Food Labeling Class Actions: Navigating Ascertainability, - - PowerPoint PPT Presentation

Food Labeling Class Actions: Navigating Ascertainability, Predominance, Preemption and Standing

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Presenting a live 90-minute webinar with interactive Q&A

S arah L. Brew, Partner, Faegre Baker Daniels, Minneapolis Ronald J. Levine, Partner, Herrick Feinstein, Princeton, N.J.

• R. Trent Taylor, Partner, McGuireWoods, Richmond, Va.

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Food Labeling Class Actions: Navigating Ascertainability, Predominance, Preemption and Standing

Presented by:

S arah L. Brew, Faegre Baker Daniels, Minneapolis, sarah.brew@ faegrebd.com Ronald J. Levine, Herrick Feinstein, Princeton, N.J., rlevine@ herrick.com

• R. Trent Taylor, McGuireWoods, Richmond, Va., rtaylor@

mcguirewoods.com

QUIZ UIZ

WHY ARE SO MANY NEW CASES BREWING IN THE UNITED STATES? [MULTIPLE CHOICE TEST]

6

• A. BECAUSE TOBACCO COMPANIES

SHELLED OUT BIG BUCKS TO THE PLAINTIFFS’ LAWYERS.

7

• B. BECAUSE AL GORE INVENTED THE

INTERNET.

8

• C. BECAUSE OF THE EVER INCREASING USE OF

CONSUMER CLASS ACTIONS IN THE COURTS.

9

• D. BECAUSE OF THE GROWING

FOCUS ON OBESITY AND HEALTH

10

E. BECAUSE PEPSI DOES NOT TALK TO COKE.

11

ANSWER

AND MANY MORE FACTORS HAVE CONTRIBUTED TO THE GROWING NUMBER OF CASES.

12

LITIGATION IS A “FOR- PROFIT” BUSINESS – THE PLAYBOOK

• Demonize the industry
• Support certain public interest groups
• Use the media to maximum advantage
• Blame a multi-factorial health problem on a single

“ADDICTIVE” or “HARMFUL” ingredient.

13

ADDING FUEL TO THE FIRE – SOCIAL MEDIA

• PLAINTIFFS’ LAWYERS SCOUR WEB ADVERTISING
• PLAINTIFFS’ LAWYERS TROLL FOR CLAIMANTS
• BLOG COMMENTS GET REHASHED IN PLEADINGS
• VIRAL STORIES ABOUT LAWSUITS

14

“Nature’s valley is linked with the concept of natural on the brand’s website” “General Mills also links the Nature Valley Brand with the concept of natural on its Flickr photostream” “Nature Valley’s Facebook page also features photographs of nature . . .”

Janney v. General Mills (Class Action Complaint), (N.D. Cal.)

15

Silber v. Barbara’s Bakery, Inc. (Class Action Complaint), (E.D.N.Y.)

16

17

THE INDUSTRY’S DISADVANTAGES

• Regulated, but not completely
• Highly competitive – competing claims on “natural,”

ingredients, health, etc.

• Constantly evolving product lines
• Rapidly changing consumer tastes
• Diet is a subject of strong public interest

18

“Natural”

19

How Does FDA Define “Natural”?

• Holds to the policy it outlined in 1993:

“FDA has not established a formal definition for the term ‘natural’, however the

agency has not objected to the use of the term on food labels provided it is used in a manner that is truthful and not misleading and the product does not contain added color, artificial flavors, or synthetic substances. Use of the term ‘natural’ is not permitted in the ingredient list, with the exception of the phrase ‘natural flavorings.’”

• “Natural” only defined in terms of Natural Flavors:

The essential oil, oleoresin, essence or extractive, protein hydrolysate, distillate,

• r any product of roasting, heating or enzymolysis, which contains the flavoring

constituents derived from a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf or similar plant material, meat, seafood, poultry, eggs, dairy products, or fermentation products thereof, whose significant function in food is flavoring rather than nutritional.

• Has long resisted making any definition for other foods

(several petitions have been outstanding for years)

20

How Does USDA Define “Natural”?

• 2005 incorporated in Labeling Policy Book its longstanding policy of

allowing use of “Natural” where

• (1) product does not contain any artificial flavor/color/chemical preservative per

21 CFR 101.22; and

• (2) product/ingredients are only minimally processed
• 2005 Policy modified to add exceptions for (1) ingredients in the

National Organic Policy; and (2) corn-derived sodium lactate

• 2006 Hormel petition to codify 1982 memo language with some

exceptions

• Sept. 2009 Advanced Notice of Proposed Rulemaking issued with

comment period ending 11/09; no further actions taken

21

How Does FTC Define “Natural”?

• It doesn’t – case by case basis
• Rulemaking process started in mid-1970s; abandoned in 1983,

confirmed case-by-case basis going forward

• 2010: Green Guides released, again refused to define
• No cases involving food or beverages
• Left with the “reasonable basis” substantiation standard:

advertiser/company must have “reasonable basis” for all express/implied claims made in advertising, at time claims are made

• Open question whether FTC would defer to FDA’s definition,

per its 1994 Enforcement Policy Statement on Food Advertising

22

“Natural” Early Targets

• High Fructose Corn Syrup (HFCS) (Snapple, Arizona

Beverages, Nature Valley bars, Healthy Choice pasta sauce)

• Citric acid (enzymatically-made, solvent washed) in juices
• Alkalized Cocoa (Ben & Jerry’s)
• Potassium carbonate (Skinny Girl Margaritas)
• Other products made through use of enzymes, solvents,

acids, bases, etc.

• By 2011, almost weekly filing of lawsuits

23

Holk v. Snapple Beverage Corp., 575 F.3d 329

(3d Cir. 2009)

• Held no preemption of “All Natural” claim
• No express preemption clause – FDA policy statement not enough
• No field preemption – NLEA states no preemption unless explicit,

and Congress clearly stated intent not to occupy field

• No conflict preemption – FDA’s policy statement on “natural” is

not a formal definition entitled to preemptive effect

• Primary Jurisdiction:
• Court stayed case for 6 months and sought FDA guidance on

“natural”

• FDA responded by letter indicating

no action due to lack of agency resources

24

GMO “Natural” Litigation

• Briseno, et al. v. ConAgra Foods, Inc. (C.D. Cal. June 28,

2011)

• Plaintiffs alleged “100% Natural” labeling is misleading

because vegetable oil is derived from plants grown from seeds genetically engineered to allow greater yield and be pesticide-resistant

• Key Causes of Action
• Violation of California’s false advertising/unfair competition laws
• Breach of express warranty
• Plaintiffs also sought permanent injunction and order requiring

ConAgra to adopt and enforce a policy disclosing GE ingredients or removal of natural claims

25

• In re Wesson Oil Marketing and Sales Practices Litigation
• October 13, 2011 MDL assigned cases to C.D. Calif.
• ConAgra moved to dismiss, arguing:
• FDA’s labeling guidance for bioengineered foods,

which says disclosure is not required, preempts these claims

• FDA has concluded that bioengineered foods are not

meaningfully different and so claims that a food is not “natural” merely because it is bioengineered is preempted

26

FDA Preemption: GMOs

• Complaint dismissed without prejudice on Rule 9(b) grounds

because Plaintiffs did not adequately allege specifics of purchases or labels, advertisements or statements relied upon

• Plaintiffs given 20 days to refile, which they did
• Claim for relief requiring ConAgra to disclose GM ingredients

is preempted because draft FDA guidance doesn’t require labeling

• Consumer fraud claims relating to labeling products “100%

Natural” when derived from GM ingredients are not preempted

27

Sandys/Pappas v. Naked Juice Co., No. CV11-

08276 (C.D. Cal. Aug. 7, 2013)

• False advertising claim— “Non-GMO” and “All Natural” are

false representations

• Allegedly GM ingredients include:
• Soy lecithin
• Soy protein
• Claims based on minor ingredients in food
• Underscores ubiquity of ingredients from GMOs
• “Almost all soy products are now genetically modified.”
• Defendants either know or have “recklessly avoided the truth”
• Class settlement for $9 million

28

McGuireWoods LLP | 29

CONFIDENTIAL

Recent Trends

McGuireWoods LLP | 30

CONFIDENTIAL

Maturing Litigation

McGuireWoods LLP | 31

CONFIDENTIAL

Appellate Courts Digesting Food Cases

McGuireWoods LLP | 32

CONFIDENTIAL

Pom Wonderful LLC v. The Coca-Cola Co. Holding: Competitors may bring Lanham Act claims alleging unfair competition from false or misleading product descriptions on food and beverage labels regulated by the Federal Food, Drug and Cosmetic Act. Judgment: Reversed and remanded, 8-0, in an opinion by Justice Kennedy on June 12, 2014. Justice Breyer took no part in the consideration of this case.

McGuireWoods LLP | 33

CONFIDENTIAL

Ninth Circuit

• Dole Packaged Foods LLC v. Brazil
• Jones v. ConAgra Foods

McGuireWoods LLP | 34

CONFIDENTIAL

Venue Shift?

McGuireWoods LLP | 35

CONFIDENTIAL

Legislative and Regulatory Developments

• Statewide Coalition of Hispanic Chambers of Commerce v. New

York City Dept. of Health

• Grocery Manufacturers Assoc. v. William H. Sorell
• FDA’s new Nutritional Labeling guidelines
• FDA’s tentative determination that PHOs are not GRAS
• FDA’s Draft Social Media Guidance
• GMO labeling laws this year

McGuireWoods LLP | 36

CONFIDENTIAL

Governmental Investigations/Suits

• AG suits against the Energy Drink Industry
• Others

McGuireWoods LLP | 37

CONFIDENTIAL

Competitor Litigation

• Rachel D. Stone v. The Blue Buffalo Co. Ltd, Case No. 3:14-cv-

00520 (S.D. Ill.)

• Nestle Purina PetCare Co. v. The Blue Buffalo Co, Ltd., Case
• No. 4:14-cv-00859 (E.D. Mo.)
• Maine Springs LLC v. Nestlé Waters North America, Inc., Case
• No. 2:14-cv-00321 (D. Maine)
• Pom Wonderful LLC v. The Coca-Cola Co., Case No. 2:08-cv-

06237 (N.D. Cal.)

McGuireWoods LLP | 38

CONFIDENTIAL

Preemption

• Yumul v. Smart Balance, Inc., No. 10-00927, 2011 BL 339172,

at *9 (C.D. Cal. Mar. 14, 2011)

• Held that consumer fraud claims brought under the CA

Consumer Legal Remedies Act relating to the alleged false and misleading labeling of Nucoa Real Margarine as having “no cholesterol” was preempted by the NLEA

• The court reasoned that Smart Balance complied with the

regulatory requirements for labeling a product “cholesterol free” and therefore, its label could not be false or misleading

McGuireWoods LLP | 39

CONFIDENTIAL

Preemption

• Pom Wonderful LLC v. The Coca-Cola Co., Case No. 2:08-cv-

06237 (N.D. Cal.)

• Court granted defendant’s MSJ saying that state law claims are

preempted by the FDCA because they ask the court to find that the juice blend is misleadingly labeled in spite of compliance with U.S. FDA regs

• Held that “Congress has explicitly allowed labeling that is not

misleading, and granted FDA the authority to make such a

• determination. Defendant has complied with the relevant FDA

regulations and is also compliant by extension with the FDCA.”

McGuireWoods LLP | 40

CONFIDENTIAL

Preemption

• In re Simply Orange Juice Marketing & Sales Practices Litig.,
• No. 12-2361

(W.D. Mo. 3/1/13)

• Rejected motion to dismiss based on preemption
• Court said that while the FDCA expressly preempts states from

imposing any requirement that is not identical to the FDA’s regulation, a state requirement that is identical to federal law is not subject to preemption

• Court noted that in this case, the pltfs’ claim either seek to

enforce state laws that imposed requirements identical to those imposed by federal law or cover matters not within the scope of the FDCA or the NLEA

McGuireWoods LLP | 41

CONFIDENTIAL

Preemption

• Brazil v. Dole Food Co., Case No. 5:12-cv-01831 (N.D. Cal.

March 26, 2013)

• Court rejected preemption argument and found “no indication” in

the text of the NLEA which amended the FDCA or its legislative history that Congress “intended a sweeping preemption of private actions predicated on requirements contained in state laws.”

• Court noted that both the U.S. Supreme Court and the 9th Cir.

have allowed “parallel claims” in medical device suits

McGuireWoods LLP | 42

CONFIDENTIAL

Preemption

• Lilly v. ConAgra Foods Inc., 743 F.3d 662 (9th Cir. Feb. 20,

2014)

– Trial judge dismissed case as being preempted by the federal Nutrition Labeling and Education Act. – Ninth Circuit reversed, holding that because the plaintiff’s state-law claims, if successful, would impose no greater burden than those imposed by federal law, her state law claims were not preempted.

• Others:

– Koenig et al. v. Boulder Brands Inc. et al., case number 1:13-cv- 01186, in the U.S. District Court for the Southern District of New York – Swearingen et al. v. Yucatan Foods LP, case number 3:13-cv- 03544, in the U.S. District Court for the Northern District of California

McGuireWoods LLP | 43

CONFIDENTIAL

Class Certification Issues

McGuireWoods LLP | 44

CONFIDENTIAL

Ascertainability

• Carrera v. Bayer Corp., No. 1202621 (3d Cir. Aug. 21, 2013)
• Held that without receipts or sales records, there may be no

reliable way to identify class members in a false advertising lawsuit

• No ascertainability
• Reversed certification of a class of Florida consumers who

claimed that Bayer falsely advertised the metabolism-boosting benefits of its One-A-Day WeightSmart vitamin

• Rejected plaintiffs’ contention that class membership could be

determined by retailer records for customer-loyalty cards and

• nline purchases or based on affidavits from consumers

McGuireWoods LLP | 45

CONFIDENTIAL

Ascertainability

• Sethavanish v. Zoneperfect Nutrition Co., No. 12-2907-SC, 2014

U.S. Dist. LEXIS 18600, at *13 (N.D. Cal. February 13, 2014)

• Clancy v. Bromley Tea Co., No.12-cv-03003-JST, 2014 U.S.
• Dist. LEXIS 102917, at *6-7 (N.D. Cal. July 28. 2014)(denying

class certification in part because plaintiff failed to provide a method to ascertain absent class members’ identities)

• Stewart v. Beam Global Spirits & Wine, Inc., Case No. 11-cv-

05149 (D. N.J. June 27, 2014)

• Karhu v. Vital Pharmaceuticals Inc., 2014 WL 815253, at *3

(S.D. Fla. Mar. 3, 2014)

McGuireWoods LLP | 46

CONFIDENTIAL

Ascertainability

• “In situations where purported class members purchase an inexpensive product

for a variety of reasons, and are unlikely to retain receipts or other transaction records, class actions may present such daunting administrative challenges that class treatment is not feasible.” In re POM Wonderful, LLC, No. ML10-02119 DDP, 2014 U.S. Dist. LEXIS 40415, at *23 (C.D. Cal. Mar. 25, 2014).

• “While courts in this district have previously found proposed classes

ascertainable even when the only way to determine class membership is with self-identification through affidavits…, courts in this district have also declined to certify classes when self-identification would be unreliable or administratively unfeasible.” Bruton v. Gerber Products Co., No. 12-CV- 02412-LHK, 2014 U.S. Dist. LEXIS 86581, at *20 (N.D. Cal. June 23, 2014).

• Astiana v. Ben & Jerry’s Homemade, Inc, 2014 WL 60097, at *1 (N.D. Cal.
• Jan. 7, 2014) (“apart from the explicit requirements of Rule 23, the party

seeking class certification must also demonstrate that an identifiable and ascertainable class exists.”)

McGuireWoods LLP | 47

CONFIDENTIAL

Ascertainability

But compare:

• Brazil v. Dole Packaged Foods LLC, (N.D. Cal. May 30, 2014)
• Werdebaugh v. Blue Diamond Growers, 2014 U.S. Dist. Lexis

71575 (N.D. Cal. May 23, 2014)

• Lanovaz v. Twinings N.A. Inc., 2014 U.S. Dist. Lexis 57535

(N.D. Cal. Apr. 24, 2014)

• Ebin v. Kangadis Food, Inc., 297 F.R.D. 561 (S.D. N.Y. 2014)

McGuireWoods LLP | 48

CONFIDENTIAL

Predominance (Damages)

• Brazil v. Dole Packaged Foods, LLC, 2014 U.S. Dist. LEXIS

74234 (N.D. Cal. May 30, 2014)

• Astiana v. Ben & Jerry’s Homemade Inc., 2014 U.S. Dist. LEXIS

1640 (N.D. Cal. Jan. 7, 2014)

• Caldera v. J.M. Smucker Co., 2014 U.S. Dist. LEXIS 53912

(C.D. Cal. Apr. 15, 2014)

• In re POM Wonderful, 2014 US. Dist. LEXIS 40415 (C.D. Cal.
• Mar. 25, 2014)
• Jones v. ConAgra Foods, Inc., 2014 U.S. Dist. LEXIS 81292

(N.D. Cal. June 13, 2014)

• Lanovaz v. Twinings N. Am. Inc., 2014 U.S. Dist. LEXIS 57535

(N.D. Cal. Apr. 24, 2014)

McGuireWoods LLP | 49

CONFIDENTIAL

Choice of Law

• Ebin v. Kangadis Food, Inc., 297 F.R.D. 561 (S.D. N.Y. 2014)
• Brazil v. Dole Packaged Foods, LLC, 2014 U.S. Dist. LEXIS

74234 (N.D. Cal. May 30, 2014)

• Werdebaugh v. Blue Diamond Growers, 2014 U.S. Dist. Lexis

71575 (N.D. Cal. May 23, 2014)

McGuireWoods LLP | 50

CONFIDENTIAL

Materiality

• Brazil v. Dole Packaged Foods, LLC, 2014 U.S. Dist. LEXIS

74234 (N.D. Cal. May 30, 2014)

• Werdebaugh v. Blue Diamond Growers, 2014 U.S. Dist. Lexis

71575 (N.D. Cal. May 23, 2014)

• Lanovaz v. Twinings N. Am. Inc., 2014 U.S. Dist. LEXIS 57535

(N.D. Cal. Apr. 24, 2014)

• Compare with Jones v. ConAgra Foods, Inc., 2014 U.S. Dist.

LEXIS 81292 (N.D. Cal. June 13, 2014)

Primary Jurisdiction

51

Primary Jurisdiction

• Court has discretion to stay or dismiss without prejudice to

permit parties to seek relief from FDA or other regulatory authority with appropriate mandate and technical expertise.

• Is the issue one of first impression?
• Does resolution require the specialized knowledge or expertise
• f an agency?
• Is there any indication that the agency intends to provide

guidance?

• Has the agency affirmatively declined to provide guidance?

52

• Invoking the primary jurisdiction doctrine to dismiss claims

where the central question in the case – whether milk protein concentrate is a permitted ingredient in yogurt – was held to be “squarely within the competence and expertise of the FDA, pursuant to the authority granted to the Agency by Congress”).

• Ruling bolstered by fact FDA had issued a proposed rule that,

if implemented, would have allowed MPC in yogurt

Taradejna v. General Mills, No. 12-993 (D. Minn.

• Dec. 10, 2012)

53

Cox v. Gruma Corp., 2013 U.S. Dist. LEXIS 97207

(N.D. Cal. July 11, 2013)

• Defendant argued that under the doctrine of primary jurisdiction,

FDA, not judge or jury, must decide whether GMOs are “natural.”

• The FFDCA and NLEA “unquestionably and squarely give [the]

authority” to FDA to “determin[e] whether food labels may properly state that GMO products can be labeled ‘all natural.’”

• Court stayed the case, asked FDA to address “the question of

whether and under what circumstances food products containing ingredients produced using bioengineered seed may or may not be labeled ‘Natural’ or ‘All Natural’ or ‘100%.’”

• Parties sent letters to FDA
• Defendant advocated for FDA clarification
• Plaintiffs said issues of misleading labeling can be

handled by courts; no need for FDA to weigh in

54

FDA’s Response, January 6, 2014

• Reaffirmed that FDA has declined to define “natural” and

stand by its policy statement

• If FDA were to revoke, amend or change its policy, it would do

so through formal rulemaking or guidance, not in litigation context

• “Natural” definition has implications beyond the narrow scope
• f GMOs
• FDA would have to consider science, consumer perceptions

and beliefs, other modern food production technologies and “strictures flowing from the First Amendment”

• FDA’s limited resources devoted to FSMA, nutrition labeling,

etc.

55

Court Decisions Since FDA Response

• Parker v. J.M. Smucker Co., N.D. Cal. May 2014
• Court denied defendant’s motion to dismiss, arguing deferral to

FDA’s primary jurisdiction

• Court refused to dismiss, stating FDA’s refusal to consider

whether foods containing GMOs may be labelled “natural” indicated FDA had no intention of defining “natural”

• Court stated the question of whether a label is

misleading is a legal question, not a scientific question

• Makes it harder for defendants to argue primary

jurisdiction in natural and GMO lawsuits

56

Court Decisions Since FDA Response

• Garrison v. Whole Foods Market Group Inc., N.D. Cal. June 2,

2014

• Court found primary jurisdiction doctrine inapplicable, stating

there was no indication the FDA intended to issue a formal

• pinion on the word “natural” and therefore there was no

“resolution of the issue pending before the [FDA] to which the Court could defer.”

• Court echoed the Smucker court by holding “allegations of

deceptive labeling do not require the expertise of FDA to be resolved…as every day courts decide whether conduct is misleading.”

57

Evaporated Cane Juice (ECJ) Litigation

• In March, FDA reopened comment period on draft guidance

relating to ECJ

• Gives defendants opportunity to argue primary jurisdiction
• Some courts have stayed or dismissed pending FDA action
• Saubers v. Kashi Co., S.D. Cal., Aug. 11, 2014 (dismissed)
• Gitson v. Trader Joe’s Co., N.D. Cal., Aug. 8, 2014 (stayed)
• Other courts have declined to apply primary jurisdiction
• Leonhart v. Nature’s Path Foods, Inc., N.D. Cal., Mar. 31, 2014
• Morgan v. Wallaby Yogurt Co., N.D. Cal., Mar. 25, 2014

58

Standing

59

Standing

• In re Simply Orange Juice Marketing & Sales Practices Litig.,
• No. 12-2361 (W.D. Mo. Mar. 1, 2013)
• Rejected defense argument that the claims should be

dismissed because plaintiffs do not allege that they saw advertisements for the juice products

• “Whether plaintiffs actually ever saw advertisements of

Simply Orange, MM Premium, and MM Pure Squeezed is not dispositive of the case at hand.”

• Where the alleged misrepresentations and false

statements are part of an extensive and long-term advertising campaign, reliance on specific advertisements is not required

60

Standing

• Gitson v. Trader Joe’s Co. (N.D. Cal. Mar. 14, 2014)
• Alleges a variety of Trader Joe’s products are

misbranded or mislabeled, including “soymilk” mislabeled as “milk” because product contained no milk

• Complaint includes products purchased by plaintiffs and

products that are “substantially similar” to purchased products

• Court ruled plaintiffs have standing to bring suit re: non-

purchased products that are substantially similar

• But plaintiffs lacked standing to bring the “milk” claims

because they failed to provide any facts of how they relied on the alleged misrepresentation of the soymilk label

61

Standing

• Figy v. Frito-Lay North America Inc.

(N.D. Cal. Aug. 13, 2014)

• Plaintiffs allege pretzel products misleadingly

claim “Made with All Natural Ingredients” when they contain “artificial, synthetic and unnatural ingredients”

• Court adopted “substantial similarity” test

re: non-purchased products, finding plaintiffs successfully argued substantial similarity in that all the products at issue were pretzels and varied only in shape and size

62

ANTICIPATED REACTIONS

THE FIVE STAGES OF CORPORATE GRIEF

Denial We complied with the FDA’s rules and regulations, so …we are not liable. The statements in our labels/ads are true, so …we are not liable. Anger The lawsuit is frivolous; it will not cost me anything. This is pure Blackmail; we must defend our product no matter what. Bargaining We can make this case go away quickly. Depression If we settle, we will attract more plaintiffs and more lawsuits. Acceptance If we settle, will we buy peace with respect to the product forever?

63

WHAT IS GOING INTO YOUR STRATEGIC DECISION?

• Cost
• Exposure
• Odds of success on motions
• Discouraging other claims
• Avoiding publicity

64

Taco Bell Fights Back

Newsprint YouTube

Facebook

65

Case Study: Taco Bell Continued

Prior to the Lawsuit:

– Almost 80,000 followers – Over 5 ½ million Facebook Fans – Nearly 3 million views of YouTube Videos

One month after filing:

– “Taco Bell” search on Google – Only ONE result in the top ten related to action

66

Counter-Attack: Malicious Prosecution

 Deceptive Labeling Action  “Hours of energy now – No crash later”  DISCOVERY REVEALED THAT:  Plaintiff never saw or read the

Complaint, which referred to her as a “he.”

 Plaintiff never met counsel, except the

day before the deposition.

 Plaintiff bought the product for the case!

67

Risk Management Strategies

68

Table Stakes: Compliance with Labeling Regulations

• Seven basic label elements
• Nutrient content claims (express and implied)
• Health claims (substantiation, approval, know your risk)
• Flavors and flavor cues
• Know other labeling requirements specific to your industry
• Dairy (SOIs and flavor labeling)
• Juice labeling
• Dietary supplements
• Food for kids

69

Know Your Industry and the Trends

• Keep ahead of the risk curve
• Benchmark (but don’t rely upon) your competitor’s labels
• Understand consumer perception and how it is changing
• Watch CSPI, CU and others – often the vanguard
• Look beyond U.S. borders

70

Overall Net Takeaway Test

• Label is more than the sum of its individual parts
• Combination of claims
• Each claim by itself may be fine, but do two or more claims, taken

together, imply a third message?

• Combination of claim + graphics
• E.g., Heart picture + benign copy = implied health claim?
• Vignettes by themselves (especially fruits)
• E.g., Gerber Suit:
• “Fruit Juice Snacks” with photos of fruits
• But snacks didn’t contain juice from those fruits
• 9th Circuit reversed dismissal, allowed class

action to go forward

71

Coordinate Early!

• Two ways of building claims:

1. Develop product, then let marketing figure out the claims; or 2. Understand target market and expected claims, and (re)formulate to that market and claims

• Second approach gets Marketing,

Quality and Legal involved in early development, helping build product and the label

• Helps build substantiation necessary for

claims

72

Most Important: Uniform Process and Procedures

• Situations to avoid:

1. The Last Minute Approval:

• “I need to get this to the printer in 3 hours to make our deadline, can

you please take a look”?

2. Nobody Asked Me:

• “Of course you can’t make that claim. If you had asked me, I would

have told you our product does not qualify for a “gluten free” claim because ingredient X contains gluten.”

3. Never Approved That:

• “That wasn’t the label I approved!”

73

Show Your Work

• Develop and document a claims evaluation framework
• Establish substantiation for different types of claims
• Maintain substantiation files
• Certain claims require different or more stringent substantiation
• E.g., health claims
• Address both express and implied claims
• Substantiation required in advance (FTC)

74

• Understand Marketing’s desire to make claims does not

necessarily stem from studies showing increased sales

• Ask:
• Why are we making this claim?
• What do we expect to gain and on what basis do we believe that?
• Do the risk-benefit analysis
• What is chance we will be sued?
• What is worst case scenario if we are sued (assume millions)?
• How will the brand suffer if faced with suit (even if we win)?
• Weigh that against expected benefit of claim

Know When Not To Make the Claim

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