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.
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.
Food and beverage manufacturers should also be sure to have concrete evidence supporting any marketing claims on their packaging in the event that regulators come calling. For example, if a product’s label claims that “two out of three doctors recommend including X as part of a balanced diet,” there should be clear and convincing survey data supporting the claim. While many FDA regulations apply specifically to the product’s nutrition label, the remainder of the product’s physical packaging as well as all of the company websites, television ads, social media platforms, and other materials touting the product are subjected to the scrutiny of regulators (and plaintiffs’ lawyers, for that matter). Even an action as simple as “re-tweeting” another’s praise of the product can be deemed to have been adopted by the company.
Generally speaking, well-meaning food or beverage manufacturers can follow this rule of thumb: If your marketing team is spending significant time and resources to develop a clever alternative to statements or claims that you know are over the line, it’s best to avoid those claims—and any crafty versions thereof. Following these general guidelines will help food or beverage manufacturers avoid both FDA and FTC investigations.
Don’t Pique the Interest of Plaintiffs’ Lawyers
Unfortunately, plaintiffs’ lawyers are not bound by the same regulations as the FDA or FTC to limit the cases that they can bring against food and beverage companies. While manufacturers can look to prior cases filed as a guide to subjects that are the current focus of the plaintiffs’ bar, there is no guarantee your tagline or marketing theme will not be the next target. One way to avoid piquing the interest of plaintiffs’ lawyers is to make sure your product packaging and marketing is well within the boundaries of FDA regulations or guidances. FDA warning letters and FTC investigations are a matter of public knowledge after formal action has been taken. The companies targeted in these actions may find themselves on the receiving end of demand letters and legal complaints by plaintiffs’ lawyers.
Definitive statements such as “proven to improve health” and “proven to cause weight loss,” as well as undefined terms like “pure” and “wholesome,” can also be traps. There has been a significant amount of debate and legal action focused on the meaning of the term “natural,” and variations thereof. This is partly due to the difficulty in defining these terms and also the fact that, to date, the FDA has declined to take a position on the interpretation of the term “natural.” Thus, companies whose marketing strategy heavily relies on the use of these terms would be prudent to stay informed on recent litigation on this topic and the theories pursued by plaintiffs’ lawyers.
Another related area of interest in food and beverage litigation in recent years is the use of genetically modified organisms (“GMO”) in the manufacturing process. In late July 2016, President Obama signed into law a bill that puts in place the framework for the development of a national standard for the labeling of GMO food products. While the specifics of the labeling requirements to be developed by the Department of Agriculture over the next two years remain to be seen, particularly with the new presidential administration, it is clear that the labeling of products containing GMOs will be an area of focus by plaintiffs’ attorneys. Manufacturers whose products incorporate genetic engineering should work with their food and beverage counsel to ensure their packaging and marketing strategies do not unduly increase their exposure.
Tousi is a partner in Nutter’s Litigation Department and a member of the firm’s Business Litigation and Product Liability and Toxic Tort Litigation practice groups. Reach her at 617-439-2872 or [email protected].
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