Coffee sellers in the State of California will now be required to provide cancer warnings on their coffee products. On March 28, 2018, a California State Court issued a Statement of Decision in a Proposition 65 (Prop 65) case that found that Starbucks and other retailers failed to prove that a chemical found in coffee poses no significant harm. Council for Education and Research on Toxics v. Starbucks Corporation, No. BC435759 (L.A. Super. Ct. Mar. 28, 2018).

Under California’s Prop 65, cancer warnings are required to appear on a wide range of products. In 2010, a nonprofit sued over 90 coffee sellers alleging that the companies failed to warn consumers regarding the presence of acrylamide in their coffee in violation of Prop 65. Acrylamide is listed as a chemical known to the State of California to cause cancer and reproductive toxicity and, consequently, products containing it are required to carry a warning. The chemical is created in certain plant-based foods during cooking, baking, frying, or roasting at high temperatures. Because acrylamide is also created during the cooking process for other foods, including potato chips, bread, french fries and roasted nuts, many of these products are arguably required to carry cancer warnings in California.

The court in the Starbucks case still has to rule on penalties the coffee sellers could face, but the decision exposes the defendants to significant fines: civil penalties of up to $2,500 per person exposed each day over eight years.

Contact us if you need help determining whether your products – coffee or otherwise – are covered by Prop 65, if you want assistance designing a Prop 65-compliant warning label for your products, or if you need legal counsel to address a Prop 65 60-day notice you’ve received.

On June 13, Husch Blackwell’s Food & Agribusiness industry team presented a seminar in Denver, CO spotlighting industry finance and investment trends and regulatory developments. More than 50 professionals attended the seminar, representing ag processing, food distribution, ag production and industry-focused lenders and investors. The morning started off with Jim Ash, Husch Blackwell’s Food & Agribusiness industry team leader, moderating a panel focused on industry trends. The panelists included –

The panel discussion kicked off by discussing the current consumer trends and whether or not the current trends are considered sustainable. The panel agreed the importance of food safety is top of mind with consumers and food company executives alike. Healthy alternatives, convenience and transparency in labeling were also noted as important to consumers. Consumer demand for new products with unique flavorings is resulting in small, nimble companies being rewarded. An example of this is the growth in the craft beer industry.

The panel turned their attention to consolidation within the industry. The panelists agreed the mega-deals would likely continue over the next 18-24 months, but smaller deals at the other end of the spectrum would also continue, highlighting the importance of companies being nimble and responsive to the market. For smaller companies within the industry, 75% of the deals were for strategic reasons compared to an average across all industries of 50%. Technology advances and the need for innovation were also mentioned as driving consolidation. European companies are looking to North America for investment because of perceived opportunity.

Commodity pricing and the impact on the industry was discussed next. Over the long-term the prices for commodities are expected to rise, however in the short-term there will be continued downward pressure until there is a significant correction, which will likely be driven by a weather event. Pricing is driven by supply and demand and in the short-term there is an excess supply; however, long-term commodity demand will be driven by rising world-wide socio-economic status increasing demand for protein, which is a more inefficiently produced food source. The current excess supply is the result of technology advances resulting in improved yields and the absence of a significant weather event over the past several years. Continue Reading Denver Food & Agribusiness Seminar: Regulatory & Investment Trends

We had previously posted on the Decosters’ petition for certiorari to review a prison sentence imposed upon them as responsible executives for food contamination at Quality Egg, even though they were unaware of the contamination in their product.  On May 22, 2017, the Supreme Court denied the petition.

Earlier this week, the FDA published three anticipated waivers to the Food Safety Modernization Act’s Sanitary Transportation of Human and Animal Food Rule. The waivers may be of interest to certain shippers, carriers, and receivers of Grade “A” milk and milk products, food establishments that transport food, and businesses that transport molluscan shellfish.

Under Section 416(d) of the Federal Food, Drug, and Cosmetic Act, FDA can waive the requirements of the Sanitary Transportation Rule if the FDA determines that the waiver will not result in the transportation of food under conditions that would be unsafe for human and animal health and will not be contrary to the public interest. Pursuant to this authority, FDA announced over three years ago that it intended to issue certain waivers. After considering comments on the waivers and determining that they would not negatively impact public health or result in the transportation of food under conditions unsafe to human or animal health, or otherwise be contrary to the public interest, the FDA issued the final waivers for the following entities:

  • Permitted businesses that are inspected under the National Conference on Interstate Milk Shipments’ Grade “A” Milk Safety Program, but only when transporting Grade “A” milk and milk products.
  • Food establishments, such as restaurants, grocery stores, and home grocery delivery services, while operating (1) as a receiver or (2) as a shipper and carrier when food is delivered directly to consumers or to other locations that the food establishments or affiliates operate that serve or sell food directly to consumers.
  • Businesses that are certified and inspected under the requirements established by the Interstate Shellfish Sanitation Conference’s (ISSC) National Shellfish Sanitation Program (NSSP) and transport molluscan shellfish in ISSC permitted vehicles.

The final Sanitary Transportation Rule was published on April 6, 2016, with compliance deadlines of April 6, 2018 for small businesses (businesses other than motor carriers who are not also shippers and/or receivers employing fewer than 500 persons and motor carriers having less than $27.5 million in annual receipts) and April 6, 2017 for all others not small and not subject to waiver or otherwise excluded from coverage.

For assistance with issues related to the Sanitary Transportation Rule, or any other issue related to FSMA, contact one of the members of the Husch Blackwell Food Safety & Labeling team.

Austin and Peter DeCoster have filed a petition for certiorari to review the Eighth Circuit’s affirmance of their misdemeanor convictions for selling adulterated food products in violation of the Food, Drug & Cosmetic Act, 21 U.S.C. § 331(a). There is a reasonable chance the Court will grant review, because this opinion is important not only to sellers of food products but more generally for the mens rea requirements of criminal statutes generally.

The DeCosters, father and son, were the principals of Quality Egg, which sold eggs in interstate commerce.  Some of the eggs were contaminated with salmonella.  The government stipulated that neither of the DeCosters knew that the eggs were contaminated.  The DeCosters stipulated that they were in a position to detect and correct the salmonella contamination had they known about it.  The District Court accepted their conditional plea of guilty, fined them each $100,000, and sentenced each of them to three months in prison.

A badly fractured panel of the Eighth Circuit affirmed.  Judge Murphy’s opinion for the Court acknowledged that due process prohibited imprisonment for purely vicarious liability – i.e., holding an otherwise blameless corporate officer liable for the actions of a lower level employee.  In the DeCosters’ case, she held, they were liable for their own failure to take action to prevent the sale of contaminated eggs.  Given the importance of a safe food supply, Judge Murphy held that there was no need for mens rea – a guilty conscience – if the penalty is relatively small, there is no grave damage to the defendant’s reputation, and legislative intent supports the penalty.  Thus, they were subject to imprisonment regardless of whether they intended to violate the statute or were even aware that the company was doing so.

Judge Gruender concurred.  He agreed with the dissent that imprisonment based on vicarious liability would raise serious due process concerns.  Judge Gruender thought that United States v. Park established a negligence standard for violations of § 331 and that the DeCosters’ admission that they had sufficient authority to detect and prevent the sale satisfied that standard.

Judge Beam dissented.  He correctly observed that Park did not involve any prison time.  He relied on subsequent Supreme Court opinions holding that there is a strong presumption requiring mens rea in cases involving the possibility of imprisonment.  Mere negligence, Judge Beam concluded, does not satisfy that requirement.

This case points out that even inadvertent violation of a regulation can result in criminal prosecution and possibly even imprisonment. The FDA has made it clear that it intends to prosecute these kinds of violations vigorously.

On January 4th, the U.S. Food and Drug Administration (FDA) issued two Federal Register notices (available here and here) announcing the availability of two long-awaited draft guidance documents.  The first draft guidance document, Questions and Answers on the Nutrition and Supplement Facts Labels Related to the Compliance Date, Added Sugars, and Declaration of Quantitative Amounts of Vitamins and Minerals, is intended to assist industry in complying with the May 2016 final rule amending the Nutrition Facts and Supplement Facts labeling requirements.  Although the guidance document does not extend the earliest compliance deadline of July 26, 2018, it does clarify that products that are labeled before July 26, 2018 (or July 26, 2019 for manufacturers with less than $10 million in annual food sales) do not need to be in compliance with the new labeling requirements and may use the old nutrition label.  Products that are labeled on or after July 26, 2018 (or July 26, 2019 for manufacturers with less than $10 million in annual food sales) must bear a nutrition label that complies with the new nutrition labeling requirements.

The second draft guidance document, Reference Amounts Customarily Consumed, provides examples of foods that belong to each product category included in the tables of Reference Amounts Customarily Consumed (RACCs) per Eating Occasion that are established under the serving size regulatory provisions. FDA intends for these examples to assist industry in identifying the appropriate food categories for their products and determining the serving size on a product’s Nutrition Facts label.

While comments on any of the topics discussed in the draft guidance documents may be submitted at any time, they should be submitted by March 6, 2017 to be considered by FDA in finalizing these two guidance documents. The Husch Blackwell Food Safety & Labeling team is available to assist with the comment process or to answer any questions you may have regarding FDA rules.

Food manufactures facing deceptive food labeling claims under the Missouri consumer fraud statute were recently dealt a setback by the Missouri Court of Appeals for the Eastern District of Missouri. On November 8, 2016, the appellate court issued an opinion in Murphy v. Stonewall Kitchen, LLC, reversing the trial court’s adoption of the so-called “ingredient list” defense.   Although the ingredient list defense may be relevant at trial, the court held that the defense does not defeat a consumer fraud claim under the Missouri Merchandising Practices Act (“MMPA”) arising from the use of “all natural” labeling.  Finding that the plaintiff’s allegations were sufficient to survive a motion to dismiss, the court remanded the case back to the trial court for further proceedings.

In Murphy, the plaintiff filed a putative class action under the MMPA alleging that Stonewall Kitchen misrepresented its vanilla cupcake mix as “all natural” when the mix contained sodium acid pyrophosphate (“SAPP”), a synthetic leavening agent found in commercial baking powders.  Stonewall Kitchen in turn filed a motion to dismiss for failure to state a claim, asserting, in part, that plaintiff failed to allege an unlawful act under the MMPA because SAPP was included on the product’s ingredient list and the plaintiff’s proposed definition of “natural” was “fatally subjective and unworkable.”  Stonewall Kitchen further argued that the plaintiff failed to plead facts showing that his alleged loss was caused by any alleged wrongful act.  Agreeing with Stonewall Kitchen, the St. Louis Circuit Court determined that plaintiff failed to plead an unlawful act within the meaning of the MMPA.  Noting that the terms “natural” and “all natural” are ambiguous and lack any generally accepted meaning in the food labeling context, the court reasoned that the cupcake mix’s packaging, when taken as a whole, was not deceptive or misleading, because it disclosed that SAPP was an ingredient.

In reversing the trial court, the Missouri Court of Appeals determined that the assertion that the term “all natural” is subjective and ambiguous did not cause plaintiff’s claim to fail, as “a reasonable consumer’s understanding of the term ‘all natural’ or whether a practice is unfair or deceptive are questions of fact.” The court further held that that the parties needed to conduct more discovery to flesh out the facts needed to resolve those questions.

The appellate court also expressly rejected the assertion that the ingredient list defense defeated plaintiff’s claim as a matter of law. Relying on case law from the Ninth Circuit, the court stated that the U.S. Food and Drug Administration (“FDA”) does not require food manufacturers to provide an ingredient list on their products “so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misrepresentations and provide a shield from liability for that deception.”  The court further noted that a reasonable consumer would expect an ingredient list to comport with the representations made on a product’s packaging and explained that the manufacturer is in a superior position to know whether the ingredients comport with its packaging.  Acknowledging that the ingredient list ultimately may be relevant to Stonewall Kitchen’s defense at trial, the court determined that the ingredient list defense could not defeat a MMPA claim as a matter of law.

Additionally, in response to Stonewall Kitchen’s argument that plaintiff failed to allege that SAPP is both artificial and synthetic and that it would not normally be expected in the cupcake mix, the court held that there was no requirement that the plaintiff plead that SAPP would not normally be expected in the cupcake mix. Finally, the court noted that plaintiff adequately pled an ascertainable loss under the benefit-of-the-bargain rule by asserting that he paid a premium price for Stonewall Kitchen’s “all natural” products out of a desire to purchase “healthy food products that do not contain potentially harmful synthetic ingredient.”

The appellate decision in Murphy is significant for any food manufacturer involved in litigating food labeling claims brought under the MMPA, as it reduces the claims that food manufacturers can make on their products without potentially incurring liability.  In the wake of the Murphy decision, food manufacturers may want to closely monitor the activities of FDA in case the agency breaks from its longstanding policy of declining to formally define the term “natural” given the agency’s recent request for comments on the use of the term “natural” on food labeling.  As FDA has previously mentioned, however, defining the term “natural” would require involving other federal agencies such as the United States Department of Agriculture, as well as considering any strictures flowing from the First Amendment.  Thus, even if FDA ultimately decides to formally define the term, it will likely take the agency a number of years to do so.

Husch Blackwell and its cross-disciplined team of litigators across our offices have been assisting food and consumer product manufactures in their defense in the latest round of putative class action filings, including for clients sued by the same Plaintiff’s law firm that filed and briefed the Murphy case.  These cases have involved, among other things, claims directed to “Natural” and “Made in America.”  The latest trend locally now seems to focus on “slack filling” claims and “evaporated cane juice” language.

Please contact a member of our team for further information or updates.

On July 14th, the U.S. Food and Drug Administration (“FDA”) published a final rule amending the food facility registration requirement originally implemented under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.  The final rule includes a number of changes that are designed to improve the accuracy of the food facility registration database.  It also amends the retail food establishments definition, expanding the number of establishments that are considered retail food establishments and, therefore, exempt from the registration requirement pursuant to 21 C.F.R. § 1.226.

Under Section 415 of the Federal Food, Drug, and Cosmetic Act, food facilities that manufacture, process, pack, or hold food for consumption in the United States are required to register with FDA. More specifically, a domestic registrant is now required to provide an e-mail address for the contact person at its facility and  a foreign facility registrant must provide the e-mail address for the U.S. agent for its facility.  Registration renewals must be completed every two years, and facilities must provide assurance that FDA will be permitted to inspect the facility at the times and in the manner permitted by the Federal Food, Drug and Cosmetic Act.

Additionally, the final rule adds a few new requirements intended to improve the food facility registration database:

  • as of July 14, 2016, registrations are required to contain the type of activity conducted at the facility for each food product category;
  • all food facility registrations are required to be submitted to the FDA electronically by January 4, 2020; and
  • food facilities will need to provide a unique facility identifier (“UFI”) as part of the registration process beginning October 1, 2020.

The amended regulations also permit registrants to submit a written waiver request explaining why it is not reasonable to submit the registration, registration renewal, updates, or cancellation to FDA electronically or to explain why it is not reasonable to provide the required e-mail address contact information. An abbreviated registration renewal process is now available for registrants who do not have any changes to the required information since submission of their proceeding registration or renewal. Continue Reading FDA Amends Food Facility Registration Requirements

Over the past few years, there has been a virtual onslaught of lawsuits directed to the food and beverage industry, principally relating to claims that certain marketing efforts of food and beverage producers falsely advertise their products and encourage consumers to purchase them based upon fraudulent representations.  Likely due to California’s expansive consumer protection statutes and perceived “green” nature, the U.S. District Court for the Northern District of California has become the venue of choice for many of these lawsuits and, as a result, has been dubbed by some as the “Food Court.”

Recently, the Food Court received another complaint directed to a human food product. Rather than a labeling or false advertising claim, this suit contends that the U.S. Food and Drug Administration’s (FDA) recent approval of a genetically modified (GM) animal intended for human consumption was unsound and further challenges the FDA’s authority to even approve genetically modified animals used for food.  At issue is a GM salmon offered by AquaBounty Technologies, Inc, which claims its now-FDA approved salmon grow twice as fast as wild versions of Atlantic salmon while consuming 25% less feed in the process.  In November, the FDA approved AquaBounty’s GM salmon finding the product “safe for human consumption” and equally nutritious as non-genetically engineered Atlantic salmon.  The AquaBounty salmon is the first GM animal cleared for human consumption in the United States. Continue Reading Will Genetically Modified Salmon Be Served a Setback in the Food Court? Consumer Groups Seek to Stall Release of GM Fish

The FDA Food Safety Modernization Act (FSMA) sets forth sweeping reforms of US food safety laws with the primary goal of strengthening the food safety system through prevention of food safety problems rather than relying primarily on reacting to problems after they occur.

The FSMA aims to preempt safety concerns at all levels of the supply chain – including transportation.  The Final Rule governing the safe transportation of food was enacted on, March 31, 2016.

A recent post on Husch Blackwell’s Technology, Manufacturing and Transportation Industry Insider blog talks about who must comply, what is required and when compliance is necessary.

For additional information, please contact Kate Dickenson or Joe Orlet.