Category: Food & Hospitality

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.

Court Lets Trader Joe’s Out of Sticky Situation Over Honey Advertising

A magistrate judge in the Northern District of California recently dismissed a putative class action alleging that Trader Joe’s misled its consumers about the purity of its manuka honey.  Moore v. Trader Joe’s Co., No. 4:18-CV-04418-KAW, 2019 WL 2579219 (N.D. Cal. June 24, 2019).

Plaintiffs commenced a putative class action lawsuit alleging that Trader Joe’s engaged in “false, misleading, and deceptive marketing” by representing that its Trader Joe’s Manuka Honey product was “entirely” manuka honey when, purportedly, the product’s manuka honey content had been “adulterated by the inclusion of cheaper honey.” Manuka honey is produced from the nectar of New Zealand’s manuka tree and is said to have numerous medicinal benefits.

Plaintiffs specifically challenged the product’s “100% New Zealand Manuka Honey” label and the ingredient statement that lists “manuka honey” as the sole ingredient because Plaintiffs’ laboratory tests demonstrated that only between 57.3% and 62.6% of the pollen found in the product was from the manuka flower, with the remainder deriving from “other floral sources.” Plaintiffs claimed Trader Joe’s mixed manuka honey with non-manuka honey, and in doing so violated “consumer protection and similar laws in all fifty states” – which allegedly incorporate the adulteration and misbranding provisions of the Federal Food, Drug, and Cosmetic Act (the “FDCA”) – and committed common-law fraud and breach of warranty.

In her opinion, Magistrate Judge Kandis A. Westmore cut straight to the point and rejected Plaintiffs’ argument that the honey was adulterated. Citing hearing testimony, she noted that Plaintiffs’ adulteration allegation was premised on “bees visiting different floral sources and returning to the hive resulting in a lower manuka pollen count, rather than the manufacturer purposefully mixing Manuka honey with non-manuka honey.” Under Section 342(b) of the FDCA, a product is adulterated only:

(1) If any valuable constituent has been in whole or in part omitted or abstracted therefrom; or (2) if any substance has been substituted wholly or in part therefor; or (3) if damage or inferiority has been concealed in any manner; or (4) if any substance has been added thereto or mixed or packed therewith so as to increase its bulk or weight, or reduce its quality or strength, or make it appear better or of greater value than it is.

None of those definitions was met in this case, Judge Westmore held, because any impurities in the honey were introduced by the bees that made it, and not by Trader Joe’s. She, therefore, granted Trader Joe’s motion to dismiss without leave to amend as plaintiffs “could not plead sufficient facts to support their adulteration theory.” Judge Westmore also ruled that to the extent the applicable state laws imposed different standards than the FDCA, they were preempted.

Along similar lines, Judge Westmore found that the product’s label was not misleading. According to FDA guidance, honey is a “single ingredient food” that may be labeled with the plant or blossom name so long as that plant or blossom is the “chief floral source.” Trader Joe’s argued that “100%” in the phrase “New Zealand Manuka Honey” could refer to either manuka honey or the fact that the honey comes entirely from New Zealand. Because Plaintiffs’ adulteration theory failed and the “chief floral source [was] undisputedly Manuka,” Judge Westmore held that the label was accurate and that a reasonable person would not be misled. She dismissed Plaintiffs’ common law fraud and breach of express warranty causes of action on similar grounds.

© 2019 Proskauer Rose LLP.
This article was written by Lawrence I Weinstein, Carl Mazurek and Marc Palmer of Proskauer Rose LLP.

Note To Chicago Employers: Expansive New Work Scheduling Rules Take Effect July 2020

The Chicago City Council passed the Chicago Fair Workweek Ordinance on July 23, regarding advance scheduling notice for certain employees in certain industries, including healthcare, hotels, restaurants, and retail, among others. Chicago Mayor Lori Lightfoot has already indicated that she will sign the new ordinance in short order, describing it as the most expansive worker scheduling policy in the country, including the first in the country to cover healthcare employers.

The ordinance, which goes into effect in July 2020, imposes significant administrative requirements relative to the employer/employee relationship. Chicago employers should consider familiarizing themselves with them now in order to avoid penalties in 2020.

Details and Penalties of the New Ordinance

The ordinance will require covered employers operating in the City of Chicago to provide employees with 10 days advance notice of scheduled work, generally beginning on July 1, 2020. After June 30, 2022, the period of required advance notice of the work schedule will increase to 14 days. The work schedule must be posted in a conspicuous location at the workplace, or must be emailed upon the request of the employee.

In addition, the ordinance provides a carve-out for smaller employers, only applies to employees who earn less than $50,000 annually or $26.00 per hour or less, and does not apply to independent contractors or day and seasonal laborers.

Employers generally covered by the law are those who have 100 or more employees (in total, not just in Chicago), or 250 or more employees in the case of nonprofit entities. Restaurants covered by the ordinance are those with more than 30 locations and at least 250 total employees (and franchisees with four or more locations). Of the total employee count, for the employer to be governed by the law, at least 50 of their employees must be “covered” employees.

If employers make changes inconsistent with the requirements of the ordinance, the employees must receive compensation. The amount of compensation will depend on the nature of the scheduling change.

Right to Decline Work Scheduled

Employees under the ordinance have the right to decline any work scheduled that does not comply with the required advance notice period. Further, if an employer alters an employee’s schedule after the deadline, depending on the particular circumstances, the employer may be required to pay the employee an additional hour for each altered shift. The ordinance also prohibits retaliation against the employee for exercising rights conferred by the scheduling ordinance.

A number of exceptions do apply. For example, schedule changes caused by power outages, blizzards, a mutually agreed-upon shift trade, or a schedule change that is mutually agreed upon by the employer and employee and confirmed in writing.

The Chicago Department of Business Affairs and Consumer Protection has been tasked with enforcing this new ordinance. Employers who violate this law will be subject to a fine of between $300 and $500 for each offense. The law also establishes a process by which an employee may initiate a civil action under the law, beginning with a written complaint to the department.

 

© 2019 BARNES & THORNBURG LLP
For more employment ordinances nation-wide, please see the Labor & Employment law page on the National Law Review.

California Redefines “Beer” to Align with Federal Definition

On July 9, 2019, California Governor Gavin Newsom signed into law Assembly Bill (AB) 205, which redefines beer under California’s Alcohol Beverage Control Act.  AB 205 allows for beer to be produced with honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials. Under the prior California law, “beer” was defined as “any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, or any other similar product, or any combination thereof in water.” Prior to AB 205, use of fruit in the fermentation process required a wine license.

Notably, federal law already permits the use of these additional ingredients.  As per 26 U.S.C. § 5052(a), federal law defines beer as “beer, ale, porter, stout, and other similar fermented beverages (including sake or similar products) of any name or description containing one-half of 1 percent or more of alcohol by volume, brewed or produced from malt, wholly or in part, or from any substitute therefor.” Federal regulations at 27 CFR 25.15 identify the materials that may be used in the production of beer: “Beer must be brewed from malt or from substitutes for malt. Only rice, grain of any kind, bran, glucose, sugar, and molasses are substitutes for malt. In addition, you may also use the following materials may be used as adjuncts in fermenting beer: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials.”

Thus, the passage of AB 205 is a seemingly long-overdue update and will likely have little effect on the market as California’s legal system has likely deferred to the federal definition.  Indeed, California Craft Brewers Association Executive Director Tom McCormick described AB 205 as a “clean-up bill” that aligns California with federal law. Nonetheless, Assemblyman Tom Daly (D-Anaheim), who introduced the bill, stated that “[t]his measure modifies the definition of beer in a way that will allow California breweries to expand their market, satisfying the consumer’s desire for more varied and unique styles of beer.”

 

© 2019 Keller and Heckman LLP
Article by Food and Drug Law at Keller and Heckman LLP.
For more on alcohol regulation, please see the National Law Review page on Biotech, Food & Drug law.

Mississippi Sued Over Plant-Based, Cell-Based, and Insect-Based Meat Labeling Law

Like countless other states, earlier this year, Mississippi passed SB 2922, which stipulates that cell-based, plant-based, or insect-based foods cannot be labeled as “meat” or “a meat food product” (e.g., “hamburgers,” “hot dogs,” “sausages,” “jerky”, etc.). Specifically, SB 2922 amended Section 75-35-15(4) of the Mississippi Code to state “[a] food product that contains cultured animal tissue produced from animal cell cultures outside of the organism from which it is derived shall not be labeled as meat or a meat food product. A plant-based or insect-based food product shall not be labeled as meat or a meat food-product.” Such products still run afoul of the law even if the labels include claims like “100% vegan,” “plant-based,” or “meatless.”

SB 2922 came into effect on July 1, 2019. On that same day, vegan “meat” producer, Upton’s Naturals Co. and the Plant Based Foods Association (PBFA) filed suit in federal court against Mississippi’s Governor and Commissioner of the Department of Agriculture and Commerce arguing that the label restrictions violate their First Amendment right to free speech, among other claims. Upton’s and PBFA are seeking a declaratory judgment that SB 2922 violates the First and Fourteenth Amendments to the U.S. Constitution, a preliminary injunction prohibiting enforcement of SB 2922 throughout the duration of the litigation, a permanent injunction, and an award of nominal damages in the amount of $1.00.

Mississippi’s Department of Agriculture and Commerce, along with the state’s cattle and poultry associations, supported the state law. Indeed, in response to the lawsuit, the Department said it has a “duty and obligation to enforce the law” and that it wanted to ensure the consumer has “clear information on the meat and non-meat products they purchase.” However, supporters of the lawsuit, like the Good Food Institute, argued that “Mississippi is acting as word police” and that the law is a “slippery slope” that could open the door to restrictive labeling.

© 2019 Keller and Heckman LLP
For more on food regulation & labeling, see the National Law Review Biotech, Food & Drug law page.

Big Food and Plant-Based Protein: Potential MEATing of the Minds?

Capitalizing on an increasingly health and environmentally conscious era, plant-based meat substitute companies are positioning themselves as the future of protein. On May 2, 2019, Beyond Meat became the first plant-based product company to go public. Its stock skyrocketed to become the highest performing first-day public offering in nearly two decades. Impossible Foods is also performing well. While the company is in no rush to go public, they just secured $300 million in their latest funding round.

In light of these recent successes, the meat industry is grappling with how to address the new food phenomenon. With the long-term viability of the alternative meat market yet to be seen, traditional meat companies are taking both an offensive and defensive approach.

Many Big Food companies view cell-based meat as an opportunity rather than a liability. Taking the “if you can’t beat ’em, join ’em” approach, these companies are integrating plant-based protein investments into their own portfolio. For example, Tyson was an early investor in Beyond Meat. Tyson recently sold its 6.52% stake in the company, but Tyson is still fully committed to competing in the plant-based protein space. Tyson announced that it plans to launch an “alternative protein product” with market testing as early as this summer. The fact that Tyson is a household name synonymous with meat could impede its ability to build brand loyalty in the alternative meat space. That said, the producer’s well-established distribution networks and manufacturing facilities will enable them to hit the ground running—an advantage that start-up companies in the emerging market necessarily lack.

Simultaneously, however, the meat industry is taking active measures to hedge against what, on its face, appears to be an impending threat of market erosion.

The meat industry is also lobbying for laws banning any non-slaughterhouse-derived protein product from being labeled “meat.” Last year, Missouri was the first state to formally do so. Lawmakers in 17 states—including Arkansas, Kentucky, Mississippi, North Dakota, South Dakota, and Wyoming—have followed suit. Laws in Montana, Georgia, Nebraska, and Oklahoma are also on the horizon.

Legislators and meat industry lobbyists are touting these laws as necessary consumer protection measures. Not surprisingly, proponents of plant-based meat disagree and are fighting back against legislation they say is aimed to protect cattle and livestock producers’ bottom line. Tofurkey, the Good Food Institute, the American Civil Liberties Union of Missouri, and the Animal Legal Defense Fund are challenging the Missouri law on constitutional grounds. Jessica Almy, director of policy for the Good Food Institute believes that the appeal should put other states on notice “that there are significant constitutional problems with these laws” because labeling is a form of “commercial speech, which is protected as long as it’s truthful.” The constitutional issue has yet to be resolved.

If Big Food is on board as a champion of plant-based protein rather than an opponent, the future for the protein industry certainly looks bright. But, it appears—at least for the time being—that meat alternative companies will have their work cut out for them as they navigate a newly developing (and often times conflicting) patchwork of state laws designed to stifle their marketing efforts. These uncertainties will continue to trigger disputes about what producers (that often operate in multiple states) can say about their products without misleading consumers, and just how far states can go to regulate commercial speech.

© 2019 Bilzin Sumberg Baena Price & Axelrod LLP
Article by Jennifer Junger and Lori Lustrin from Bilzin Sumberg.
For more on the meat substitute industry see the National Law Review Biotech, Food & Drug page.

Hungry for Change: ASA and Government Target Junk Food Ads

With childhood obesity rates in the UK among some of the worst in Europe, the Government has set a national target to halve childhood obesity by 2030. Whilst the Government acknowledges that this is a multi-faceted problem, it has reported that evidence suggests that children’s exposure to advertising of products that are high in fat, salt and/or sugar (“HFSS”) contributes to their consumption patterns.

HFSS product advertising is currently subject to content and placement restrictions under the Committees of Advertising Practice (“CAP”) broadcast and non-broadcast codes of advertising (“Codes”); however, campaigners and industry bodies have raised concerns that adverts are not being targeted correctly and that the existing rules do not go far enough. The Advertising Standards Authority (“ASA”) and the Government have taken steps in recent months to address these issues, with the ASA launching a monitoring exercise on targeted ads and the Government consulting on options to reduce children’s exposure to HFSS ads.

The rules

Each of the Codes contains rules dealing with adverts that are directed at or feature children, as well as specific rules in relation to advertising HFSS products, whether directly or indirectly. The restrictions include:

  • a prohibition on the use of licensed characters and celebrities popular with children in ads for HFSS products where the ad is targeted at under 12s;
  • in relation to broadcast TV, a prohibition on HFSS products being advertised “in or adjacent to programmes commissioned for, principally directed at or likely to appeal particularly to audiences below the age of 16”; and
  • in relation to ads placed in children’s media, “HFSS product advertisements must not be directed at people under 16 through the selection of media or the context in which they appear. No medium should be used to advertise HFSS products, if more than 25% of its audience is under 16 years of age”.

ASA monitoring

Although compliance with the Codes by advertisers is generally high, the ASA recently published the results of a ‘compliance sweep’ that used online avatars to monitor ads for HFSS products that were served to children. Similar technology was used earlier this year to track brands that breached CAP’s gambling rules on advertising to under 18s, which we reported on in April.

The avatars replicated the browsing habits of children of various ages and collected information about HFSS adverts appearing on children’s websites and on YouTube. The monitoring exercise found that the vast majority of HFSS ads on children’s websites were being targeted correctly; however, potential issues were identified in relation to HFSS ads being served on YouTube.

Moving away from its typically ‘reactive role’, the ASA took proactive action to notify a number of non-compliant brands which were each required to take steps to prevent further breaches, including making improvements to their targeting approach.

Government consultation

Despite strong compliance by the industry, the Government is still considering further advertising prohibitions and earlier this year launched a consultation in which it sought views on options to further reduce children’s exposure to HFSS in broadcast and online media, including the introduction of a 9pm watershed. Other options included a ‘ladder’ system for advertising restrictions on broadcast TV, the strengthening of current targeting restrictions for online advertising and a mixed option for online advertising consisting of a watershed for video and additional targeting restrictions for other types of marketing.

Whilst the watershed proposals have received extensive support from campaign groups such as The Children’s Food Campaign (Sustain) and the Obesity Health Alliance, the ASA and the Institute of Practitioners in Advertising have both stated that the proposed changes would be ineffective and disproportionate, particularly given the high level of compliance with the HFSS rules in the Codes.

Steps to take

The ASA has stated that it will carry out further compliance sweeps in future, and so advertisers should take care to continue to comply with the Codes.

Anyone advertising in the area should also make use of any available tools which allow the targeting of ads so as to restrict children and young people from seeing adverts for HFSS products. Advertisers must also ensure that terms with their media buyers are sufficient to guarantee that targeting has been put in place correctly. As with labelling or other regulated industries such as financial services, agencies may wish to make clear that responsibility for compliance with these specialist rules lies with their clients (in particular if an assessment as to whether a product is indeed HFSS is required).

 

© Copyright 2019 Squire Patton Boggs (US) LLP

Is Next-Day Pay the Next Big Thing?

Among the hardest-to-find workers in America today are restaurant and retail workers. The current labor market is the tightest in 49 years, and for the past year, there have been roughly a million more open positions in the United States than people looking for work. The hospitality sector always has faced recruitment challenges, but the recently shrinking applicant pool has forced employers to look for creative ways to lure workers to jobs in the food service and retail industries.

“Expedited pay”—also known as “same day pay,” “next day pay,” or “daily pay”—provides employees with all or some portion of their wages without having to wait for the weekly or semi-monthly payroll cycle to conclude. While direct deposit, pay cards, and electronic fund transfers all have shortened the time that employees have to wait to access their funds, PayPal, Apple Pay, Venmo, and the like, in conjunction with Millennials’ and Generation Z’s expectation of seamless and immediate financial transactions, have upped the ante for immediate distribution of wages.

In an effort to address the challenges, several food-service groups are currently test marketing the next-day pay model. For example, Church’s Chicken and Bloomin’ Brands are offering forms of expedited pay in an effort to recruit and retain talent. The expedited process provides workers with almost immediate access to funds to bridge the gap between paydays for expenditures.

There are a variety of vendors and distribution methods for employers to consider. For example, Instant Financial provides immediate access to pay after a worker finishes his or her shift. PayActiv and FlexWage are app platforms through which employers may offer customized pay options to their employees.

Some vendors charge employers for their services while others deduct fees from employees’ pay. These fees vary, and employers will want to understand what they are being charged before either contracting with an app provider or making an app available through a payroll processing service. Similarly, employers may want to ensure that employees understand these fees as well. Additionally, employers may want to review state and local laws regarding whether passing along such fees to employees passes legal muster.

In determining whether to implement expedited pay, employers can ensure that all federal, state, and local minimum wage, overtime, and payday requirements will be met when deciding on a vendor or app for their workforce. Employers may also want to analyze the effectiveness of these expedited pay methods in assisting in recruitment efforts, employee engagement, and reducing turnover.

 

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more in employment news please see the National Law Review Labor & Employment page.

Your Next Hamburger Could Be “Slaughter-Free”

In the face of an ever-increasing global population set to surpass 9 billion by 2050, agriculture and science have converged to create sustainable, innovative solutions to food production. Cellular agriculture is perhaps the most cutting edge of them all.

Producing meat, poultry and seafood through cellular agriculture promises to revolutionize the way we think about, grow and consume food. When rolled out to consumers in the coming years, these products are expected to have the same nutrition profile and organoleptic properties as their conventionally sourced counterparts.  Organoleptic properties refer to the sensory aspects of food, including taste, sight, smell, and touch.

What is Cellular Agriculture?

Cellular agriculture refers to the production of agricultural products from cell cultures. Through cellular agriculture, meat, poultry, and fish can be produced ex vivo, or grown outside the animal. The finished product – commonly referred to as cultured, clean or cell-based meat – replicates the characteristics of muscle harvested from food-producing animals.

How Are Cell-Cultured Foods Made?

The production process is quite complex and varies across producers. At a high level, there are four core elements to production: (1) cell cultures, (2) scaffolds, (3) media and (4) bioreactor (cultivator).

Cells are obtained from food-producing animals, healthy at the time of biopsy. The cells are subsequently separated and transferred in a sterile environment and placed in a bioreactor also referred to as a cultivator. Once placed in the cultivator, the cell cultures are fed nutrients referred to as media. Media is a mixture of ingredients that works as a food source for cell lines. The cultivator controls food supply inputs and temperature, the cells are continuously monitored, and once the meat is cultivated, meat tissues are harvested and stored under appropriate conditions. See Figure 1, below (P.D. Edelman, D.C. McFarland, V.A. Mironov, and J.G. Matheny. Tissue Engineering. May 2005).

Scaling Up Production

Product development efforts are well underway across the globe. In 2016, for example, San Francisco-based Memphis Meats unveiled the first meatball produced with clean meat technology. In late 2018, Aleph Farms debuted the very first cell-cultured steak. Significant investments from Tyson Foods’ venture capital arm Tyson Ventures, Cargill, Bill Gates and Richard Branson — among others — are driving innovation in the field and helping startups to reduce costs and scale up production.

Cell-based meat could hit supermarket shelves within the next 5 years. Before that happens, stakeholders must confront a number of questions. Among those – Who will be the key regulators? How will the regulators work to ensure product safety? And will consumers actually want to eat hamburgers, chicken nuggets and fish fillets produced in such a novel way and perhaps pay a premium to do so?

The Regulatory Conversation

Cellular agriculture came to life in 2018 – from Capitol Hill to the halls of the FDA and USDA. Given the novelty of the production process, the regulators engaged stakeholders to think through an appropriate regulatory pathway for meat, poultry and seafood produced from cell cultures.

A recently issued Memorandum of Understanding (March 7, 2019) outlines the U.S. government’s current thinking regarding a proposed pathway for cell-based meat and poultry. The MOU provides that the FDA and USDA will jointly regulate human food produced using cell culture technology derived from cell lines of USDA-amenable species. In other words, cell-based meat and poultry will be subject to joint FDA-USDA oversight. Seafood products will generally be subject to FDA oversight (except in limited instances where the species is considered to be USDA-amenable, e.g., catfish). This builds on existing precedent as current American food law places the production and processing of meat and poultry under USDA jurisdiction. FDA regulates regulates all seafood except for Siluriformes (catfish) which fall under USDA oversight.

So what will joint regulation look like? The MOU indicates that the FDA will oversee cell collection, cell banks, and cell growth and differentiation. Oversight then shifts to the USDA during the cell harvest stage. USDA’s core tasks will be inspection and labeling. Upon harvest, USDA will conduct inspection activities at cell-based food processing facilities. This means that any establishment engaged in the business of processing harvested USDA-amenable, cell-based foods will need to obtain a federal grant of inspection from the USDA and all such foods will need to bear a USDA mark of inspection.

Many critical questions core to developing a functioning regulatory review process remain to be answered: How will the FDA and USDA initiate their respective application processes, how long will it take to obtain premarket approval, and what will inspections of production facilities look like? Further, how should these products be labeled? The devil will be in the details.

Regulators are currently reviewing comments submitted to the FDA and USDA following two public meetings: (1) An FDA meeting held on July 12, 2018 focused on safety considerations and (2) A joint FDA-USDA meeting held on October 23 and 24, 2018 focused on potential hazards and labeling.

Safety Considerations & Potential Hazards

Regulators are focused on working with stakeholders to:

  • Consider and develop appropriate controls for potential hazards that may arise during all stages of production, i.e., culturing and harvesting, processing, and packaging.
  • Understand the safety profile of the cell culture media used to produce cell-based foods.
  • Leverage best practices from the traditional meat, poultry and seafood production context, as well as the biomedical arena as appropriate, to ensure that meat and poultry produced by way of cellular agriculture are safe and wholesome.
  • Consider how these products will compare to traditionally produced meat and poultry from a compositional, nutritional and organoleptic standpoint.

Based on our conversations with cell-based meat producers, it is clear that in many cases the production process for cell-based foods will likely not be vertically integrated. That is, each step in the production process could be an end point — i.e., the collection, characterization and qualification of cell-lines could be conducted by Company A; Company B could then grow the meat in a cultivator (bioreactor) with media supplied by Company C; Company D could, in turn, market the meat once harvested at Company B. Hazards could conceivably emerge at each step, and especially during the transportation phase. Thus, regulators and producers will need to consider those transitions and outline where hazard control responsibilities begin and end and how best the FDA and/or USDA should go about verifying compliance.

Labeling

As of this writing, no set nomenclature has been settled upon for meat, poultry or seafood produced through cellular agriculture.

The labeling of cell-based meat and poultry is a hot button issue that came to the forefront in February 2018. That month, the United States Cattlemen’s Association (USCA) filed a petition with USDA’s Food Safety and Inspection Service (FSIS) requesting that USDA undertake rule-making on beef labeling to clarify the difference between beef derived from cattle and “beef” products created through cell culture technology. To date, the USDA has received over 6,100 comments on this petition.

Cell-based meat and conventional agriculture stakeholders have expressed a range of views. Among conventional animal agriculture interests, some contend that terms such as “meat” and “beef” should not be used to describe products produced through cellular agriculture. Others have expressed some openness to using “meaty” terms provided that the labeling clearly indicates how the product was produced. In this regard, some commenters called for the establishment of standards of identity for cell-cultured foods to distinguish them from their conventionally produced counterparts.

At a recent industry meeting and in recent industry trade press, USDA has indicated that the Agency is strongly considering proposing such standards of identity within the next 12 months.

© 2019 Foley & Lardner LLP
Learn more about food production on the National Law Review Biotech, Food and Drug page.

No Soup for You!

An 11-year-old boy required to eat his homemade, gluten-free chicken sandwich outside a restaurant on a school field trip will get to take his case to trial.

The boy sued the owner of the Shields Tavern in Colonial Williamsburg for violating the Americans with Disabilities Act and Virginia law. The tavern offered to make the boy a gluten-free meal, but the boy and his father declined. The boy suffers from a serious gluten allergy, and had gotten ill from cross contamination at other restaurants. The tavern then asked the family to eat outside, citing a public health concern.

In a divided decision, the Fourth Circuit allowed the case to proceed to trial. The court found factual issues remained about whether the boy’s gluten allergy created a disability, and whether his request to eat his own food was necessary, reasonable, and would fundamentally alter the nature of the restaurant, which tries to create a historic colonial experience for visitors.

Judge J. Harvie Wilkinson III wrote a blistering dissent, accusing the court of establishing an “almost per se rule” that forces restaurants “to give up control over their most valuable asset: the food they serve.” Read the opinion here: J.D. v. Colonial Williamsburg Found., No. 18-1725 (4th Cir. May 31, 2019).

©2011-2019 Carlton Fields, P.A.
Post By David A. Karp of Carlton Fields
Read more about Disability Rights on the National Law Review Civil Rights page.