There are few things more alarming for a business owner than receiving a letter threatening a class action lawsuit. Yet, an ever-increasing number of food companies are facing such threats as plaintiffs’ attorneys across the country seek to leverage consumer protection laws in pursuit of lucrative claims against food companies. In particular, food companies face significant risk from lawsuits involving allegations of misleading or illegal labeling practices. This column will discuss the legal background and history of these lawsuits and explain how companies can best protect themselves and mitigate against the risks associated with these lawsuits.
Federal Labeling Authority
FDA and USDA are the governmental agencies with primary oversight authority over food labeling. Additionally, the Federal Trade Commission has a broad mandate to protect consumers from fraud and deception in the marketplace. The Federal Food, Drug, and Cosmetic Act (FDCA) and the Fair Packaging and Labeling Act are the primary federal laws governing food products under FDA’s jurisdiction. The Nutrition Labeling and Education Act (NLEA), which amended the FDCA, governs nutrition labeling and requires food labels bearing health claims, nutrient content claims, and structure/function claims to meet applicable requirements.
Labeling regulations can be difficult to interpret, ambiguous, confusing, and seemingly contradictory. In fairness, there is an almost endless variety of food products comprising an almost endless combination of ingredients, which are sold in packages of all shapes and sizes. Moreover, competition in the marketplace remains fierce, our understanding of nutrition is constantly evolving, and terms used to describe a product can mean different things to different people. Consequently, complexity is inevitable, and establishing a uniform set of readily understandable rules is nearly impossible. Yet, notwithstanding the byzantine complexity of the rules, their purpose is straightforward: adequately inform consumers in a manner that is accurate and not misleading.
Neither the FDCA nor the FTC Act (false advertising) provides a private right of action for consumers to pursue claims against food companies. In other words, the laws do not provide a mechanism for consumers to bring lawsuits against companies who violate the labeling provisions of the FDCA or the FTC Act. At the same time, FDA lacks the resources and regulatory authority to effectively monitor false and misleading labeling practices. Historically, even when FDA did initiate enforcement actions in response to prohibited or misleading labeling practices, the actions did little to deter future violations.
The Rise of Labeling Lawsuits
In the early 2000s, America underwent a rapid cultural shift as the importance of healthy eating entered the mainstream consciousness. This cultural shift led to a proliferation of products making misleading and inaccurate labeling claims, which not only resulted in consumer confusion, but also placed companies who complied with the law at a substantial disadvantage. In turn, consumer protection groups began to raise alarms and file the first labeling lawsuits.
In a 2006 report to Congress, the Center for Science in the Public Interest (CSPI) asserted that it had asked FDA to act against almost 200 misleadingly labeled products discovered during visits to supermarkets in the Washington, D.C., area. In 2008, the Government Accountability Board criticized FDA for failing to address mislabeling issues, noting that the agency was doing too little to address mislabeling. In 2009, FDA issued guidance advising companies to stop using misleading front-of-package labeling, asserting “that nutrition-related FOP and shelf labeling, while currently voluntary, is subject to the provisions of the Federal Food, Drug, and Cosmetic Act that prohibit false or misleading claims and restrict nutrient content claims to those defined in FDA regulations.” Yet despite the increased scrutiny, and although most food companies complied with the law, mislabeling issues continued.
State Laws Allowing Mislabeling Lawsuits
Although there is no private right of action under federal law, some states have enacted legislation that adopts federal law and allows for private lawsuits. California’s Sherman Food, Drug, and Cosmetic Law, for example, expressly adopts the federal labeling requirements of the FDCA. California’s wholesale incorporation of the FDCA’s labeling laws transforms alleged violations of the FDCA into violations of California’s Sherman Act. In turn, alleged violations of the Sherman Act may be used as predicate acts to recover damages under the Unfair Competition Law (UCL), False Advertising Law (FAL), or the Consumers Legal Remedies Act (CLRA). New York has enacted a similar legal framework. These state laws allow individuals and groups who claim to have been injured as a result of mislabeling to bring lawsuits seeking to enjoin mislabeling practices, recover damages caused thereby, or both.