It is no surprise that in today’s times, when healthy eating and fitness regimens have taken on increased popularity, litigation involving food and beverage companies and the claims they make on their product packaging have also seen a rise. According to a 2015 Nielson study, 80 percent of North American respondents surveyed said they would be willing to pay more for foods with health attributes. With greater public scrutiny from consumers on food and beverage manufacturers also comes greater scrutiny from regulators and plaintiffs’ lawyers, leading to an increase in class actions focused on these issues. So how can food and beverage manufacturers avoid litigation targeting their product packaging? To understand the answer to that question, it is beneficial to understand the types of cases that can be brought and the claims made in those actions.
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Explore this issueFebruary/March 2017
Potential Sources of Litigation
Regulators and plaintiffs’ lawyers pose dual threats as potential sources of litigation to food and beverage companies based on their product packaging and labeling. In regards to regulatory action, the FDA and the Federal Trade Commission (FTC) share overlapping jurisdiction on the labeling of food and beverage products, with the FDA responsible for enforcing regulations on the content of product labeling. Meanwhile, the FTC handles instances of allegedly false and deceptive advertising. The FDA will typically send a Warning Letter as an enforcement tactic, which serves as official notice to the company. FDA can seek court remedies from that point, including injunctions, recalls, seizures, civil penalties, and criminal prosecutions. Through its Division of Advertising Practices, the FTC can bring administrative action, which can result in cease and desist orders. From there, the FTC can initiate court action to seek remedies, such as injunctions and civil monetary remedies.
In addition to avoiding regulatory action, food and beverage companies should be wary of a consumer class action by the plaintiffs’ bar. These claims can vary from product liability claims alleging physical harm to false or misleading advertising claims that resulted in a plaintiff (or plaintiffs) purchasing a product he or she may not otherwise have bought. A company may be in full compliance with FDA and FTC regulations, but plaintiffs’ lawyers can examine the packaging and advertising for any particular product, identify a single lead plaintiff who allegedly was misled into buying the product, and initiate expensive and prolonged litigation that the company will either have to settle or commit resources to fight. Certainly, if a company is the subject of an enforcement action by the FDA or the FTC, it is likely to draw the attention of plaintiffs’ lawyers.
Steps to Prevent Regulatory Action or Litigation
The best way to avoid being the subject of a regulatory action is to make sure your food and/or beverage company is in compliance with all FDA regulations, including by obtaining appropriate certifications from their suppliers and working with co-packers to ensure all appropriate standards are being met. Certain claims—such as nutrient content claims (e.g., “low fat,” “a good source of protein”) and health claims (“diets low in sodium may reduce the risk of high blood pressure”)—are strictly regulated by the FDA and can only be made in certain specified circumstances. Food and beverage companies should work with their regulatory counsel to ensure they are in compliance with these regulations.
As to product-specific marketing claims made directly on the product packaging, companies should avoid making claims that go beyond scientifically proven attributes of their products or ignore data supporting the opposite conclusion. In many instances, the FDA has issued formal guidance on certain product attributes; careful food and beverage manufacturers (or their counsel) should be familiar and up to date with the FDA’s guidances and ensure compliance. For example, the FDA issued a guidance in May 2016 on the use of the term “evaporated cane juice,” stating that it found the term to be false or misleading.