Category: Food & Hospitality

FDA Issues Final Rules to Implement FSMA Produce Safety, FSVP, and Third-Party Auditor Provisions

FDA has issued its long-awaited final rules to implement the produce safety, foreign supplier verification program (FSVP), and accredited third-party certification provisions under the FDA Food Safety Modernization Act (FSMA).  The rules are scheduled for publication in the Federal Register on November 27, 2015.  The general compliance dates for the Produce Safety rule are in January 2017 for covered activities involving sprouts and in January 2018 for covered activities not involving sprouts.  The general compliance date for the FSVP rule is in May 2017.  FDA must publish the final Model Accreditation Standards guidance and the final user fee rule before the third-party certification program may be implemented.

Below please find links to FDA’s rule overviews and the full text of the rules:

FDA also announced two upcoming webinars; a webinar devoted to significant provisions of the product safety final rule will take place on November 17, 2015, while FDA will address significant provisions of the FSVP and Third Party Auditors final rules on November 23, 2015.

Article By Melvin S. Drozen, Leslie T. Krasny, Evangelia C. Pelonis & Laura D. Venker of Keller and Heckman LLP
© 2015 Keller and Heckman LLP

Vermont GMO Battle Continues in Second Circuit

The Second Circuit Court of Appeals is currently in the midst of an interlocutory appeal by the Grocery Manufacturer’s Association (“GMA”) and others of the District Court of Vermont’s denial of a request for a preliminary injunction against Vermont’s “Right to Know” Act.

The Act, passed by the Vermont legislature on May 8, 2014, and effective July 1, 2016, has the stated goal of establishing a system to allow for informed decisions by consumers with respect to the potential health effects of “genetically engineered foods,” commonly referred to as “GMOs.”  The Act applies to products entirely or partially produced with genetic engineering, with a focus on raw agricultural commodities and covered processed foods.  Labels on covered food products must either state that they are “produced with genetic engineering” or “may be produced with genetic engineering.”  Limited exceptions are made for foods derived entirely from animals, restaurant foods, alcoholic beverages and foods that have been independently verified to have “minimal” GMO content.  Penalties under the Act include $1,000.00 per day, per product, fines for food manufacturers.

The GMA filed its initial Complaint with the District Court in June 2014, and sought a preliminary injunction in September 2014.  U.S. District Judge Christina Reiss refused to enjoin the law in a ruling issued on April 27, 2015, which was promptly appealed to the Second Circuit.  Oral argument in the appeal took place on October 8, 2015.

The crux of the issue before the Second Circuit is the proper standard for evaluating GMA’s position that the Act violates the First Amendment by imposing a burden on speech by, inter alia, food manufacturers, based upon the content of that speech.  In reaching her decision to deny the preliminary injunction, Judge Reiss applied the less-stringent First Amendment analysis set forth in Zauderer v. Office of Disciplinary Counsel,  471 U.S. 626 (1985).  Given what the appellants term the “controversial” information/disclosures mandated by the Act, they argue the U.S. Supreme Court’s decision in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980) and its stricter level of scrutiny applies.  Appellants further rely on Second Circuit precedent, arguing that the case of Int’l Dairy Foods Ass’n v. Amestoy, 92 F.3d 67 (2d Cir. 1996), bars the state legislature from enacting a law that “trammel[s] manufacturer’s free speech rights to appease “consumer curiosity” and was ignored by the District Court.  The State of Vermont continues to argue that the District Court’s reliance on Zauderer and its less-stringent “rational basis” test was proper, in that the Act merely serves to provide consumers with “factual information.”

The Second Circuit panel reviewing the case addressed the issue of ripeness during oral argument, and remains, given the impact of the Act as the first of its kind to have a set effective date, at the forefront of debate over the regulation of GMO food and food products.  The Second Circuit’s decision bears watching, as the costs to industry resulting from enactment of the Act and the potential domino effect of similar acts being passed by other state legislatures could be significant and will require extensive advanced planning to ensure compliance.

The Second Circuit case is Grocery Manufacturers Association, et al. v. Sorrell, Case No. 15-1504.  The District Court case is Case No. 5:14-cv-117 and the Court’s order denying the preliminary injunction is Document #95.  A link to a .pdf copy of the Order is provided immediately here.

Article By Scott K.G. Kozak of Armstrong Teasdale

© Copyright 2015 Armstrong Teasdale LLP. All rights reserved

Getting Serious about Palcohol: Powdered Alcohol

“Imagine a Margarita on a counter. And then imagine if you could snap your fingers and it would turn into powder.  That’s Palcohol….without the magic.”

So says Mark Phillips, the creator of Palcohol.  Phillips created Palcohol, a witty play on “Powdered Alcohol,” so that he could have a drink while “hiking, biking, camping and kayaking” without carrying a heavy bottle around.  According to the product’s website, “Palcohol is just a powder version of vodka, rum and three cocktails….with the same alcoholic content.” The powder is available in vodka, rum, cosmopolitan, “powderita” and lemon drop flavors.  The site discusses applications in medicine, energy, hospitality, the military, and manufacturing. Phillips’ company, Lipsmark, says the product is expected to hit store shelves later this summer.

Palcohol is sold in a flat 1-ounce pouch measuring approximately 4 inches by 6 inches.  Consumers would mix this powder into a glass of water, soda or juice to create an instant mixed drink.  Critics warn that the product’s main feature — how easy it is to store and carry — is also its biggest flaw.  For example, Dr. Pat Charles, the Superintendent of Middletown, CT Schools  stated, in support of a Connecticut ban of the product, “[t]he ability to conceal powdered alcohol is problematic for schools and law enforcement.  The ease of transporting it and the flavors proposed also make me concerned that it would lead to abuse, not just by young people but even for those of age.  This product must not be allowed to come into our state.”

After federal regulators approved Palcohol nationally in March, a number of states also moved to regulate Palcohol. According to the National Conference of State Legislatures, 39 states and Washington, D.C. have either passed bills or have bills under debate to restrict powdered alcohol.

“With packets small enough to fit into a child’s pocket, it will be harder for schools and parents to identify and confiscate this substance from our youth,” said Grace Barnett, spokeswoman for Texans Standing Tall, at a House Licensing and Administrative Procedures Committee hearing in March.  Texans Standing Tall is a nonprofit that advocates against youth drug and alcohol use.  Educators are fearful that youth may abuse powdered alcohol.  For example, NASPA, Student Affairs Administrators in Higher Education, recently hosted a series of seminars titled, “Addressing Palcohol: Comprehensive Prevention Tactics for Novel Alcohol and Substance Abuse Concern.”

State regulators have voiced concerns over the ease in which Palcohol can be inconspicuously sprinkled onto food or snuck into venues such as concert halls and stadiums. Vermont Liquor Control director Bill Goggins recently expressed this in an interview with a New York news station, adding that this feature adds to the appeal of powdered alcohol to underage individuals.

Senator Chuck Schumer (D, N.Y.) has even asked the Food and Drug Administration for an outright ban on the substance, calling it “the Kool-Aid of teenage binge drinking,” and said the product “is nearly guaranteed to promote unsafe drinking among teenagers and young adults, among others.”

Concertgoers, underage students, spiking drinks, snorting powder – can somebody please tell me what does any of that has to do with insurance?

In a post-palcohol world, consider whether any of the following are far-fetched:

  • What coverage exists for a concert venue when a concertgoer is injured by someone who ingested Palcohol that security did not confiscate, and sues the arena.  Does it matter that it is nearly impossible to control covert smuggling?

  • What claims will arise if a school finds that teens bring Palcohol to school to get intoxicated in class? Are any of them covered?

Palcohol may be a paradigm shifting product. Society is all too aware of the methods and problems of underage drinking and excessive drinking among adults.  All these current problems with alcohol are based upon a highly regulated liquid that is also hard to conceal in any material quantity.  Palcohol, and certainly additional products that will mimic Palcohol’s design, disrupts that model.  With this disruption arrives new realities of unexpected liability for companies, municipalities, schools and others.  We all know where they will turn next.

Article By Patrick M. Harrington & Sandra K. Jones of Drinker Biddle & Reath LLP

©2015 Drinker Biddle & Reath LLP. All Rights Reserved

FDA’s Proposed Naming Convention for Biologics

On August 27, 2015, the Food and Drug Administration (FDA) released draft guidance on nonproprietary naming of biological products. The agency’s draft guidance proposes that the core nonproprietary name for originator biological products, related biological products, and biosimilar products be appended with a unique, four-letter suffix designated by the FDA in order to distinguish each product and minimize inadvertent substitution of products that are not interchangeable.

A New Naming Convention

The proposed framework for the naming convention includes the nonproprietary name — otherwise known as the proper name — of the originator biological product along with a designated four-letter suffix attached to the core name with a hyphen. Importantly, a related, biosimilar, or interchangeable product will share a core name with the originator biological product, but will also include a distinct four-letter suffix. This convention will indicate a relationship among the products while highlighting the unique identification of each product.

For example, two products sharing the core name of replicamab might have the following nonproprietary names:

  • replicamab-cznm

  • replicamab-hixf

The FDA has not yet decided whether the nonproprietary name for an interchangeable product should also include a unique four-letter suffix or whether it should be assigned the same proper name and suffix as its reference product. The draft guidance notes that the agency is seeking comment on these alternative approaches.

Which Products Are Covered?

The FDA’s proposed naming convention would apply both prospectively and retrospectively to biological products licensed under sections 351(a) and 351(k) of the Public Health Service Act, although the agency is still considering how the convention should apply to interchangeable products. As indicated in the draft guidance, the FDA believes that the designated suffix is warranted for both newly and previously licensed biological products in order to advance a number of goals, including (1) ensuring that patients only receive the biological products intended to be prescribed to them, (2) facilitating manufacturer-specific pharmacovigilance, (3) encouraging the routine use of designated suffixes, and (4) avoiding any inaccurate perceptions of the safety and effectiveness of biological products based on their path to licensure.

Designating a Suffix

Applicants and current license holders may propose their own suffix, which should consist of four lowercase letters devoid of any meaning. Proposed suffixes should not be promotional, include any abbreviations commonly used in clinical practice, contain or suggest the name of any drug substance, or look too similar to the name of a currently marketed product or another product’s suffix designation. The FDA will evaluate a proposed suffix and notify the applicant of its determination. Given the FDA’s previous selection of “sndz” for Sandoz’s Zarxio (filgrastim-sndz), it will be interesting to see the approach and development of these suffixes.

Comments and suggestions on the draft guidance are due by October 27, 2015, at www.regulations.gov. (Docket No. FDA-2013-D-1543).

Relatedly, the FDA issued a proposed rule to be published in the Federal Register on August 28, 2015, that would designate “the official names and the proper names” for six biological products that qualify as either a reference product, a related biological product, or a biosimilar product. As the agency explains, its proposed action with respect to the six products covered by the rule is meant to encourage the routine usage of designated suffixes.

Article By Nathan A. Beaver, David L. Rosen & Anna S. Ross of Foley & Lardner LLP

© 2015 Foley & Lardner LLP

FDA Issues Draft Guidance on Mandatory Food Recalls Under the Food Safety Modernization Act

The Food and Drug Administration (FDA) recently issued a draft guidance titled, “Questions and Answers Regarding Mandatory Food Recalls.” FDA was given general mandatory food recall authority by the Food Safety Modernization Act (FSMA). The guidance is notable for its brevity, coming in at a total of seven pages including the cover. Although much of the content will be familiar to those with experience in food recalls, the guidance does discuss the procedure for FDA to order a mandatory food recall and the assessment of user fees for those subject to such a recall.

With respect to the procedure, the guidance states after FDA finds that the criteria for a mandatory recall have been met, it must first provide the responsible party with an opportunity to perform a voluntary recall of the food. FDA will provide this opportunity in writing using an expeditious method. If the responsible party does not voluntarily cease distribution and recall the food within the time and manner prescribed by FDA, FDA may order the responsible party to cease distributing the article of food, order the responsible party to give notice to certain other persons to cease distributing the article of food, and give the responsible party an opportunity for an informal hearing. After these steps are completed, FDA may order a recall if it determines that the removal of the food from commerce is necessary. Only the FDA Commissioner has the authority to order a recall.

As to user fees, the guidance observes that the FDA has the authority to collect fees from a responsible party for a domestic facility and an importer who does not comply with a food recall order. The fees would cover time spent by FDA conducting food recall activities, including technical assistance, follow-up effectiveness checks, and public notifications. FDA defines noncompliance to include (1) not initiating a recall as ordered by FDA, (2) not conducting the recall in the manner specified by FDA in the recall order, or (3) not providing FDA with requested information regarding the recall, as ordered by FDA. FDA publishes a Federal Register notice of fees for non-compliance with a Recall Order no later than 60 days before the start of each fiscal year.

Given that most parties will voluntarily recall food when the statutory conditions are satisfied to avoid a public relations disaster and harsh FDA action, it seems unlikely that FDA will have to resort often to the exercise of its mandatory recall authority or assessment of fees. The fact that FDA has this authority, however, helps ensure FDA will not have to exercise it.

A copy of the draft guidance document can be found here.

ARTICLE BY Hae Park-Suk & Lynn C. Tyler, M.S. of Barnes & Thornburg LLP
© 2015 BARNES & THORNBURG LLP

FDA Issues Final Guidance Documents on Medical Device Data Systems and Medical Mobile Apps

Barnes & Thornburg LLP Law Firm

The FDA recently issued two final guidance documents signaling its intention either not to regulate, or to give minimal oversight, to two categories of medical devices, medical device data systems and medical mobile apps. The guidance on medical device data systems bears the wordy title, “Medical Device Data Systems, Medical Image Storage Devices, and Medical Image Communications Devices.” The app guidance is titled simply, “Medical Mobile Applications.”

The data systems guidance defines “medical device data systems” as “a hardware or software product that transfers, stores, converts formats, and displays medical device data” and cites 21 CFR 880.6310 for a somewhat more elaborate definition. In perhaps record brevity, the substance of the guidance is expressed as follows:

The FDA does not intend to enforce compliance with the regulatory controls that apply to the following devices:

  • MDDS subject to 21 CFR 880.6310,

  • Medical image storage devices subject to 21 CFR 892.2010, and

  • Medical image communications devices subject to 21 CFR 892.2020.

The guidance notes that a medical device data system (MDDS) “does not modify the data, and it does not control the functions or parameters of any connected medical device. An MDDS does not include devices intended for active patient monitoring.”

The medical mobile app guidance states that it was changed from a prior final version only to be made consistent with the MDDS guidance. Our prior alert summarizing the medical mobile app guidance can be found here.

Copies of the final guidance documents can be found here and here.

ARTICLE BY

Lynn C. Tyler, M.S.
Hae Park-Suk
OF
Barnes & Thornburg LLP

Boyz In the Agrihood: Planned Communities Trade Golf Courses for Working Farms in North Carolina

Womble Carlyle Law firm

I don’t play golf.  I like golf, I’ll go out and hit around with friends or colleagues, but I don’t “play golf”.  To me, playing golf means 18 holes on a weekend, maybe 36, and perhaps a round or two during the week.  No, I don’t play golf.

And I don’t think I’m alone in my generation.  Thus, we don’t see much development anymore around golf courses, even here in North Carolina — home of famed Pinehurst and beautiful Quail Hollow. Sure, it happens, but not nearly as often as it did in the 80s, 90s and even early 2000s.

So, what takes the place of that planned living community “working” greenspace, formerly ruled by gold courses and tennis courts and pools?

Nationally, a growing number of “agrihoods” are popping up, residential developments where a working farm is the central feature.  In northern Durham County, just next to Raleigh, a group of real estate developers are seeking to build a 230-acre subdivision with 140 single family homes and featuring a 15-acre fruit and vegetable farm.  According to conceptions, weekly deliveries of produce from the farm would be included in HOA dues for Wetrock Farm, and the farm will be professionally managed.  Raleigh already has its City Farm, as do other up and coming cities in America, so this new conception of planned living appears to strive to capture what’s next for the homeowning American.  It’s mutually beneficial, as well, both to developer and purchaser:  “‘As a developer it’s been humbling that such a simple thing and such an inexpensive thing [like the farm] is the moved loved amenity,’ said Brent Herrington, who oversaw the building of Kukui’lua [community development in Kauai, Hawaii] for the developer DMB Associates.”

There are sure to be land use planning and operational challenges, of course, and we’ll be curious to identify and solve those issues.

Land Use Litigatior

“Restrictive covenants include no asphalt walkways, no garish house colors, and extra carrots.”

Copyright © 2014 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.
ARTICLE BY

Michael C. Thelen
OF
Womble Carlyle Sandridge & Rice, PLLC

“Do You Want Liability With That?” The NLRB McDonald’s Decision that could undermine the Franchise Business Model (Part II)

 

McBrayer NEW logo 1-10-13

 

Yesterday’s post discussed the decision of NLRB’s General Counsel to hold McDonald’s Corp. jointly responsible with its franchise owners for workers’ labor complaints. The decision, if allowed to stand, could shake up the decades-old fast-food franchise system, but it does not stop there. The joint employer doctrine can be applied not only to fast food franchises and franchise arrangements in other industries, but also to other employment arrangements, such as subcontracting or outsourcing.

This decision could also impact the pricing of goods and services, as franchisors would likely need to up costs to offset the new potential liability. Everything from taxes to Affordable Care Act requirements could be affected if the decision stands.

If you are a franchisor and are currently in what could be determined to be a joint employer relationship, consider taking steps to further separate and distinguish your role from that of your franchisee. While franchisors should always take reasonable measures to ensure that franchisees are in compliance with applicable federal and state employment laws, they should take care to not wield such force over them to give the appearance of a joint-employer relationship.

We will be following the NLRB decision and keep you updated as the issue progresses.

ARTICLE BY

Luke A. Wingfield
 
OF 
McBrayer, McGinnis, Leslie and Kirkland, PLLC

“Do You Want Liability With That?” The NLRB McDonald’s Decision that could undermine the Franchise Business Model

McBrayer NEW logo 1-10-13

On July 29, 2014 the National Labor Relations Board (“NLRB”) General Counsel authorized NLRB Regional Directors to name McDonald’s Corp. as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. Joint employer liability means that the non-employer (McDonald’s Corp.) can be held responsible for labor violations to the same extent as the worker’s “W-2” employer.

In the U.S., the overwhelming majority of the 14,000 McDonald’s restaurants are owned and operated by franchisees (as is the case with most other fast-food chains). The franchise model is predicated on the assumption that the franchisee is an independent contractor – not an employee of the franchisor. Generally, the franchisor owns a system for operating a business and agrees to license a bundle of intellectual property to the franchisee so long as on the franchisee adheres to prescribed operating standards and pays franchise fees. Franchisees have the freedom to make personnel decisions and control their operating costs.

Many third parties and pro-union advocates have long sought to hold franchisors responsible for the acts or omissions of franchisees – arguing that franchisors maintain strict control on day-to-day operations and regulate almost all aspects of a franchisee’s operations, from employee training to store design. Their argument is that the franchise model allows the corporations to control the parts of the business it cares about at its franchises, while escaping liability for labor and wage violations.

The NLRB has investigated 181 cases of unlawful labor practices at McDonald’s franchise restaurants since 2012. The NLRB has found sufficient merit in at least 43 cases. Heather Smedstad, senior vice president of human resources for McDonald’s USA, called the NLRB’s decision a “radical departure” and something that “should be a concern to businessmen and women across the country.” Indeed it is, but it is important to note that General Counsel’s decision is not the same as a binding NLRB ruling and that it will be a long time before this issue is resolved, as McDonald’s Corp. will no doubt appeal any rulings.

ARTICLE BY

Luke A. Wingfield
 
OF 
McBrayer, McGinnis, Leslie and Kirkland, PLLC

“Do You Want Liability With That?” The NLRB McDonald’s Decision that could undermine the Franchise Business Model

McBrayer NEW logo 1-10-13

On July 29, 2014 the National Labor Relations Board (“NLRB”) General Counsel authorized NLRB Regional Directors to name McDonald’s Corp.as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. Joint employer liability means that the non-employer (McDonald’s Corp.) can be held responsible for labor violations to the same extent as the worker’s “W-2” employer.

In the U.S., the overwhelming majority of the 14,000 McDonald’s restaurants are owned and operated by franchisees (as is the case with most other fast-food chains). The franchise model is predicated on the assumption that the franchisee is an independent contractor – not an employee of the franchisor. Generally, the franchisor owns a system for operating a business and agrees to license a bundle of intellectual property to the franchisee so long as on the franchisee adheres to prescribed operating standards and pays franchise fees. Franchisees have the freedom to make personnel decisions and control their operating costs.

Many third parties and pro-union advocates have long sought to hold franchisors responsible for the acts or omissions of franchisees – arguing that franchisors maintain strict control on day-to-day operations and regulate almost all aspects of a franchisee’s operations, from employee training to store design. Their argument is that the franchise model allows the corporations to control the parts of the business it cares about at its franchises, while escaping liability for labor and wage violations.

The NLRB has investigated 181 cases of unlawful labor practices at McDonald’s franchise restaurants since 2012. The NLRB has found sufficient merit in at least 43 cases. Heather Smedstad, senior vice president of human resources for McDonald’s USA, called the NLRB’s decision a “radical departure” and something that “should be a concern to businessmen and women across the country.” Indeed it is, but it is important to note that General Counsel’s decision is not the same as a binding NLRB ruling and that it will be a long time before this issue is resolved, as McDonald’s Corp. will no doubt appeal any rulings.

ARTICLE BY

Luke A. Wingfield
 
OF 
McBrayer, McGinnis, Leslie and Kirkland, PLLC