Category: Food & Hospitality

Senate Introduces Bill to Formalize Joint Framework for Regulating Cell-Cultured Meat Products

Producers of cell-cultured meat – synthetic meat products derived from animal cell cultures that are intended to simulate the taste, appearance, and texture of traditional animal products – may soon receive regulatory direction from Congress. On December 16, 2019, Senators Mike Enzi (WY) and Jon Tester (MT) introduced legislation to codify a joint agreement between the U.S. Food & Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) regulating the development and sale of cell-cultured meat products. The legislation aims to address ongoing uncertainty over which federal agency should regulate the cell culture development process, and would assign authority to USDA to establish appropriate label terms for cell-cultured meat products. The bill arrives even as a number of states have recently acted to prohibit cell-cultured meat products from being labeled as “meat” – and are now facing lawsuits in federal court.

Cell-cultured meat, also called lab-grown meat or “clean meat,” is grown in a sterile laboratory environment. The cell cultures are drawn from either a live or slaughtered animal and grown in a complex multi-step process.[1] They are differentiated and matured to simulate traditional meat products while avoiding many of the environmental impacts associated with traditional animal husbandry. Technology advocates state that cell-cultured meat reduces feed costs, crop footprints, greenhouse gas emissions, and water consumption.

But cell-cultured meat products have not yet been able to offer these benefits at scale, owing in part to high costs currently associated with development and production. Regulatory uncertainty has also created challenges, as regulators have grappled over which federal agency should have primary oversight over the cell-cultured meat production process: while USDA regulates and inspects meat and poultry, FDA generally regulates all other food products to ensure that they are safe for human consumption and labeled accurately. This longstanding framework has prompted a challenging question for regulators and stakeholders alike: should cell-cultured meat products be regulated by USDA under its authority over traditional meat and poultry products, or by FDA, which has historically regulated the types of food manufacturing facilities and laboratories where cell-cultured meat will be grown and produced?

The agencies have already offered their commitment to work together. In November 2018, USDA and FDA issued a press release articulating a joint framework for robust collaboration, wherein FDA would oversee the stages of production from cell collection to differentiation, while USDA would regulate all subsequent processing, packing, and labeling of the products.[2] The agencies formalized their joint agreement in March 2018.

Responding to concerns from livestock industry groups and other stakeholders, a number of states (including Arkansas, Louisiana, Missouri, Mississippi, and Wyoming) subsequently passed laws to prohibit certain animal-derived food products from being labeled as “meat” or a “meat food product.” Several of those laws were subsequently challenged in lawsuits brought by public interest groups.

In the wake of these legal challenges, Senators Enzi and Tester introduced the “Food Safety Modernization for Innovative Technologies Act” (Senate Bill 3053) on December 16.[3] The bill draws from the Joint Agreement and aims to clarify that FDA will oversee the initial cell collection, proliferation, and culturing processes while transferring regulatory oversight of the harvested cells to USDA for regulation related to further processing and packaging. Significantly, the bill provides USDA with exclusive authority over labeling requirements for cell-cultured meat products derived from cell lines of livestock or poultry and assigns USDA with responsibility for establishing “appropriate nomenclature” for these product labels. The bill also requires the FDA and USDA to share information and collaborate during cell differentiation and harvesting. As of this date, the bill has been referred to the Committee on Agriculture, Nutrition, and Forestry and has yet to face a vote.

[1] See Alan Sachs & Sarah Kettenmann, A Burger by Any Other Name, 15 SciTech Lawyer 19 (Winter 2019).

[2] U.S. Dept Agric., Statement from USDA Secretary Perdue and FDA Commissioner Gottlieb on the Regulation of Cell-Cultured Food Products from Cell Lines of Livestock and Poultry, Release No. 0248.18, Nov 16, 2018, available at https://www.usda.gov/media/press-releases/2018/11/16/statement-usda-secretary-perdue-and-fda-commissioner-gottlieb.

[3] Food Safety Modernization for Innovative Technologies Act, S. 3053, 116th Cong. (2019).

© 2019 Beveridge & Diamond PC

For more on Cell-Cultured Meat, please see the Biotech, Food and Drug Law section of the National Law Review.

What to Know About FDA’s Recent Statements on CBD

Last week FDA issued a public release on CBD titled, “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis derived Compounds, Including CBD.”

The FDA document does not break much new ground, though it emphasizes again FDA’s concern with the safety of CBD, some of which comes from FDA’s review of the CBD-based epilepsy drug Epidiolex. FDA does not believe it has enough information about certain aspects of CBD, such as what happens if someone takes CBD daily for sustained periods. In addition, FDA specifically identifies as a potential harm the use of CBD with alcohol because of the increased risk of sedation and drowsiness, which can lead to injuries. FDA, in addition to issuing this document, sent 15 warning letters to companies marketing CBD products that FDA views as unapproved drugs primarily because of the drug like claims made for such products.

FDA appears to be on a path toward considering a regulation to allow the marketing of CBD in conventional foods or as a dietary supplement. This approach will likely take a long time—perhaps some 2-4 years—absent legislative changes that do not appear likely in an election year. In the meantime, FDA continues to view putting into interstate commerce a food to which CBD has been added or to market CBD as or in a dietary supplement as a violation of the  Federal Food, Drug, and Cosmetic Act (FD&C Act).

© 2019 McDermott Will & Emery

For more on the FDA and CBD regulation, see the National Law Review Biotech, Food and Drug Law section.

FDA Issues Warnings to 15 Companies for Illegally Selling Products Containing CBD

On November 25, 2019, the U.S. Food & Drug Administration (“FDA”) published a press release, published a revised Consumer Update, and announced the issuance of new warning letters to 15 companies for illegally selling and marketing various products containing hemp-derived cannabidiol (“CBD”).

To quote the FDA:

“Today’s actions come as the FDA continues to explore potential pathways for various types of CBD products to be lawfully marketed.  This includes ongoing work to obtain and evaluate information to address outstanding questions related to the safety of CBD products, while maintaining the agency’s rigorous public health standards.  The FDA plans to provide an update on its progress regarding the agency’s approach to these products in the coming weeks.”

In the meantime, however, these steps appear to be an effort to stem the tide of proliferation of CBD products on the market – and the growing consumer demand for those products.  It is great that the FDA intends to provide an update on its efforts to develop a regulatory pathway for CBD products under the Federal Food Drug & Cosmetic Act (“FD&C Act”).  But, it is frustrating that the FDA still refuses to identify a set date for that update – or, to publicly commit to a meaningful resolution of the regulatory uncertainty that persists for CBD products today.

A Reminder: Don’t Make Unsubstantiated Claims

As made clear in prior FDA warning letters – and the 15 letters released on November 25th – there continues to be significant regulatory risk in the labeling and marketing of CBD products for sale in interstate commerce.  However, the FDA’s enforcement efforts still appear to be focused on companies and products that engage in the most egregious violations of the FD&C Act – including those making disease claims and those marketed to (or for use by) children and other vulnerable populations.

Among other things, this round of warning letters address the following major issues:

  • Marketing products for use by children and other vulnerable populations.
  • Including a supplements facts panel on product labels, which indicated the company’s intention to market the product as a dietary supplement.
  • Marketing products that are intended for use in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Posting materials on the companies’ social media websites that link to a third party’s content indicating that CBD can be used in the cure, mitigation, treatment, or prevention of diseases and/or intended to affect the structure or any function of the body.
  • Misbranding products intended to be marketed as drugs.
  • Marketing human and animal food containing CBD in interstate commerce.
  • Marketing unapproved new animal drugs by selling pet products containing CBD that are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animals and/or intended to affect the structure or any function of the body of animals.

Many of these issues have been referenced in prior actions and warning letters released by the FDA.  By now, it should be clear to all market participants that it is illegal (and irresponsible) to market your CBD products as a cure for cancer, Alzheimer’s, diabetes, or other medical diseases, ailments, or conditions.  CBD companies should heed this clear warning and stop the practice.  Just don’t do it.

The New Concerns

This round of enforcement action seems to signal that the FDA is taking a more aggressive stance on its view of CBD health and safety issues.  The press release and the consumer update both indicate that the FDA has broad safety concerns about CBD products, that there exist many unanswered questions and data gaps about CBD toxicity, and that some of the data available to the FDA raises serious concerns about potential harm from CBD.

The consumer update contains troubling statements like “CBD has the potential to harm you, and harm can happen even before you become aware of it,” and “CBD can cause liver injury.”  But, no direct evidence or substantiation for these claims is linked to the consumer update or press release.  Instead, the consumer update attempts to draw a corollary line between the data obtained from trials performed in connection with one FDA-approved CBD drug and the non-pharmaceutical products available on the market today.  Equating that data against the products available to consumers today does not produce an apples-to-apples comparison.  There are likely different scientific outcomes from, and different levels of toxicity caused by, the delivery of high dosages of concentrated CBD to mice in a clinical laboratory setting versus the relatively low dosages of CBD found in many food and supplement products available to consumers today.

More scientific research is absolutely needed on the efficacy and safety of CBD used in products intended for human consumption.  And that research will come in time.  But, the information released by the FDA this week appears to be an overstatement of the potential health risks associated with CBD products – at least, as they are known today.  There are health risks associated with bad products – and there are bad products on the market today – but that merely highlights the need for clear regulatory guidance from the FDA.

The Future of CBD

The FDA recognizes that there is a significant public interest in CBD.  It also recognizes that there are reports of CBD products containing potentially harmful contaminants, such as pesticides and heavy metals.   Yet, despite that strong interest and recognition of a need for regulation in the industry, the FDA has delayed its development and implementation of meaningful regulatory guidance for CBD companies.  That continuing delay does a disservice to the industry and to the general public.

Companies that cut corners and sell CBD products containing potentially harmful substances need to be regulated out of existence.  Consumers deserve to know that the CBD brands they purchase and use have been responsibly grown, responsibly and safely manufactured, and are free from potentially harmful substances, like heavy metals and pesticides.  And well-intentioned, responsibly operating CBD companies need and deserve clear regulatory guardrails within which they can safely – and legally – operate their business.

Unfortunately, it appears that regulatory uncertainty will continue to persist until there is more scientific data to support the safety and efficacy of CBD in consumer products.  Obtaining that additional research and data will take time, so the industry may face a long slog until the FDA identifies a clear, detailed regulatory “pathway forward” for CBD.  Until then, it is important for CBD companies to carefully consider the FDA’s position on CBD and the warnings sent this week, and to incorporate those factors into their internal compliance practices as they develop, produce, advertise, and sell their products in interstate commerce.

© 2019 Ward and Smith, P.A.. All Rights Reserved.

For more on cannabidiol/CBD regulation, see the National Law Review Biotech, Food & Drug law page.

Ferrero Successfully Enforces the Tic Tac Shape Mark in Italy

Many of us had a Tic Tac box in our pockets as kids, no matter the country we grew up in. Ferrero Spa (“Ferrero”), the Italian manufacturer of Tic Tac (and lots of other delicious confectionary products) registered the Tic Tac box as a trade mark in several jurisdictions, including Italy.

After succeeding before the CJEU in the invalidation action against BMB sp. z o.o. earlier this year (click here), in a recent case brought before the Italian courts, Ferrero successfully defended its shape marks, despite the invalidity claim brought by S.r.o. Mocca spol. (“Mocca”), a Czech company selling Bliki-branded mints in an identical container.

Background

In 2017, Ferrero commenced proceedings against Mocca for infringement of its 3D reputed trade marks, the earliest of which was registered in 1973, as well as unfair competition.

Mocca, on the other end, argued that:

  1. an Italian court had no jurisdiction, as Mocca’s mints were produced in the Czech Republic;
  2. Ferrero’s trade marks would be invalid, as the shape would give substantial value to the goods or would be necessary to obtain a technical result; and
  3. there would be no likelihood of confusion because the containers would carry different word marks and the shape of the mints is standard in the industry.

The court’s findings

The court of Turin determined that it did have jurisdiction to hear the case, as the claimant was enforcing Italian trade marks, irrespective of where the defendant resides. The court also noted that sales of the Bliki products had taken place in Italy, providing further reason for the Italian court’s jurisdiction.

With regard to the second argument brought by the defendant, the court found that Ferrero’s box shape is not necessary to obtain a technical result, although it had been previously registered as a patent. In fact, the patent was registered for the closing mechanism, which is not visible on the representation for the trade marks. Lastly, the court also denied that the shape gives substantial value to the goods, as Ferrero’s mints are also sold separately, and it has not been proved that the box influences the purchase experience.

In relation to the likelihood of confusion, the court noted that the only difference claimed by the defendant was the brand on the box. However, the brand (ie Bliki and Tic Tac) was irrelevant in this case, as Ferrero was enforcing its exclusive rights on the box shape rather than on the Tic Tac trade mark (which was not included in the 3D mark registrations). By contrast, the defendant box maintained the same shape and size of the Tic Tac mints.

As a result, the court determined that the Ferrero trade marks were valid and had been infringed. In addition, Mocca’s acts amount to unfair competition. Ferrero was awarded the legal costs of this matter, the payment of a penalty should any box be sold by Mocca after 60 days from the decision and the publication of the decision on a national newspaper. However, Ferrero was not awarded damages as no evidence was filed in this regard.

Implications

In comparison to traditional trade marks, protecting shape marks can be difficult, as their validity is likely to be challenged in the context of an infringement proceeding. Therefore, national registrations may be helpful tools to ensure an effective enforcement strategy. In addition, as shown in this case, trade mark holders should always consider registering shapes without brands or logos to achieve a greater overall protection.

Copyright 2019 K & L Gates

More on shape and trade marks on the National Law Review Intellectual Property law page.

FDA Works to Find Source of Multi-State Outbreak of E. coli Infections

On November 20, the Centers for Disease Control and Prevention (CDC), in conjunction with the Food and Drug Administration (FDA) and several state agencies, announced that it is currently investigating an outbreak of Shiga toxin-producing E. coli (STEC) O157:H7 infections that has so far impacted at least 17 people across 8 states. The first reported illnesses date back to September 24, 2019. Investigators are looking into a branded chicken Caesar salad as a potential source, after the Maryland Department of Health (MDH) identified E. coli O157 in an unopened package. However, MDH is still conducting a whole genome sequencing (WGS) analysis to determine if it is closely related genetically to the E. coli identified in this outbreak.

As previously reported on this blog, in January 2019, FDA’s Food Safety and Inspection Service (FSIS) transitioned to using only WGS for Shiga toxin-producing E. coli (STEC) in an effort to update its analytical methods to the state of the art. The method of WGS determines the order of all of the DNA building blocks (nucleotides) in an organism’s entire genome in a single laboratory process, and a comparison of the DNA sequence of an isolated bacterial pathogen to the sequences from other samples in a DNA database can pinpoint the source of a foodborne disease outbreak.

The recent outbreak follows a similar outbreak of E. coli 0157:H7 from 2018 that was ultimately traced to romaine lettuce. The 2018 outbreak included 62 cases from 16 states and the District of Columbia, and prompted FDA to issue recommendations for leafy greens growing operations as well as a partnership between FDA and leafy greens stakeholders in Arizona to enhance food safety. Subsequent research from the U.S. Department of Agriculture’s Agricultural Marketing Service found that pest flies were a potential vector in the spread of the E. coli O157:H7 and contamination of leafy greens.

© 2019 Keller and Heckman LLP

For more in food safety, see the National Law Review Biotech, Food & Drug law page.

Suit Over ‘No Preservatives’ Capri Sun Label Tossed

A proposed class action, filed in the Northern District of Illinois on October 25, 2018, against Kraft Heinz Food Co. accused the company of falsely advertising its Capri Sun juice as containing “no preservatives” when in fact it contains citric acid. Tarzian et al v. Kraft Heinz Food Company, Case No. 1:18-cv-07148. The complaint alleged that the representation that Capri Sun beverages contain “No Artificial Coloring, Flavors, or Preservatives” is unfair and deceptive advertising as the beverages contain a well-known preservative, citric acid.

In an order filed on October 10, 2019, U.S. District Judge Charles P. Kocoras dismissed the lawsuit and found that while the plaintiffs allege practices commonly used to manufacture citric acid throughout the industry, plaintiffs failed to draw a connection between the common industry practice and the actual practice used by Kraft.

This dismissal follows a dismissal of a similar matter in California federal court in 2015. Osborne v. Kraft Heinz Group, Inc., Case No. 3:15-cv-02653. In that case, plaintiffs accused Kraft of mislabeling Capri Sun drinks as “all natural” when they allegedly contained synthetic ingredients, including citric acid and natural flavor. In a hearing on the defendant’s motion to dismiss, U.S. District Judge Vince Chhabria found that plaintiff did not know whether the citric acid used in Capri Sun’s drinks was natural or synthetic. The judge ultimately granted Kraft Heinz’s motion to dismiss with leave to amend the complaint. The plaintiff never filed an amended complaint.

© 2019 Keller and Heckman LLP

For more on food labeling laws, see the National Law Review Biotech, Food & Drug law page.

Food for Thought: Outcomes of Food Labeling Cases Prove Difficult to Predict

The past year has seen a proliferation of lawsuits alleging that food product labels mislead consumers about the product’s ingredients. The trend continued last month, with decisions from the Court of Appeals for the First Circuit and one of its district courts reaching different results on motions to dismiss complaints alleging deceptive food labels.

Last month, the First Circuit reinstated a class action lawsuit against New England Coffee for violation of Massachusetts’ consumer protection laws related to the coffee brand’s label for “Hazelnut Crème” coffee. Dumont v. Reily Foods, 18-2055 (1st Cir. Aug. 8, 2019). Plaintiff alleged that the product name was deceptive because the product did not contain hazelnuts. A Massachusetts federal district court judge dismissed the suit because the complaint lacked sufficient particularized facts to satisfy the heightened pleading standard for fraud allegations.

The First Circuit reversed in a 2-1 decision. The majority noted that although the ingredient list on the product package’s back label read “100% Arabica Coffee Naturally and Artificially Flavored,” reasonable consumers might take different approaches in determining whether the coffee actually contained real hazelnuts. One might check the list of ingredients to ensure the coffee contained hazelnut while others may not, instead relying on the name of the product, without searching the ingredient list, “much like one might easily buy a hazelnut cake without studying the ingredients list to confirm that the cake actually contains some hazelnut.” The majority accordingly concluded that whether the product name implied that the product contained hazelnuts was better suited for resolution “from six jurors, rather than three judges.” In dissent, Circuit Judge Lynch argued that “a reasonable consumer plainly could not view the phrase ‘Hazelnut Crème’ as announcing the presence of actual hazelnut in a bag of coffee which also proclaims it is “100% Arabica Coffee.”

Neither opinion is especially persuasive. As for the dissent, hazelnuts are not coffee, and the fact that a coffee product called “Hazelnut Crème” is said to contain 100% Arabica Coffee does not reasonably rule out the possibility that the product contains hazelnuts. By the same token, however, other courts have concluded that reasonable consumers do not ignore a product’s prominently displayed ingredient list when information on the front label may be viewed as ambiguous concerning whether an ingredient is or is not contained in the product. See, e.g., Jessani et al. v. Monini North America, which one of the authors litigated and which this blog covered. To the extent the Dumont majority suggests otherwise, the opinion would be misguided. That said, whereas the olive oil product in Monini was labeled as “truffle flavored,” here, there was no modifier to suggest that the coffee in question simply tasted, or smelled, like hazelnuts. In such cases, perhaps, one could conclude that the front label lacked ambiguity, and thus would not compel prospective purchasers to search the label further.

Less than a week after the First Circuit’s Dumont decision, Judge Alison Burroughs of the District of Massachusetts tossed a putative class action suit alleging that the advertising and packaging of the cereal “Honey Bunches of Oats” falsely suggested it was sweetened only or primarily with honey, when in fact the main sweeteners are sugar, brown sugar, and corn syrup. Lima v. Post Consumer Brands, 18-12100 (D. Mass. Aug. 13, 2019).The plaintiffs pointed to images of a sun, bee, and honey dipper as representing that honey was the principal sweetener in the cereal. They also cited surveys showing that most consumers believe honey is “better for you than sugar” and that approximately half of consumers are willing to pay more for foods that are primarily sweetened with honey.

In concluding that the consumers failed to state a claim, Judge Burroughs found that plaintiffs had offered no reasonable basis for their alleged belief that the honey references on the packaging implied that honey was the primary sweetener in the cereal rather than simply one of its primary flavors. In addition, even assuming the packaging could be viewed as portraying honey to be an ingredient instead of or as well as a flavor, Judge Burroughs found that plaintiffs still failed to state a claim. She noted that, unlike the “Hazelnut Crème” product in Dumont that did not contain any hazelnut, Honey Bunches of Oats did, in fact, contain honey. She also distinguished the case from Mantikas v. Kellogg, in which the Second Circuit found that a “made with whole grain” claim could imply that the product contained more whole wheat flour than white flour. Here, according to Judge Burroughs, the mere references to honey on the package carried no implication that honey was the primary sweetener, and a reasonable consumer concerned about how the cereal was sweetened would have consulted the cereal’s list of ingredients.

If nothing else, these cases underscore the fact-specific nature of the inquiry as to what product labels imply about their ingredients.

 

© 2019 Proskauer Rose LLP.

For more on class action lawsuits, see the National Law Review Litigation & Trial Practice page.

U.S. Dealing with Several Hepatitis A Outbreaks, Including One Due to Food Worker Infection

Public health officials in Mendham, New Jersey are dealing with a relatively rare instance of a foodborne hepatitis A outbreak due to an ill food handler.  The employee has been linked to illnesses in 27 people, with 1 death reported.

According to the Centers for Disease Control and Prevention, foodborne outbreaks of hepatitis A are not common in the U.S.  CDC does not recommend that all food service workers receive routine vaccination against hepatitis A—except in areas with an active community-wide outbreak and where state and local health authorities (or private employers) indicate that vaccination would be cost-effective.

There are hepatitis A outbreaks in Alabama and Nevada where infected food handlers have been identified but where illnesses have not been traced to such workers.  Twenty-five counties in Alabama are reporting cases of hepatitis A in an outbreak that has been ongoing since September 2018, including among food workers; officials are urging food handlers in that area to get vaccinated.  Officials in Las Vegas, which also has an ongoing outbreak with 86 cases and one death, have warned customers who purchased non-prepackaged foods at a 7-Eleven store where a worked tested positive for hepatitis A to be on the lookout for symptoms.

CDC’s hepatitis A surveillance is updated through 2016.  Thus, it is not yet clear whether the 2019 cases reflect a marked increase in the incidence of hepatitis A in the U.S.

© 2019 Keller and Heckman LLP

Sometimes You Feel Like a Nut

In a spit decision, the First Circuit reversed a dismissal of a putative class action in a Massachusetts consumer protection case. Dumond v. Reily Foods Co., No. 18-2055 (1st Cir. Aug. 8, 2019)

The defendant New England Coffee Company sells a “Hazelnut Crème” coffee. The plaintiff sued because the coffee contains no nut – it’s all coffee, no nut, only nut flavored. The district court dismissed the complaint without leave to amend on the basis that the complaint wasn’t sufficiently specific. After rejecting that ground for dismissal and also rejecting a preemption argument, the majority noted that the defendants argued as an alternative ground to support the dismissal that the factual allegations complaint failed to state a plausible claim, and that’s the part of the decision that interests us.

Whether the label was deceptive, Judge Kayatta, writing for himself and Judge Torruella, opined was a question of fact. While the label said it was “100% Arabica coffee” and listed no hazelnut as an ingredient, Judge Kayatta said that perhaps a reasonable factfinder could conclude the name of the product was sufficient, without having to read the “fine print,” “much like one might easily buy a hazelnut cake without studying the ingredients list to confirm that the cake actually contains some hazelnut.”

Responding to the dissent, Judge Kayatta wrote:  “Our dissenting colleague [Judge Lynch] envisions a more erudite reader of labels, tipped off by the accent grave on the word “crème,” and armed perhaps with several dictionaries, a bit like a federal judge reading a statute. We are less confident that ‘common parlance’ would exhibit such linguistic precision. Indeed, we confess that one of us thought “crème” was a fancy word for cream, with Hazelnut Crème being akin, for example, to hazelnut butter, a product often found in another aisle of the supermarket.”

Judge Kayatta further wrote: “None of this is to say that our dissenting colleague’s reading is by any means unreasonable. To the contrary, we ourselves would likely land upon that reading were we in the grocery aisle with some time to peruse the package.”

In her dissent, Judge Lynch said that she disagreed with the majority that this presented a “close” question – in her view “a reasonable consumer plainly could not view the phrase ‘Hazelnut Crème’ as announcing the presence of actual hazelnut in a bag of coffee which also proclaims it is ‘100% Arabica Coffee.’”  Aside from noting that the package ingredient only said it included 100% Arabica coffee and never said it contained an actual nut, Judge Lynch explained how the word “Crème” means, both in the dictionary and in common parlance, a cream or cream sauce as used in cookery or a sweet liqueur, with the latter usually “used with the flavor specified” (citing Webster’s) – in short, “hazelnut Crème” clearly indicates a flavoring, not an ingredient. The majority’s hazelnut cake analogy was inapt because cakes are “made up of many ingredients.” .

My thoughts on this opinion are, first, it sounds like a lively chambers discussion, and second, I wonder about the degree to which each of the members of the panel does his or her own grocery shopping, and, if so, whether he or she reads labels, and whether this, consciously or not, influenced their thinking.

Since according to the majority opinion, either Judge Kayatta or Judge Torruella thought “Hazelnut Crème” meant hazelnut butter (really? in coffee? And despite the fact no dairy product was listed on the label?), did the majority reason that it follows that a reasonable consumer could be confused, because obviously the members of the majority are reasonable consumers? As noted above, the majority stated that “we” would “likely” realize there was no actual hazelnut in the coffee “were we in the grocery aisle with some time to peruse the package.” Are they saying that’s not the reasonable consumer standard –someone with time to peruse a package? It’s unreasonable to have them look at the ingredients? Or is the majority saying “likely” isn’t good enough to avoid a jury question?

©2019 Pierce Atwood LLP. All rights reserved.

Big Food Price-Fixing Update: Court Certifies Three Putative Classes in Packaged Seafood Litigation

What started out as a proposed merger between two of the largest packaged seafood manufacturers spawned a lengthy criminal investigation into antitrust violations in the tuna industry by the Department of Justice (DOJ) and multiple class and individual civil lawsuits. After four years of litigation, a major development in the class action lawsuits occurred– the Court certified three putative classes.

In 2015, the Department of Justice investigated a proposed merger between Thai Union Group P.C.L. (the parent company of Chicken of the Sea) and Bumble Bee Foods LLC. As the DOJ’s civil attorneys reviewed information related to the merger, they discovered materials that appeared to raise criminal concerns.[1]

Chicken of the Sea then “blew the whistle” to the DOJ regarding their anticompetitive conduct. This admission helped DOJ reach plea agreements with two other manufacturers, Bumble Bee[2] and Starkist,[3] as well as three packaged seafood executives—two from Bumble Bee[4],[5] and one from Starkist[6]. In connection with its guilty plea, Bumble Bee agreed to pay a $25 million fine, while Starkist’s fine is still pending. Bumble Bee’s CEO has also been indicted, and faces up to 10 years in a federal penitentiary. [7]

Now, the tuna manufacturers face a new challenge in the related civil actions. In 2015, on the heels of the DOJ investigation, three separate class actions were filed in the Southern District of California. Plaintiffs alleged that Defendants took part in various forms of anti-competitive conduct, including agreeing to fix certain net and list prices for packaged tuna. Plaintiffs alleged that the conspiracy began as early as November of 2010 and lasted until at least December 31, 2016.

On July 30, 2019, Judge Janis L. Sammartino granted the respective Motions for Class Certification filed by the Direct Purchaser Plaintiffs, as well as the two indirect classes–the Commercial Food Preparer Plaintiffs, and the End Payer Plaintiffs.[8] Judge Sammartino found that each class had satisfied Rule 23’s requirements and—contrary to the Defendants arguments—that common issues predominate over individualized issues within each class. For example, Plaintiffs contended that common evidence exists that would be used to prove the existence and scope of Defendants’ purported price fixing conspiracy.

The certification orders represent a major victory for each of the classes. They can now proceed to summary judgment and trial without any concern that their claims may be narrowed due to the mechanics of the proposed class. While dispositive motions are scheduled to be submitted later this month, no trial date is currently set. With certification rulings issued and merits briefing on the horizon, renewed settlement discussions are likely to come.

[1] https://www.justice.gov/atr/division-operations/division-update-spring-2017/civil-investigations-uncover-evidence-criminal-conduct

[2] https://www.justice.gov/opa/pr/bumble-bee-agrees-plead-guilty-price-fixing

[3] https://www.justice.gov/opa/pr/starkist-co-agrees-plead-guilty-price-fixing

[4] https://www.justice.gov/opa/pr/packaged-seafood-executive-agrees-plead-guilty-price-fixing-conspiracy

[5] https://www.justice.gov/opa/pr/first-charges-brought-investigation-collusion-packaged-seafood-industry

[6] https://www.justice.gov/opa/pr/former-packaged-seafood-executive-pleads-guilty-price-fixing

[7] https://www.justice.gov/opa/pr/bumble-bee-ceo-indicted-price-fixing

[8] Case No.: 15-MD-2670 JLS (MDD) United States Court of Southern District of California

© 2019 Bilzin Sumberg Baena Price & Axelrod LLP
This article was written by Jerry Goldsmith and Lori Lustrin of Bilzin Sumberg.
For more food industry news, see the Biotech, Food & Drug page on the National Law Review.