YOUR SOURCE ON FOOD LITIGATION AND REGULATION

What recourse do businesses have when their products are incorrectly identified as the source of a foodborne illness outbreak? For the time being, it appears that the answer to that question is “very little.” In a recently dismissed lawsuit concerning FDA’s 2008 warnings linking tomatoes to a Salmonella outbreak in New Mexico and Texas, which proved to be wrong, a federal court held that the government’s error did not constitute a regulatory “taking” under the Fifth Amendment, even though the warnings had significant financial impact on the marketplace. Despite the court’s decision, and its impact on prospective regulatory takings claims, a compensation provision under the Food Safety Modernization Act (FSMA) provides a potential avenue of recourse for farmers, and it is likely that litigants will test this compensation theory in the future.

The U.S. District Court for the Southern District of Ohio granted preliminary approval for another class action settlement related to beverage label claims on September 25—this time involving the Coca-Cola Company. The settlement involves label claims related to Coca-Cola’s Vitaminwater and arises from four putative class actions filed in Ohio, Florida, Illinois, and the Virgin Islands. The cases alleged that Vitaminwater's product name, description, slogans, and flavor names misled consumers by causing them to believe that the product would provide various health benefits whose validity was brought into question by the plaintiffs.

A landmark U.S. Supreme Court decision on the ultimate source of pomegranate juice has already leaked into other product lines—including textiles—and its reach is likely to extend even further. It’s been three months since the U.S. Supreme Court’s decision in POM Wonderful LLC v. Coca-Cola Co.—and the decision’s effects are already being felt in the area of source identification. The High Court’s holding allowed POM Wonderful to sue Coca-Cola under the Lanham Act’s unfair competition provision for an allegedly false and misleading label on Coca-Cola’s Minute Maid pomegranate-blueberry juice blend. According to POM Wonderful, Coca-Cola’s juice blend prominently displayed the words “pomegranate juice” when, in reality, the product contained only 0.3% pomegranate juice. The Court rejected Coca-Cola’s objection that the Lanham Act claim should be precluded because the Minute Maid labeling complied with FDA regulations. (For a deeper analysis, see our prior LawFlash.) In June 2014, the decision was heralded by POM Wonderful as “a real victory for consumers” that will “translate into higher assurance for consumers that the labels on beverage and food are accurate.” Although time will tell, plaintiffs and courts have started to use POM Wonderful in some creative ways in the arena of source identification, and these claims may be a harbinger of things to come.

Morgan Lewis partners recently published an article in the Institute of Food Technologist’s Food Technology magazine on the future of obesity-related litigation. The article discusses how companies can maximize their insurance assets, use federal regulations proactively, and refocus compliance programs to improve their position against possible lawsuits. Read the full article here.

New regulations for poultry inspection from the USDA’s Food Safety and Inspection Service (FSIS) may end its long, acrimonious struggle to modernize the existing status quo. Given the competing interests surrounding the initiative, compromise was inevitable—and compromise is precisely what everyone got. As previously proposed, the rule would have mandated universal changes in the inspection system. The proposed rule directed all poultry slaughterers to initially examine and screen birds for cosmetic and other nonsafety-related defects—traditionally the role of USDA inspectors—and maintained the core government responsibility to identify problems associated with animal disease and other forms of product contamination. This system has been in effect—and successful—on a voluntary basis for more than a decade within the context of so-called pilot programs.

The Food Safety and Inspection Service (FSIS) recently proposed a rule that, if adopted, will require both processing establishments and retail facilities that grind raw beef products to maintain records in a newly prescribed format. That format will delineate source materials and the identity of suppliers as well as any carryover from one production lot to the next. Our FDA Practice discussed the details and implications of the rule, which was proposed in July, in a Food Industry LawFlash.

The proposed rule represents a significant new recordkeeping requirement at the retail/grocery level and should be examined closely by such businesses. Submitted comments to FSIS detailing potential recordkeeping burdens and logistical concerns will be important to ensure that the proposal balances practical considerations with the intended food-safety goals.

In February, the Occupational Safety and Health Administration issued a new rule that contains important guidance regarding several aspects of the Food Safety Modernization Act’s (FSMA’s) whistleblower provision. The details and implications of this guidance are discussed in a LawFlash from our Labor and Employment Practice.

Companies in the food industry should update their policies and training materials to ensure that supervisors and managers are properly educated about protected whistleblower conduct under FSMA. In addition, companies should make sure that they have implemented a process for reporting any concerns or complaints about food safety and that any such reports are documented.

The U.S. District Court for the Southern District of California has joined its sister court in the Northern District and delayed yet another case about “evaporated cane juice” (ECJ). Falling in line with a string of recent decisions, on August 11, the court stayed proceedings in Saubers v. Kashi Co., a case involving whether a food company’s use of the term “evaporated cane juice” to describe certain sweeteners violated food labeling laws. In its holding, the court cited the “primary jurisdiction” doctrine, which allows courts to stay proceedings pending the resolution of an issue within the special competence of an administrative agency. Since 2013, numerous courts have faced this issue—with widely different results—leaving litigants facing “evaporated cane juice” claims under a fog of uncertainty. The Saubers decision and its line may be a sign that the fog is finally lifting.

Throughout 2013, the FDA issued several Warning Letters to manufacturers of medical foods, suggesting that the FDA’s final guidance may narrow its interpretation of the definition of “medical foods.” The details and implications of these Warning Letters are discussed in a Food Industry LawFlash from our FDA Practice.

It remains important for the medical food industry to monitor the status of the guidance and any continued enforcement efforts in order to determine whether the agency will be revise its interpretation of the medical food category or continue to enforce the more limiting criteria set forth in the nutritional labeling regulations.

In January, the FDA issued guidance on substances added to foods, including beverages and dietary supplements. The details and implications of this guidance are discussed in a recent Food Industry LawFlash from our FDA practice.

As the alert discusses, affected companies should review their products in light of these guidance documents and consider whether there are any vulnerabilities in their products’ formulations, labeling, or marketing.