This is Part II in our series on Food Labeling litigation. Part I gave general context to food labeling and advertising litigation and discussed some general trends with these claims, focusing on consumer claims such as false advertising, consumer protection, and unfair trade practices. To review: consumers bring class actions that allege, through some legal claim, the use of a labeling term misleads consumers. Remember the term “selling words” that we explained in Part I? This part summarizes the most hotly contested kinds of selling words and gives examples of class actions brought by consumers against the companies who used them. The selling words that are the biggest targets of this kind of litigation: (1) “Natural” and “all natural”; (2) “Healthy” claims; and (3) Food mislabeling claims about ingredient quality (like “100% pure”). Let’s jump in!
“Natural” Litigation
“Natural” Claims: Intentionally, the FDA has not adopted a formal definition of “natural.” In 1991, it adopted an “informal policy” which states that “natural” means merely that “nothing artificial or synthetic (including colors regardless of source) is included in, or has been added to, the product that would not normally be expected to be there.” The policy carries only the weight of an advisory opinion, and it does not establish a legal requirement. On its website, the FDA provides consumers the following guidance on the meaning of “natural” in food labels:
- From a food science perspective, it is difficult to define a food product that is “natural” because the food has probably been processed and is no longer the product of the earth. That said, the FDA has not developed a definition for use of the term natural or its derivatives. However, the agency has not objected to the use of the term if the food does not contain added color, artificial flavors, or synthetic substances.
- The FDA will not object to the use of “Natural” on the label if the food does not contain added color, artificial flavors or synthetic substances.
But, of course, “natural” claims that meet this standard are still targeted by plaintiffs’ attorneys. In this regard, the biggest risk remains the use of GMO ingredients, followed by products with ingredients that are allegedly produced by a chemical or non-natural process. Specific cases illustrating this are discussed after this article makes a brief distinction among “natural” products: those with GMOs and those without. Take a look at the below examples.
Use of “Natural” in Products with GMOs: A growing subset of the “Natural” claims litigation arises from foods which would otherwise meet the FDA’s informal policy definition of natural, but contain GMOs. In three of these cases, the courts stayed the litigation to request that the FDA provide “an administrative determination” on “the question of whether and under what circumstances food products containing ingredients produced using bio-engineered seed may or may not be labeled ‘Natural.’” The FDA declined this invitation and indicated that it could make such a determination only through a public rule-making process. As a result, claims will continue to be brought against foods labeled as “Natural” but contains GMO ingredients. See Cox v. Gruma Corp., 4:12-cv-6502 (N.D. Cal.); Barnes v. Campbell Soup Co., 3:12-cv-051 85 (N.D. Cal.); and In Re General Mills, Inc. Kix Cereal Litigation, 2:1 2-cv -00249 (D. N.J.) as examples of the myriad of cases which are all fundamentally the same: consumers claim that the use of a “natural” label on products that contain GMO ingredients is misleading. Depending on a given product’s market penetration and sales, settlements have ranged from less than $1 million to $9 million.
Non-GMO Natural Cases: Under a recent class-action settlement, Cargill will pay $6.1 million into a settlement fund for marketing Truvia sweetener as “natural” when it contains synthetic and chemically-produced ingredients. Cargill also agreed to certain labeling changes: (1) to clarify its statements “Nature’s Calorie-Free Sweetener” and “Truvia Natural Sweetener provides the same sweetness as two teaspoons of sugar”; (2) to remove the phrase “similar to making tea” from all Truvia packaging; and (3) to update the Truvia website to better explain how Truvia is manufactured. Cargill will, however, continue identify its stevia and erythritol-based products as “all-natural.”
Kellogg recently settled a class action brought against it arising from its use of “all natural” or “nothing artificial” on the labels of certain Kashi and Bear Naked products. Among the ingredients challenged in the suit were pyridoxine hydrochloride, calcium pantothenate, hexane-processed soy ingredients, ascorbic acid, glycerin and sodium phosphate. Kellogg will no longer use the “all natural” or “nothing artificial” verbiage on the labels and agreed to a payment of $5 million.
On May 1, 2015, the Northern District of California approved the final settlement in Lilly et al. v. Jamba Juice Co., No. 13cv02998 (N.D. Cal.). Plaintiffs brought a class action against Jamba Juice based on allegations that Defendants’ smoothie kits were falsely labeled as “All Natural” when in fact they contained synthetic and processed ingredients. Under the settlement, Defendants will re-label the challenged products, including on their website, to exclude the description “All Natural.” Additionally Plaintiffs were granted attorneys’ fees in the amount of $410,637.13, costs in the amount of $14,326.87, and an incentive award of $5,000 for each named plaintiff.
In February of 2015, the Northern District of California issued a final order approving a $5.25 million class settlement in Miller v. Ghirardelli Chocolate Co., No. 3:12cv04936 (N.D. Cal.). The plaintiffs claimed that Ghirardelli’s white chocolate products did not contain chocolate or white chocolate, but were instead “artificial” and “imitation.” Defendants agreed to change their product labeling for three years: they will not use the phrases “all natural,” “Classic White” except as part of the phrase “Classic White Chips,” and “baking chocolate” or “chocolate indulgence” on the packaging of White Chips. Moreover, the settlement in Ghirardelli approves attorneys’ fees in the amount of $1,575,000, litigation costs in the amount of $87,572.15, and an incentive award of $5,000 for each named plaintiff.
“Healthy” Claims: “Healthy” claims are also subject to consumer litigation. These claims allege that a product labeled as “healthy,” or similar words, indicate the product is wholesome. Such claims are “false” when the product contains “non-wholesome” ingredients such as saturated fats or added sugars. Importantly, the use of “healthy” on a food label is also subject to regulatory standards established by the FDA.
The 2012 Nutella lawsuit is a good example of this type of claim. Nutella was touted as being made with “simple quality ingredients like hazelnut, skim milk and a hint of cocoa” and part of a “nutritious” and “healthy breakfast.” The lawsuit alleged that these statements and related marketing were misleading because Nutella contains 10.9g of added sugar per serving and 2g of saturated fat. Ferrero USA agreed to contribute $3 million to the settlement fund and remove the phrase “An example of a tasty yet balanced breakfast” from the product label and replace it with “Turn a balanced breakfast into a tasty one.”
It is also worth noting that that the FDA issues “warning letters” if it determines that a food product is labeled as “healthy” but doesn’t actually comply with the FDA regulations for “healthy” claims. A recent example is Kind LLC’s snack bars. Although labeled as “healthy,” the bars contained more than the one gram of saturated fat content allowed under the FDA regulations. Not surprisingly, within days of the FDA warning letter becoming public, two separate class actions were filed against Kind alleging consumer deception.
Food “Mislabeling” Claims: This category of litigation encompasses legal allegations that the information on a particular food label does not match the actual food or ingredients. These cases arise in a fairly diverse set of circumstances.
- Free of Trans Fats: Backus v. H. J. Heinz Co., 3:15-cv-02738 (N. D. Ca), a class action complaint alleging that Heinz falsely markets its frozen microwave tater tots and french fries as containing no trans fats when they allegedly contain partially hydrogenated oils, which in turn contain trans fats. ConAgra Foods Inc. was hit with a similar suit alleging that its caramel popcorn snack Crunch ‘n Munch was labeled as free of trans fats but also contained partially hydrogenated oils.
- Improper Organic Label: In re: Aurora Dairy Corp Organic Milk Marketing and Sales Practices Litigation, U.S. Eighth Circuit Court of Appeals, No. 09-2762, a multi-district lawsuit in which Aurora Dairy, which supplies organic milk to many national retailers, was alleged to have marketed and sold milk under the USDA’s certified organic seal, which didn’t meet the National Organic Program’s (NOP) standards because that the USDA found that Aurora had committed a number of “willful” violations of NOP regulations. The court dismissed claims that Aurora’s products were not properly certified as organic because Aurora never lost its organic certification. The court allowed the marketing claims to proceed. Aurora entered into a $7.5 million settlement.
- Golloher Todd Christopher International Inc., Case No. 3:12-cv-06002-RS (N.D. Ca), although not a food case, this litigation highlights that companies cannot attempt to pass off non-organic products as organic. Here, the defendant marketed personal care products under the brand name “Organix” along with marketing materials that implied the products were organic, but the products were not certified as organic under federal or California law. Defendant entered into $6 million settlement and agreed to change certain business practices.
- False Representation of Origin: Kumar v. Salov North America Corp., No. 4:14-CV-02411 (N.D. Cal. Feb. 3, 2015) alleges that Salov’s Filippo Berio oil is deceptively labeled as “Imported from Italy,” and that independent product tests on the “Extra Virgin” varieties show these to be of less than extra-virgin quality. The front label of each bottle says “Imported from Italy,” while the back label informs consumers that the product is “Packed in Italy,” with component olive oils from Greece, Italy, Spain and Tunisia. The Plaintiff also had several bottles of Salov’s “Extra Virgin” oils independently tested for quality and found that none met the various international, national and California standards for extra virgin oil. The Plaintiff’s claims largely survived a motion to dismiss and the case is pending.
The Main Takeaways:
(1) Consumers are taking matters into their own hands and initiating or participating in class action lawsuits against companies that use arguably misleading selling words;
(2) If a labeling claim doesn’t match up with the product ingredients, expect trouble; and
(3) Sometimes, it is really, really subjective whether a product’s ingredients comport with its labeling claims. State consumer deception statutes are intentionally broad so that they will cover as much conduct as possible. That means these claims can sometimes be more expensive to defend than settle.
Our Husch Blackwell team can help you with your labeling issues—give us a call, we’d love to talk with you.
[1] Food Labeling: Nutrient Content Claims, General Principles Petitions, Definition of Terms, 56 Fed. Reg. 60421 at 60,466.
[2] 21 C.F.R. § 10.85(d), (e), (j) (1996).
[3] What is the meaning of ‘natural’ on the label of food?, FDA, http://www.fda.gov/AboutFDA/Transparency/Basics/ucm214868.htm (last updated June 8, 2015).