certification.  This decision reminds us that, as with any class action, it is important to prepare the case as if you will take it to trial (and be prepared to try it) and to put the plaintiffs to the test of meeting the essential elements of their claims.

Reis v. AriZona Beverages USA LLC, No. 10-01139 RS (N.D. Cal. Mar. 28, 2013), began in March 2010 and is one of the earlier “all natural” food labeling cases.  Those two plaintiffs alleged that the defendants falsely labeled AriZona Iced Tea as “all natural,” “100 percent natural,” and “natural” even though the products contain high fructose corn syrup and citric acid.  The plaintiffs contended that those ingredients are not natural and that the marketing, advertising, and labeling was deceptive.  The Northern District of California denied a motion to dismiss, denied a motion for summary judgment, and certified a class under Federal Rule of Civil Procedure 23(b)(2) to pursue claims under California law.

Things changed, however, after discovery had closed.  The plaintiffs never disclosed any expert opinion as to whether high fructose corn syrup and citric acid are not “natural,” and they did not provide any evidence as to how to measure restitution or disgorgement under California law.  Thus, the defendants renewed their motion for summary judgment.

The court took a particularly harsh view of plaintiffs’ failure to conduct basic discovery or provide evidence supporting essential elements of the claims.  Central to the claims, of course, is the assertion that high fructose corn syrup and citric acid are not “natural.”  The defendants provided an expert report from a food scientist who described the processes of making those ingredients, and who opined that they are natural.  The defendants also provided declarations from their suppliers reflecting that the high fructose corn syrup supplied to defendants satisfies FDA natural policy, and a certificate of the natural status of their citric acid.

The plaintiffs did not offer any evidence that high fructose corn syrup is artificial.  Instead, they asked the court to take judicial notice of patents issuing for the process of producing that product.  They argued that high fructose corn syrup is not natural as a matter of law because a patented process is necessary to create it.  The court quickly dismissed that argument as it lacked any legal support and was nothing more than an extension of plaintiffs’ contention that a product is artificial if it cannot be grown in soil, plucked from a tree, or found in the ocean.  As the court noted (Slip Op. at 7), “[i]n the face of a motion for summary judgment, rhetoric is no substitute for evidence.”

The plaintiffs truly seemed to discard their “not natural” argument.  Instead, they contended that the labels were misleading under California law because ordinary consumers would not know that “all natural” includes such ingredients derived through complex processes.  The court rejected that argument as well because California law requires that the statements be likely to mislead the public, not merely that they could mislead the public.  To succeed on this type of claim, the plaintiffs should have demonstrated by extrinsic evidence (such as consumer survey evidence) that the challenged statements tend to mislead the public.  Ambiguous deposition testimony from one of the defendant’s executives about the decision to include the “all natural” labeling on the products did not meet the plaintiffs’ burden.  

Equally important, the plaintiffs failed to meet their burden of establishing some way to measure damages.  Under California law, plaintiffs and the class would only be entitled to restitution or disgorgement.  The proper measure of such damages is the difference between what plaintiffs paid for and what they received.  Even under the plaintiffs’ theory, the drinks they purchased had some value—presumably the same value as “correctly” labeled beverages that did not tout being “all natural.”  But the plaintiffs did not even address this essential element of their claims.  “They offer not a scintilla of evidence from which the finder of fact could determine the amount of restitution or disgorgement to which plaintiffs might be entitled if this case were to proceed to trial.”  [Slip Op. at 11]  That failure alone was sufficient to grant summary judgment.    

Last, the court also decertified the Rule 23(b) (2) class that it had certified.  The court concluded that the plaintiffs and their counsel were not adequate representatives for the absent class.  The failure to even attempt the necessary discovery and to fail to address at all in their summary judgment opposition the proper measure of damages indicated they could not protect the class’ interests.

Although Ries is a district court decision, it is significant for a few reasons.  First, it is an important victory for class defendants facing such food labeling claims in the Northern District of California. That court has become a magnet for these types of claims.  Second, the decision emphasizes that class action defendants cannot view class certification as the end of their case.  Class action plaintiffs’ reliance on the vague meaning of “all natural” can work against them on the merits of the claim.  At some point, plaintiffs must prove that the ingredients they challenge truly are not “natural” or not a good source of a nutrient.  While plaintiffs in this district often defeat motions to dismiss through rhetoric (i.e., it is not natural if it can’t be grown or raised), meeting the burden of proof at summary judgment is a different matter altogether.  Defendants should be able to compel plaintiffs to provide, at a minimum, expert testimony to meet this burden.  Of course, expert testimony must satisfy Daubert at the summary judgment stage, so that provides another avenue of attacking the plaintiffs’ case.  As with every case, prepare it from the outset as if you are going to trial.  


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T-Bones are Pink, too

Posted on March 30, 2012 02:11 by Shawn K. Stevens

And, pretty soon they'll cost less than a burger.

I've sat mostly quiet over the last few years, wondering how something as American as the hamburger could so easily become the focus of so much attack?  What in the world happened?

Over the last decade, we have heard story after story questioning the safety, efficacy and quality of this distinctly American product.  Whether you enjoy a burger on the grill, meatballs in the crock, hamburger (helper) on the stove, a quick burrito in the microwave or a family size helping of meatloaf in the oven, most Americans thoroughly enjoy -- if not cherish -- their ground beef.

But, we also have to pay for it.  In recent years, the cost of ground beef has increased substantially.  And, in the coming years, it now appears; the cost of this product will increase even more. This is because of the extraordinary amount of effort (and science) that is now required to process beef. 

From slaughter and processing to the kitchen table, billions of dollars have already been spent making ground beef as safe (and as perfect) as it can be. 

But perfect is relative, I suppose; and the onslaught of unfounded criticism continues. Set aside the occasional but continuing ramblings about whether ground beef is good for your heart (it is) or whether it increases your risk of cancer (it wont), additional heated debate persists regarding its overall safety and now -- it would appear -- its color.  And, thus, the industry is once again confronted with yet another unfortunate example of reactive sensationalism quickly outpacing reason and science. 

Will the madness ever stop?

Probably not.  So, I wont spend any time here repeating or expanding upon the expert explanations regarding what, exactly, LFTB really is.  It is beef.  And, that issue, I think, is settled.  What I will say, however, is that we should be careful not to expect ground beef to become something it is not. 

We are extremely lucky to have access to such a tasty, plentiful, safe and affordable product.  And, frankly, the health of our nation has in many ways been built on the same ground beef we now discount. 

So, back your burgers.  And, if you have any doubts, just ask your kids about how boring life would become without a virtually unlimited and affordable supply of burgers, meatballs, burritos and meatloaf. 

And, yes, we also need to think about those who struggle just to put food on the table.  We should be very careful, in the end, not to price ourselves out of our most basic needs -- like affordable protein.   As one of my readers aptly noted a few months back, if we don't get our act together soon,"maybe we'll all have to start grilling steaks on the barbecue instead of burgers [just] to save ourselves a few bucks."  

That'd be something.

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On January 23, 2012, the Supreme Court issued a unanimous opinion in the case of National Meat Association v. Harris, No. 10-224.  

In its decision, the Court reversed the Ninth Circuit Court of Appeals, reasoning that the Federal Meat Inspection Act (“FMIA”), 21 U.S.C 601, et seq., expressly preempts inconsistent state law. This decision is the latest in a long line of Supreme Court opinions that have historically and consistently affirmed the preemptive effect of of the FMIA. 

The FMIA governs the production and distribution of meat products in interstate commerce.  The Act is enforced by the United States Department of Agriculture’s Food Safety Inspection Service (“FSIS”), and requires continuous, on-site inspection of all slaughter and processing establishments.  The FSIS is required, among other things, to ensure that all meat products are: (1) produced under sanitary conditions; (2) not adulterated; and (3) properly labeled.  

Under the FMIA, slaughter establishments are expressly permitted, under defined circumstances, to receive, hold and slaughter nonambulatory animals.  After slaughter, but prior to being used for human food, the carcasses of such animals must first be inspected by a FSIS inspector.  

The FMIA also contains an express preemption provision, 21 U.S.C. 678, which prohibits states from adopting any different or additional requirements than those imposed by the FMIA.  

Despite the existence of a federal law governing the treatment of nonambulatory animals in slaughter establishments, and the existence of an express preemption provision within the FMIA, the state of California nevertheless amended its penal code in 2008 to prohibit slaughter facilities from receiving, holding or butchering nonambulatory animals.  Because the federal standards under the FMIA and the new state law were inconsistent, the Nation Meat Association brought suit challenging the California law.

In an opinion authored by Justice Kagan, the Supreme Court confirmed that FMIA’s preemption clause “sweeps broadly,” and prohibits states from imposing  any additional or different (even if non-conflicting) requirements concerning slaughterhouse facilities or operations.  Because the State of California was attempting to govern in an area reserved exclusively for federal regulation, the Court held that the California law was preempted.

Thus, once again, the Supreme Court has made clear that the states are strictly prohibited from legislating in those areas already occupied by the FMIA.  

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Law.com has an interesting blog post about a recent defense tactic in the case of an alleged “mouse in a can of soda,” you can find the article here. Basically, the defendant is taking a scientific stand regarding the presence of a mouse allegedly sealed in a can of soda. Essentially, they are saying that a whole mouse would not be present in a sealed can, because the acid in the drink would have turned it to jelly. The beverage giant  may need to start competing with jelly and jam companies.  The position may be technically viable but it appears be a public relations nightmare. Do you think this is an effective stance? Does it do more harm than good? Let us know your thoughts.

Jobby is an associate in the Oklahoma City firm of Hiltgen & Brewer, P.C.  

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You’ll leave with more than a hangover…

Posted on October 28, 2011 05:03 by Jobby Mathew

For all of you attending Annual Meeting this week – you might want to take a fire extinguisher to the cocktail mixer. Lawyerist.com has an interesting story regarding a lawsuit against the manufacturers of Bacardi 151. It seems that Bacardi’s popularity as a novelty in certain cocktails is contributing to its potential liability. Should the manufacturer be held liable for the tricks of a bartender? Have you had a close call or witnessed a trick like this at a bar? Let us know. In the interim, wear a fire retardant jacket if you are standing to close to the bar.

 

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No, this does not a commentary on a lawsuit regarding a nutritional health claim against Red Bull.  Instead it is about a lawsuit filed by D.C. United striker Charlie Davies against a D.C. bar, the Shadow Room, and Red Bull alleging that the two are liable under D.C.'s dram shop law for over serving a patron who went on to severely injure Davies and kill a passenger in his vehicle.  The suit against Das Enterprises (which owns the bar) and Red Bull North America is pending in D.C. Superior Court.  The driver at issue in the case, Maria Espinoza, was convicted of involuntary manslaughter.  The suit alleges that Red Bull hosted an event at the D.C. bar at which the bar continued to serve Espinoza despite her visible intoxication.  Davies claims that in addition to his physical and medical damages, Red Bull and the bar should be liable for damages due to his loss of the opportunity to play in the 2010 World Cup games in South Africa.

Davies' suit against Red Bull faces some problems.  Proving social host liability, as opposed to holding a licensed establishment liable, can be tricky and varies by state.  D.C. explicitly does not recognize social host liability on its own, although the case law is murky.  In addition to the difficulty in tying the claims to Red Bull, Davies claimed damages related to his playing at the World Cup are speculative at best (my sixteen-year old son's opinion of his ability to score goals notwithstanding).  Finally, Davies faces some comparative fault himself given he was breaking team curfew at the time of the accident. 

This is a sad, high-profile incident and that alone may drive the outcome far more than the strength of the legal claims.  As is often true in the hospitality industry, the media exposure is sometimes a far bigger concern than the legal costs themselves.


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Given my experience working and consulting with a broad spectrum of companies within the food industry, I believe the impact of the 2010 Food Safety Modernization Act will be largely negligible.

The reason is that the vast majority of food processors are highly committed to food safety, and have already adopted robust food safety systems.  Moreover, most notable enhancements to food safety in recent years have been driven (and in my view will continue to be driven) by stringent customer requirements rather than by new legislation. 

One of the most talked-about changes in the bill is the expansion of the FDA's enforcement powers to mandate recalls.  Under current laws, all recalls are voluntary (even if strongly "urged" by FDA or USDA).  Even this proposed change, however, will likely have minimal effect on industry.

The overwhelming majority of companies respond rapidly and responsibly in the event of a potential problem and thus, forcing a recall is rarely necessary in the first instance. My own sense is that, notwithstanding the new law, FDA will continue to "urge" recalls before they "mandate" them.  This way, the agency can strongly recommend products be recalled without taking absolute responsibility for decisions regarding the specific products or scope in the event a mistake is made. The biggest potential pitfalls for companies lie in the risk that FDA defines recall parameters that are overly-broad in scope or, worse, compels a recall without solid epidemiologic evidence to support it.

With all that said, I am excited about the proposed improvements in national food-borne illness surveillance and traceability.  These efforts will increase our ability to quickly detect potential problems and find quick solutions.  Better surveillance and traceability will also, from a litigation standpoint, significantly enhance our confidence in outbreak investigations and our ability to respond appropriately to both meritorious and meritless foodborne illness claims.

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As the BP oil spill continues to slip from daily consciousness along much of the Gulf Coast, Federal Authorities are quietly, but steadily, rebuilding levels of confidence in the quality of seafood now coming to market from Gulf waters.   Many concerned advocacy groups have spoken for months of their concerns regarding not just food contamination from the oil itself, but also potentially toxic levels of dispersant chemicals in the fish, oysters, crab, and shrimp found in open Gulf waters.  Recent testing designed by the National Oceanic and Atmospheric Administration (NOAA) and the Food and Drug Administration (FDA), however, continues to support the belief that commercial seafood is free from toxic levels of oil and dispersant residue.

Scientists continue to be amazed at the ability of fish, crustaceans, and shellfish to quickly clear dispersant from their tissues, and the results of testing 1,735 samples from all over the Gulf from June through September has merely added to the body of evidence supporting that conclusion.  Bottom line, while over 9,444 square miles of federal waters in the Gulf remain closed to commercial and recreational fishing (approximately, 4% of the Gulf), you apparently can order that Grouper, Tuna, Crab, or Oyster with peace of mind going forward.  While chemical and toxic tort litigation arising from the spill will unquestionably continue for quite some time, the breadth and scope of potential litigation areas appear to narrow as we learn more about the lasting impact of the spill.

http://www.consumeraffairs.com/news04/2010/11/feds-announce-chemical-test-for-dispersant-in-gulf-seafood.html

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Several food recalls have been making news recently, and even pets have not escaped.  On July 26, Biggers & Callam LLC, which operates under the name Mice Direct, recalled frozen reptile feed, which consists of mice, chicks and rats, because it has the potential to be contaminated with Salmonella.  FDA sampling of the company's frozen mice detected Salmonella, and the investigation is continuing. 
 
The risk is not, of course, that pet owners will eat these products, but that they may not thoroughly wash their hands after handling the frozen animals or any surfaces that the reptile food may have touched.  This is not simply a theoretical risk.  Human illnesses potentially related to frozen reptile feed have been reported in 17 states.  Snakes may become infected after eating tainted mice, although the snakes may show no signs of illness.  Handling infected snake also puts pet owners at risk.  In humans, salmonella typically can cause diarrhea, vomiting and stomach cramps, and can lead to death in rare cases.
 
The recalled product was distributed in all states, excluding Hawaii, through pet stores and direct mail.  FDA and Mice Direct have both cautioned that the recalled product should not be fed to reptiles, even after heating in a microwave, because the heating may not be sufficient to kill Salmonella.  Mice Direct, located in Cleveland, Georgia, will now begin irradiating its reptile food to eliminate Salmonella and other pathogens that may be present in its products.
 
This is not the first Salmonella outbreak linked to Mice Direct.  Beginning in August 2008, more than 400 illnesses in Great Britain have implicated Mice Direct product, about two-thirds of them have been children under 10.  Although the shipments of tainted mice were halted last year, people continue to get sick there because the bacteria may still exist in infected pets or the mice small still be in freezers.
 
Nor is this the first Salmonella outbreak linked to pet food or even to reptiles.  As recently as July 25, Procter & Gamble Company recalled two lots of prescription renal dry cat food due to concerns of potential Salmonella contamination.  Salmonella outbreaks have also been traced to pet turtles and to frogs.  

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