Label Reviews Are Critical For All Food Businesses

Imagine you are sitting at your desk on a Tuesday morning.  You are going over your financials in preparation for tax season when your assistant knocks on your door.  She walks into the office and drops mail on the desk.  She mentions an envelope addressed to your attention with the FDA listed as the return address. Curious, you open it and to your surprise you find a letter stating that your company has violated the Federal Food, Drug, and Cosmetic Act (the "Act"). The letter states that you have 15 days to respond with corrective actions you plan to take in response to the violations.

This isn't a hypothetical, this is similar to what happened to Kind LLC last month, the maker of Kind bars.  In the Warning Letter, the FDA noted multiple violations, including the improper use of the word "healthy" on the Kind bar labels.  Pursuant to federal regulations, a food can make a “healthy” claim only if it has 1 gram or less of saturated fat per serving and gets no more than 15 percent of its calories from saturated fat. The four Kind bars called out in the FDA’s letter—Fruit & Nut Almond & Apricot, Fruit & Nut Almond & Coconut, Kind Plus Peanut Butter Dark Chocolate + Protein, and Kind Plus Dark Chocolate Cherry Cashew + Antioxidants—have between 2.5 and 5 grams.

The letter also stated the use of the “+” symbol was in violation of the applicable regulations. The regulations state that “plus” can be used if a food has 10 percent more of a nutrient than another similar food, and the product lists that food. The Kind bars don’t.  Kind bars carry a “good source of fiber” claim, which claim is defined as 10 to 19 percent of the DRV for a nutrient. In this case, that’s 2.5 to 4.75 grams of fiber—and the Kind bars in question do meet the definition. However, if the product is not low-fat (containing 3 grams or less), then that fact must be disclosed on the label, near the fiber claim. Again Kind bars don’t.

While these are only some of the alleged violations in the Warning Letter, you can see the list is pretty extensive.  Not only must Kind respond to the FDA with corrective actions, but now they face the significant expense of revising their labels, adverting and website.  This is no small task for an international food producer. However, this risk could have been mitigated through an in-depth label review. The FDA's regulations covering health and nutritional claims are complex and not always transparent.  As demonstrated in the letter to Kind, this is a reminder of how important it is for food businesses to have an in-depth review of their labels and marketing prior to production.  Most important to point out is that FDA regulations affect businesses of all sizes, so small and startup food businesses with limited experience navigating federal regulations should pay particular attention to their labels and marketing.

If your business is unsure whether a product label is in compliance with, or need assistance in adapting your label to meet, FDA regulations please contact our attorneys at Morsel Law.

How Beverage Companies Can Avoid Unnecessary Lawsuits

In a recent suit filed in California, Millennium Products, Inc., the maker of GT’s Kombucha and Synergy drinks, was challenged on claims that its drinks contain "powerful antioxidants", which plaintiffs claim is in violation of the Food, Drug and Cosmetics Act because the antioxidant statements it makes are misleading and unauthorized nutrient content claims as proscribed by the FDA.

Pursuant to federal regulations, a nutrient content claim is a claim on a food product that directly or by implication characterizes the level of a nutrient in the food (e.g., "low fat," "high in oat bran," or "contains 100 calories"). Only those claims that are specifically defined in the regulations may be used, all other claims are prohibited. Previously approved nutrient content claims characterize the level of a particular nutrient (e.g., ‘low sodium’), whereas a term such as ‘high in antioxidants’ ties a claim (i.e., ‘high’) to a class of nutrients that share a specific characteristic (i.e., they are antioxidants).

GT’s label use lists “EGCG 100mg" (a polyphenol found in tea with recognized antioxidant properties) in order to substantiate their antioxidant claim. However, for claims characterizing the level of antioxidant nutrients in a food, a reference daily intake (RDI) must be established for each of the nutrients that are the subject of the claim, but in this case there is no established RDI for EGCG. Moreover, since GT's product is a type of tea, and the FDA considers tea a food with no nutritional significance, the plaintiffs claim the drinks do not contain “even a single antioxidant nutrient with an established RDI."

It is important to note that Millennium Products, Inc. isn't the only company to face legal action in recent years from consumers making false labeling claims. Recently, Twinings North America, Inc. was sued for allegedly deceiving consumers by mislabeling its teas as a "natural source of antioxidants", however, in this case the judge dismissed the lawsuit stating that a "natural source of antioxidants" is not a nutrient content claim because it did not state or imply the level of antioxidants. However, in warning letter sent in 2012 the FDA noted that the statement "very powerful antioxidant" is an unauthorized nutrient content claim because "very powerful" characterize the level of antioxidants in the product. Other tea producers were also sent warning letters by the FDA over their green teas because they were improperly labeled with the term “antioxidant” (see Unilever, Inc. maker of Lipton Tea and Dr Pepper Snapple Group).

As lawsuits are increasingly targeting food and beverage makers challenging their labeling claims, it is more important than ever to make sure your labels are thoroughly reviewed prior to introducing the products into the marketplace. If your business is unsure whether a product label is in compliance with, or need assistance in adapting your label to meet, FDA regulations please contact our attorneys at Morsel Law.

Calories Are Now Criminal

Over the past two years small business owners spent considerable time implementing procedures to comply with the health care requirements under the Affordable Care Act, also known as Obamacare.  Just when these business owners thought they could turn their attention back to doing what they do best, running their business, regulators issue new compliance requirements, this time targeting the food and beverage industry.

The Food and Drug Administration (“FDA”) recently issued a final rule on food labeling, as required under the Affordable Care Act, which provides for nutrition labeling of "standard" menu items for chain restaurants with 20 or more locations and "similar retail food establishments."  If you are a restaurant owner the menu labeling rule will most certainly impact on your bottom line.  The rule is expected to cost the food industry some $315 million to implement and about $44 million per year after that, according to the FDA’s original cost-benefit analysis.  In addition to restaurants, the rule applies to food facilities in entertainment venues, such as movie theaters and amusement parks, take-out food establishments, bakeries, convenience stores, grocery stores and supermarkets.

So what’s required?  Calories must be displayed clearly and conspicuously on menus and menu boards next to the name or price of the item.  Menus and menu boards must also display "2,000 calories a day is used for general nutrition advice, but calorie needs vary." Businesses must provide, upon consumer request, written nutritional information for each menu item.  The rule applies to "standard menu items", including food on display and self-service food, but not daily specials, temporary menu items and condiments for general use typically available on a counter or table.  It is important to note that certain alcoholic beverages listed on menus or menu boards are also included under the rule.

While the cost of compliance will vary for each establishment, non-compliance is criminal.  Criminal you say?  How?  Well, businesses that fail to comply, or don't get it right, will have affected menu items deemed "misbranded" which is a misdemeanor under the Food Drug and Cosmetic Act.  The FDA retains the discretion to hold those with supervisory responsibility, including those who are "responsible individuals" who certify the menu labeling, criminally liable for a misbranding violation.

While the menu labeling rule will most certainly face legal challenges, it’s important for businesses to start planning for the implementation as rule goes into effect on December 1, 2015.  If you need assistance in determining if the menu labeling rule affects your business, please contact our attorneys at Morsel Law.

Avoiding Costly Mistakes For Your Food Business

Unilever PLC, the maker of Hellman's mayonnaise, has sued California startup Hampton Creek Inc. accusing the company of false advertising for calling its eggless spread "mayo".  The consumer products giant is demanding that the maker of Just Mayo change its label and is also seeking compensation for unspecified damages.  The question for food companies is could this costly lawsuit have been avoided?

The FDA regulations state that "mayonnaise" must contain at least 65% oil by weight, vinegar, and egg or egg yolks.  However, Just Mayo doesn’t include eggs, instead it gets its emulsification from vegan pea protein.  Hampton Creek states that it calls its spread "mayo", not "mayonnaise", and therefore argues that it doesn't need to comply with the "mayonnaise" definition.

Unilever also claims that Just Mayo misleads customers who think they are buying actual mayonnaise, not an egg-free spread.  Whether this is true or not will be determined by the courts, however, under Federal law products are “misbranded” if their “labeling is false or misleading in any particular”. See 21 U.S.C. 343.  So how is Just Mayo misleading?  Well, for one, the label for Just Mayo features an egg with a plant growing over it and it refers to its product as "mayo" and mayonnaise" in its marketing materials.  We aren't saying that Just Mayo is "misbranded", again that is for the courts to decide, but food manufacturers should watch this case closely as it may have an impact their business going forward.

Food manufacturers should ensure they thoroughly understand FDA regulations before labeling their products.  This is not only to avoid a false advertising lawsuit, but also to avoid misbranding.  It’s a prohibited act to distribute misbranded products and manufacturers can be subject to FDA enforcement and/or private party lawsuits.  So to address the initial question posed above, whether the lawsuit could have been avoided, would be difficult to determine.  However, food companies may minimize the chances of their products facing a legal challenge by consulting with an attorney familiar with FDA regulations.  

If you need assistance navigating or complying with the laws affecting your food or beverage businesses, please feel free to contact our attorneys at Morsel Law.