Pandemic-Driven Amendments to Liquor Code Truly Novel

On Nov. 5, 2021, Governor Tom Wolf signed into law House Bill 425, which became effective immediately. Inspired by the restaurant industry’s struggle to recover from the pandemic and related shifts in operations, the bill presents new opportunities for licensees by eliminating a major hurdle for licensing premises under a licensee’s control. In addition, it loosens many other limitations in the Liquor Code regarding catering permits and other provisions.

House Bill 425 Amendments to Liquor Code

This bill presents a unique licensing strategy that comes in the form of a temporary pandemic-related law. The Pennsylvania Liquor Control Board (the “Board”) may now temporarily extend the licensed premises of a licensed club, catering club, restaurant, retail dispenser, hotel, limited distillery, distillery, brewery, or limited winery to include any outside serving area that is immediately adjacent to the existing licensed area or within one thousand feet of the main licensed premises (even if the area to be temporarily licensed and the main licensed building are separated by a thoroughfare).

For decades, the Pennsylvania Liquor Control Board has “licensed” only premises contiguous or connected to each other. This rule has confounded new license applicants for decades, and operators that controlled both sides of a private driveway or public alleyway could not utilize their license for both sides of the thoroughfare. Any questions as to how the Pennsylvania Liquor Control Board would interpret these new provisions ended with the release of the Nov. 15, 2021 Summary of Act 81 of 2021 (House Bill 425).

In the Summary, the Board confirmed that separate premises across a public thoroughfare and within 1,000 feet of the licensed premises did not have to have their own service facilities, and a server could take food and drinks out of the original licensed premises and across the street to the new proposed licensed premises and serve patrons there. This is a remarkable change in the law; however, these provisions of Act 81 are due to sunset Dec. 31, 2024, which may affect the amounts a licensee may invest in temporary structures on premises that are not immediately connected or contiguous to the licensed premises.

Pandemic-Driven Amendments to Liquor Code

Another change in the law relates to off-premises catering permits. Restaurant licensees, hotel licensees, and eating place retail dispenser licensees that want to sell liquor away from their licensed premises can apply for and obtain an off-premises catering permit to hold a catered function on otherwise unlicensed premises. A catered function is defined as “the furnishing of food prepared on the premises or brought onto the premises already prepared in conjunction with alcoholic beverages for the accommodation of a person or an identifiable group of people, not the general public, who made arrangements for the function at least thirty days in advance.”

The limit for these permits was previously capped at 52 per year. Act 81 now allows the Board to issue an unlimited number of permits for off-premises catered functions to licensees that qualify. Catering permits are also no longer limited to the five-hour time restriction that was previously mandated.

The next amendment to the law pursuant to this bill applies to what happens when a licensee goes out of business. Now, liquor and wine in the possession of a licensee at the time the licensed business closes permanently may be sold to another licensee qualified to sell such products. The licensee selling the products is required to advise the Board in writing of the name of the licensee buying them, identifying any product sold, and describing the liquor, including brand names, sizes, and numbers of containers sold.

More in the House Bill 425

Lastly, Act 81 provides for an additional year of safekeeping for the following class of licensees that was in safekeeping during the proclamation of the 2020 disaster emergency related to the pandemic: club, catering club, restaurant, eating place retail dispenser, hotel, importing distributor, and distributor. A licensee in one of those classes cannot be subject to a renewal, validation, or safekeeping fee that would be due during the additional year. But the licensee must file a renewal or validation that does come due. The additional year of safekeeping commences on the renewal or validation date of a license that occurs after Dec. 31, 2021. This means any extension of the safekeeping period due before Dec. 31, 2021, must be paid, but that license would qualify for the one-year extension from 2022 to 2023.

The novel coronavirus has forced many businesses to change the way they operate, so it is gratifying to see the Pennsylvania Legislature create more flexibility in the Pennsylvania Liquor Code, one of the more confusing and rigid sets of laws in the United States.

©2021 Norris McLaughlin P.A., All Rights Reserved

Consequences of Brexit: Not to Be Underestimated

After the fuel shortages, will there be a shortage of mineral water in UK restaurants…?

In July, the UK made it clear that no EU mineral waters can be exported to the UK from January 7, 2022, unless the UK authorities grant formal approval to do so in the coming months. (The decision does not apply to exports marketed exclusively in Northern Ireland). Brands such as Evian and San Pellegrino would be affected if the UK doesn’t give approval.

If no approval is passed in the UK, the EU will almost certainly hope to adopt an equivalent measure of non-recognition of the UK’s natural mineral waters previously marketed within the EU.

© 2021 Keller and Heckman LLP

For more articles on Brexit, visit the NLRGlobal section.

Lawsuits Allege Fudged Fudge

 

hot fudge sundae misleadingly described as fudge dairy fat, are falsely and misleadingly described as “fudge.” (See Reinitz v. Kellogg Sales Company, Bartosiake v. Bimbo Bakeries

Three class-action lawsuits filed in district courts in Illinois allege that products containing vegetable oils, and not dairy fat, are falsely and misleadingly described as “fudge.” (See Reinitz v. Kellogg Sales CompanyBartosiake v. Bimbo Bakeries USA, Inc., and Lederman v. The Hershey Company).  The lawsuits, which are all filed by Sheehan & Associates, P.C. and are substantively identical, have targeted Kellogg Sales Company’s “Frosted Chocolate Fudge,” Bimbo Bakeries USA, Inc.’s “Chocolate Fudge Iced Cake,” and the Hershey Company’s “Hot Fudge” respectively.

The lawsuits allege that fudge is a candy made from the mixing of sugar, butter, and milk, and that the replacement of dairy fats (butter and/or milk) with vegetable oils in each of the three products at issue constitutes deceptive advertising.  In support of these claims, Plaintiff cites a hodgepodge of sources including three recipes from around the turn of the 20th century, a Wikipedia entry, Molly Mills, who is apparently “one of today’s leading authorities on fudge,” and a 1982 Bulletin from the International Dairy Federation.

Plaintiffs have not, however, provided any extrinsic evidence of consumer deception (e.g., market studies), and such information will almost certainly have to be produced for such a case to ultimately succeed. We have previously reported on several other class actions which allege that the replacement of dairy fat with vegetable oil is misleading to consumers (see here and here), and we will continue to monitor and report on the outcomes of these cases.

© 2021 Keller and Heckman LLP

Article by the Food and Drug Law at Keller and Heckman

See links for more articles on Biotech, Food, Drug law, and Consumer Protection law 

Chobani Sued Over “Fair Trade” Claims

  • On July 12, 2021, private plaintiffs filed a proposed class-action lawsuit against Chobani LLC. The plaintiffs allege that Chobani misrepresented its certification from Fair Trade USA, leading plaintiffs to overpay for Chobani’s products because they believed in the certification labeling.

  • Chobani became the first in the U.S. dairy industry to be certified with the Fair Trade USA seal of approval in May 2021. Fair Trade USA is a nonprofit that grants and sets standards for the fair trade label. However, the suit claims that Chobani’s immigrant laborers work in “dangerous conditions,” dealing with hazards including slippery surfaces, aggressive cows, and heavy machinery being poorly operated on dairy farms in upstate New York. The complaint relies on a nonprofit worker groups’ report that states dairy workers did not succeed in getting Chobani’s support in unionization efforts at farms from which Chobani purchases milk.

  • Chobani stated that the lawsuit is meritless and makes “unfounded attacks on Fair Trade USA, one of the most highly-regarded third-party verification programs for environmental, social and economic standards.” This lawsuit is the most recent action filed by Sheehan & Associates, which has been prolific in recent years in lawsuits against food companies.

© 2021 Keller and Heckman LLP

For more articles on fair trade, visit the NLRBiotech, Food, Drug section.

Judge Looks “Kind”ly Upon Certifying Class in Snack Bar Advertising Suit

In a recent opinion out of the Southern District of New York, Judge William H. Pauley III certified three classes of plaintiffs in New York, California, and Florida who allege that KIND LLC, the manufacturer of KIND Bars, deceptively marketed several products as “all natural” and “non-GMO,” even though they purportedly contain synthetic and genetically modified ingredients.  In re KIND LLC “Healthy and All Natural” Litig., No. 15-md-02645 (S.D.N.Y. Mar. 24, 2021).

The court began its analysis by examining each of the four Rule 23(a) requirements—numerosity, commonality, typicality, and adequacy—and determining that each weighed in favor of class certification.  Most notably, the court found that common questions predominated despite the absence of any uniform definition of the term “natural” because, in its view, all the definitions plaintiffs advanced were consistent with one another.  Plaintiffs offered definitions of “natural” from the dictionary, FDA policy, the USDA, and Congress. In considering these various definitions, Judge Pauley recognized that “these formulations of the definition ‘natural’ differ,” but dismissed these concerns because he believed none “exclude[d] another.”

This decision is somewhat surprising, given the deep reservoir of class certification decisions finding that, where plaintiffs fail to establish a controlling definition for a key term or phrase in the challenged advertisement, individual issues predominate and class certification should be denied.  A number of courts have reached this conclusion in the “natural” labeling sphere:

  • In Astiana v. Kashi Co., the court refused to certify a class bringing “all natural” claims, in part because the plaintiffs were unable to show that “all natural” had a shared meaning amongst the proposed class. 2013 U.S. Dist. LEXIS 108445, *40 (S.D. Cal. 2013)
  • In Thurston v. Bear Naked, Inc., a federal judge in the Southern District of California found commonality and predominance lacking because the plaintiffs “fail[ed] to sufficiently show that ‘natural’ has any kind of uniform definition among class members.” 2013 U.S. Dist. LEXIS 151490, *25 (S.D. Cal. 2013).
  • In Randolph v. J.M. Smucker Co., the court denied class certification where plaintiff had “not demonstrated that an objectively reasonable consumer would agree with her interpretation of ‘all natural,’” while also noting that this failure “unequivocally exposes the fact that there is a lack of consensus” surrounding what constitutes a “natural” product. 2014 U.S. Dist. LEXIS 176731, *14 (S.D. Fla. 2014).

Courts regularly adopt this reasoning in other contexts also. See Pierce-Nunes v. Toshiba Am. Info. Sys., 2016 U.S. Dist. LEXIS 149847 (C.D. Cal. 2016) (holding that the predominance requirement was not satisfied where plaintiffs could not establish a common meaning for the term “LED TV”); In re 5-Hour Energy Mktg. & Sales Practices Litig., 2017 U.S. Dist. LEXIS 220969 (C.D. Cal. 2017) (same based on “energy”); In re Tropicana Orange Juice Mktg. & Sales Practices Litig., 2019 U.S. Dist. LEXIS 102566 (D.N.J. 2019) (same based on “pasteurized”).

The FDA also has not adopted, and has actually declined to adopt, a formal definition of the term “natural,” citing the “many facets of this issue” the agency would have to carefully consider if it were to undertake the task of defining the term.  See 58 Fed. Reg. 2302, 2407 (Jan. 6, 1993).  In doing so, the FDA noted “the ambiguity surrounding use of this term.”  It is difficult to square this ambiguity with the KIND court’s certification decision.

Watch this space as we monitor whether this decision is part of a shifting tide in “natural” certification decisions, or merely an outlier amidst continuing struggles to reach consensus on what “natural” even means.

© 2021 Proskauer Rose LLP.


For more articles on food class actions, visit the NLRLitigation / Trial Practice section.

The Food Safety Aspects of Edible Insects

Recently growing concerns about the environmental effects of food production has led to an interest in the possibility of using insects as a viable nutrient source in both human diets and animal feed (due to the low carbon, water and ecological footprints associated with insect farming and edible insects can be a good source of protein, fatty acids, vitamins and minerals).

The primary objective of FAO’s publication (see link below) is to provide an overview of the potential food safety issues that should be considered, including biological agents (bacterial, viral, fungal, parasitic) as well as chemical contaminants (pesticides, toxic metals, flame retardants). Determination of food safety hazards will help to establish appropriate hygiene and manufacturing practices in this sector.

In addition to the food safety aspects, other challenges facing this emerging sector are briefly discussed. These include general absence of insect-specific regulations governing the production and trade of insects as food and feed, issues related to upscaling the production of insects, among others.

Interested in learning more about FAO’s report ‘Looking at edible insects from a food safety perspective’ ? Click on the link.

© 2021 Keller and Heckman LLP


For more articles on edible insects, visit the NLR Biotech, Food, Drug section.

Girl Scout Troop Teams Up with Wing for Drone Cookie Deliveries

Calling all Thin Mints fans! Girl Scout Thin Mints cookies can now be delivered right to your doorstep – by drone… IF you live in Christiansburg, Virginia. The town has been a testing arena for commercial drone delivery by Wing (a subsidiary of Alphabet, Google’s parent company). Before Girl Scout Thin Mints, starting in 2019, drugstore products, FedEx packages, local pastries, tacos, and cold brew coffees have been delivered by drone to residents of this community.

During the pandemic, Wing and the Girl Scout troops started discussing the lower number of cookie sales, due to the low percentage of the public visiting storefronts. That discussion led to an entirely new format for selling cookies. One young Girl Scout of Virginia Skyline Troop 224 said, “I’m excited that I get to be a part of history. People are going to realize and be, like, ‘Hey, this is better for the environment and I can just walk outside in my pajamas and get cookies.’”

Wing’s drones are able to autonomously navigate, powered by two forward propellers on their wings and 12 smaller vertical propellers. When one of these drones reaches its destination, it hovers above as a tether releases, dropping the package.

This is yet another attempt at bridging the gap between drone capabilities and negative public perception of drones. After all, Thin Mints can be a pretty persuasive tool.

Copyright © 2021 Robinson & Cole LLP. All rights reserved.


For more articles on drones, visit the NLR Utilities & Transport section.

Bioplastics: Snickers® Candy Bars Have It Wrapped Up

A team of researchers from Yale University, the University of Maryland and the University of Wisconsin-Madison just published a study on a durable, biodegradable plastic alternative made 100% of wood. This study is just one example of the advent of a new generation of biobased plastics or bioplastics, a term broadly referring to products made from organic matter that have the same properties as “ordinary” plastic. The attractiveness of bioplastics is due to their potential to meet environmental as well as economic goals. According to current estimates, the bioplastics market size is expected to reach at least USD $20.0 billion by 2026.

Presently, the food and beverage sector is leading in terms of adoption and implementation of bioplastics.  In 2016, for instance, Mars introduced a bioplastic wrapper made from potato starch by-products for Snickers® candy bars. Bioplastic food packaging, like the Snickers® wrapper, remains and will continue to remain in high demand. Like other food packaging, bioplastic food packaging must be approved by the Food and Drug Administration (FDA). The FDA currently does not have a definition of or specific regulations for bioplastic food packaging. Accordingly, bioplastic food packaging must comply with the same food safety laws and regulations as petroleum-based plastic food packaging. The primary approval pathway is through the FDA’s so-called Food Contact Notification (FCN) process.

Under the FCN process, a manufacturer or supplier of a new “food contact substance,” or “any substance intended for use as a component of materials used in manufacturing, packing, packaging, transporting, or holding food if such use is not intended to have a technical effect in such food,” submits a notification to the FDA. Generally speaking, the notification should include information on: (a) the composition, specifications, and method of manufacture for a substance; (b) the intended conditions of use; (c) the quantity and identity of substances likely to become components of foods under the intended use conditions; and (d) toxicology data demonstrating the safety of the expected intake level. If the FDA does not object within 120 days to the substance’s use based on safety grounds, in writing, the submitter may market the substance. Critically, the FDA does not regulate labeling claims relating to bioplastic packaging, but biodegradability advertising has been the subject of action by the Federal Trade Commission.

Although a number of bioplastics have been cleared under the FCN process, some question whether the FDA should (1) define the term “bioplastics” by, among other things, specifying the percentage of carbon that must originate from biological sources as opposed to fossil fuels (currently, a product made almost entirely out fossil fuels can be considered a “bioplastic”); and (2) attempt to harmonize its regulations on bioplastics with international standards to avoid barriers to the international trade of bioplastics. Opinions on these considerations differ but watch this space for further developments, especially in light of the recently reintroduced “Break Free From Plastic Pollution Act” and the April 6, 2021 United Nations Environment Program legislative guide on the regulation of plastic products. If uptake by major brands like Snickers® is any indication of the future, bioplastics will play a meaningful role in the bioeconomy.

© 2021 Proskauer Rose LLP.

For more articles on food and drug law, visit the NLR Biotech, Food, Drug section.

The Sesame Seed Scandal!

Back in September, Belgium informed French authorities, via the RASFF, that ethylene oxide had been found in imported sesame seeds. The amount of ethylene oxide surpassed the maximum amount allowed under regulations. Subsequent DGCCRF checks have shown that other products (like spices) may also be contaminated.

Investigations are ongoing, but French health authorities and EU member states have taken measures to withdraw or recall any contaminated substances, the list of which continues to grow…

Le scandale des grains de sésame prend de l’ampleur !

Ce qui – en septembre – semblait être limité aux « graines de sésames », prend aujourd’hui une toute autre dimension. En effet, il s’agit de signaler comme potentiellement dangereux tout ingrédient alimentaire ayant été traité à l’oxyde d’éthylène.

Et la liste s’allonge…..

© 2021 Keller and Heckman LLP


For more articles on food and drug law, visit the NLR Biotech, Food, Drug section.

Ninth Circuit Drowns Out Alkaline Water Suit

The Ninth Circuit recently affirmed the dismissal of a putative class action alleging Trader Joe’s misled consumers by representing its Alkaline Water product as “ionized to achieve the perfect balance.”  In rejecting plaintiff’ allegations that the advertising referred to balancing the consumer’s internal pH rather than the balanced pH of the product itself, the Court recognized “a reasonable consumer does not check her common sense at the door of a store.”  Weiss v. Trader Joe’s, No. 19-55841 (9th Cir. Mar. 3, 2021).

The Alkaline Water product label states the water is “ionized to pH 9.5+,” will “refresh & hydrate,” and depicts “hundreds of plus symbols.”  An advertisement for the water in Trader Joe’s store newsletter likewise touted that the water was purified and charged through electrolysis, changing the structure of the water and raising the pH to 9.5+, making the product “water and then some.” Plaintiff alleged these representations were misleading because they implied that the water would “balance” a consumer’s internal pH after he or she has eaten acidic foods and would provide superior hydration as compared to other water.

The district court found several of these representations (including “water and then some,” “a drink that can satisfy,” and “refresh”) constituted non-actionable puffery.  The remaining challenged statements concerning the drink’s pH and ionization, the court found, would not mislead a reasonable consumer.

Agreeing with the district court’s analysis, the Ninth Circuit likewise found a reasonable consumer would not misinterpret these representations as suggesting internal pH balancing benefits or superior hydration.  When considered in the context of the package as a whole, the Court found the phrase “ionized to achieve the perfect balance” clearly referred to the water itself being balanced – rather than to balance within the body.

The Ninth Circuit also rejected plaintiff’s allegation that the term “hydrate” would mislead consumers into believing the water provided better hydration than other water. Plaintiff did not dispute that the water does, in fact, “hydrate.”  Finding this statement about the water’s hydrating capability true and undisputed, the Ninth Circuit agreed with the district court that it would not plausibly deceive a reasonable consumer.

The Court also affirmed the district court’s dismissal of plaintiffs’ breach of warranty claims based on the same advertising. The Court noted that though the reasonable consumer standard technically does not apply to warranty claims, those claims still require some sort of actionable representation. No such misrepresentation existed here because nothing in the challenged labeling promised health benefits or superior hydration.

This case serves as a reminder that allegations founded on fanciful interpretations of advertising claims may cause a “splash” when filed, but courts exercising common sense will not hesitate to dispose of them at the pleading stage.  While the Ninth Circuit’s decision in Weiss is unpublished, it is consistent with other precedential decisions from the court.  See for example Ebner v. Fresh, 838 F.3d 958 (9th Cir. 2016) – a case we have previously blogged about.

© 2020 Proskauer Rose LLP.
For more articles on water lawsuits, visit the NLR