U.S. On Verge Of "COOL" War

Those of us born before 1980 probably remember growing up the midst of the Cold War between the United States and Soviet Union. The Cold War ended in 1991, however, the U.S. could find itself facing a trade war, this time with its North American neighbors.

On Monday, the World Trade Organization ("WTO) ruled the U.S. country-of-origin labeling ("COOL") required on certain meat packaging discriminates against livestock from Canada and Mexico. The ruling could lead to retaliatory measures in the form of tariffs on U.S. imports.  Canada and Mexico have both indicated they intend to impose sanctions on U.S. exports as early as late summer.

The labeling law was originally introduced by Congress as part of the 2002 farm bill. The current rules require labels to state, for example, that the animal that produced the meat was "born in Mexico, raised and slaughtered in the United States" or "born, raised and slaughtered in the United States."  Canada and Mexico argued that these labeling requirements caused the prices of their meats to drop because meatpackers don’t want to go through the hassle and expense of segregating imported animals. The WTO report supports this argument, claiming that U.S. regulations, which require meat producers to indicate on retail packaging where each animal was born, raised and slaughtered, give less favorable treatment to imported meat than domestic products.

As a result of the WTO ruling, Congress is now faced with a tough choice: amend or repeal the law, or suffer punitive tariffs on a range of goods. Any amendment needs to be narrowly tailored so that U.S. meat producers are not favored over imports. In 2013 while the dispute was working its way through the WTO, Congress amend the labeling rules, but the WTO stated in their report the amendment did not go far enough. Repealing the law could appease Canada and Mexico and prevent a trade war; however, what message would this send to U.S. consumers? As consumer demand has been increasing over the past several years for transparency in the food supply, by repealing COOL Congress would in effect be telling consumers that U.S. trade interests are more important. How well this would sit with consumers is unknown, but with the 2016 election on the horizon I'm willing to bet legislators are polling their constituents on this issue. If Congress does nothing U.S. exporters will certainly suffer, most likely passing the additional cost onto consumers. But it isn't just additional cost, it's lost jobs. Jobs in the industries affected by the tariffs and jobs that supply those industries. In the stagnant economy in which we live, any action that results in job losses needs to be thoroughly reviewed.

The U.S. Congress is on the clock and the world is watching.  Whatever side you may be on, this is going to be a fight of historic proportions as money continues to pour in from all sides. Stayed tuned for updates as we closely follow this matter.

Food Safety Incidents Can Destroy Businesses

Spring is finally here and summer is just around the corner. As a kid this was my favorite time of the year, besides school ending for summer vacation, it was the season of BBQ's and ice cream. Who doesn't like ice cream? The average American consumes 48 pints of the delicious treat each year and they consume more ice cream during the summer months than the rest of the year combined.   

It is also the favorite time of the year for ice cream makers as they watch their products fly off the shelves. However, not all ice cream makers will be experiencing happiness this summer as some recently were forced to pull their inventories from store shelves. Blue Bell Creameries LP, the maker of Blue Bell Ice Cream, and Jeni's Splendid Ice Creams LLC both recently found traces of Listeria bacteria in their products. In addition to pulling products, both companies have temporarily shut down their plants until they can identify and remedy the problem. These recalls follow fellow Washington based ice cream maker, Snoqualmie Gourmet Ice Cream Inc., who last year removed all its ice creams, gelatos, custards and sorbets from retailers’ shelves after health officials linked two listeria cases at a hospital to tubs of its ice cream.

Listeria is not a laughing matter, in fact it is one of the deadliest food borne pathogens. Listeria is a virulent pathogen that thrives in cool, wet environments, and has previously prompted food companies to shut plants since it is difficult to eradicate even through plant cleanings.

For food producers, a food safety incident can be catastrophic. Not only is it a financial strain on the company, but it can destroy their reputation as consumers lose confidence in their business. A perfect example is the 1993 E. coli outbreak that damaged Jack in the Box's reputation for many years from which they may never fully recover. Plaintiff's lawyers also pick up on food safety incidents like sharks sniffing out blood in the ocean, leading to countless of lawsuits filed on behalf of consumers allegedly injured by the contaminated products.

These incidents demonstrate why food producers must take preventative measures to put place and enforce food safety procedures in their facilities. It is not enough to just have safety procedures in place for the manufacturing process, companies must also address transportation and storage of their products. This is no longer an option as the proposed rules under the Food Safety Modernization Act ("FSMA") focus on the storage and transportation of products, including loading and unloading operations, transportation, packaging and bacterial testing. 

There are many producers, both domestically and abroad, that are not yet prepared for FSMA’s requirements to take effect or for the audits that will be required. Training and preparation for audits and inspections will be the key to success of any program. FSMA is a game changer as this training must be targeted at all levels, from the corporate offices to floor managers. If your food company hasn't already begun the process of implementing the processes and procedures under FSMA it should consider doing so now. The final rules are scheduled to be issued later this year.

Michigan Craft Brewers Beware: FDA Rule May Impact Your Business

Over the past two years Michigan business owners spent considerable time implementing procedures to comply with the health care requirements under the Affordable Care Act (the “Act”). Just when business owners thought they could turn their attention back to doing what they do best (i.e., running their business), regulators issue new requirements, this time targeting the food and beverage industry.

The FDA’s final rule on food labeling (the “Rule”), as required under the Act, provides for nutrition labeling of “standard” menu items for chain restaurants with 20 or more locations and “similar retail food establishments”. Unlike earlier drafts, the final Rule requires chains to also issue caloric information for alcoholic beverages. While the Rule does not specifically apply to breweries, there may be unintended consequences that impact craft brewers, especially those brewers that sell to chain restaurants. Michigan craft breweries should take notice.

Michigan, ranked fifth in the nation, is home to more than 150 craft breweries. Consumer demand for craft brews continues to grow and many national chain restaurants operating in Michigan already carry local craft beers on their menus. Many restaurants rotate their offerings regularly and list the current beer selection on menu boards. While restaurants are ultimately responsible to collect nutritional information on the items they serve, it is unclear whether restaurants would instead place this burden on brewers.

The FDA has noted that restaurants can utilize nutritional databases in order to determine calorie content on the beers they offer, such as the USDA National Nutrient Database for Standard Reference. According to the database, the calorie count for a “typical beer” is 153 calories per 12 oz. serving. But the problem is craft beers are not “typical”. They are full-flavored concoctions which ingredients vary greatly from one brewery to another. Thus, labeling all craft beers 153-calories would clearly be inaccurate.

Under the Rule, businesses must provide an inspector with information substantiating nutrient values, including the method and data used to derive these nutrient levels. A "responsible individual" for the business must certify that the information contained in the nutrient analysis is complete and accurate. So if a restaurant lists a 350 calorie beer as having that 153-calorie count, they run the risk of violating the Rule, especially if they cannot demonstrate they took reasonable steps to ensure the brewery adhered to the 153-calorie count. Failure to comply with the Rule, or if you don't get it right, the menu item will be deemed "misbranded" which is a misdemeanor under the Food Drug and Cosmetic Act. The FDA retains the discretion to hold those "responsible individuals" who certify the menu labeling, criminally liable for a misbranding violation.

Knowing the risk of a potential misbranding violation could lead to restaurants not accepting the standard reference calorie count, forcing brewers to supply nutritional information. Thus, craft brewers may be faced with a choice: either supply calorie counts or take their products elsewhere. But with rumors circulating that the Alcohol Tax & Trade Bureau (the “TTB”) — which is responsible for approving alcohol labels — could look at its own labeling policies and enforce stricter regulations in the near future, even possibly requiring nutritional information on beer labels, craft brewers may need to consider analyzing their beers now. So in the event the TTB follows the FDA’s lead and implements new labeling requirements, brewers will be prepared and know the caloric content of their products.

Craft brewers have long stressed a “drink better, not more” philosophy, unlike the mass-produced beers who have offered low-calorie light brews for decades, so hopefully consumers won’t be deterred by the calorie counts. It may slow cross-over growth, but it won’t stop the momentum. My prediction: calories or not, craft beers are here to stay.

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.

FDA Releases Menu Labeling Guide for Small Businesses

On December 1, 2014, the Food and Drug Administration (“FDA”) 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.

Several months have now past since the rule was finalized and business owners continue to show frustration with the hundreds of pages of legalese they are forced to navigate in order to prepare their companies for its implementation. Thus, in response to this frustration, the FDA has released a Small Entity Compliance Guide, which is intended to restate the rule's requirements in plain language.

The guide provides detailed guidance on many topics, including: types of establishments covered; how to label menus with nutritional information; how to determine calorie content of foods; and the consequences of misbranding. Most importantly, the guide provides visual examples on how to calculate calories when to toppings change on particular menu items, such as ice cream sundaes and pizza. The guide also discusses the food labeling requirements in great detail, including: labeling requirements for standard menu items; formatting requirements for declaring calories; nutritional information; and requirements for food that is self-service or on display.

The rule is scheduled to go into effect on December 1, 2015, therefore it’s important for businesses to start planning for the implementation. Although the guide was meant to make it easier for small businesses to comply, the rule's requirements for determining caloric content and labeling menus are highly detailed and complicated. Therefore, if your small businesses needs assistance in complying with the rule, please contact us at Morsel Law.

Update: Avoiding Costly Mistakes For Your Food Business

In an article I published last fall, the maker of Hellman's mayonnaise sued Hampton Creek Inc., the maker of Just Mayo, accusing the company of false advertising for calling its eggless spread "mayo". But due to the negative publicity Unilever received which painted it as a corporate bully, they eventually dropped the suit. However, Hampton Creek’s worries have not disappeared as they are now facing another legal challenge.

Earlier this month, a class-action lawsuit was filed in Florida state court again stating, among other things, that Just Mayo is misleading and therefore “misbranded” in violation of federal law. Unlike the previous suit, these plaintiffs are also asserting that Hampton Creek violated the Florida Deceptive and Unfair Trade Practices Act, which have more flexible standards than the federal Latham Act (the act under which the previous suit was filed). Considering many legal experts at the time thought Unilever has a strong case, Hampton Creek could be in a bit of trouble this time around. There is no multi-national corporation to launch a campaign against, only consumers who claim they were misled into thinking Just Mayo’s product was actually mayonnaise. Although I’m sure they are working diligently to come up with a strategy to combat their new foes.

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.

The plaintiffs’ claim that Just Mayo misleads customers who think they are buying actual mayonnaise, not an egg-free spread. Under Federal law products are “misbranded” if their “labeling is false or misleading in any particular”. See 21 U.S.C. 343. The plaintiffs’ claim, as one of many reasons, Just Mayo is misleading because the label for features an egg with a plant growing over it and it refers to its product as "mayo" and “mayonnaise" in its marketing materials. Again, this is up for the court to decide and so only time will demonstrate whether this argument is a correct interpretation of the law.

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. 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.

The Fight is On: Congress Considers GMO Labeling

On Tuesday, the House Agricultural Committee conducted a hearing aimed at examining the costs and impacts of mandatory GMO labeling laws. If passed, it would create a federal law that would require manufacturers to label all genetically engineered foods and any food products that contain genetically engineered ingredients.

The Genetically Engineered Food Right-to-Know Act, introduced by Rep. Peter DeFazio (D-Ore.) in the House and by Sen. Barbara Boxer (D-Calif.) in the Senate, would direct the FDA to enforce the new rule. However, some industry groups would rather have a federal solution than a federal mandate. These industry groups, including the Grocery Manufacturers Association and the Snack Food Association, seek a federal solution of voluntary labeling that preempts state laws that require mandatory labeling, claiming that complying with a patchwork of state laws would dramatically increase costs for manufacturers and consumers. Whether this is true or not is up for debate.

In response to the Right-to-Know Act and supported by industry groups, a bipartisan bill was introduced on Wednesday by Rep. Mike Pompeo (R-Kan.) and Rep G.K. Butterfield (D-N.C.) that would bar states from requiring the labeling of foods derived from genetically-modified organisms. The proposed legislation would set up, as an alternative, a U.S. labeling program that would certify foods that are free of genetically modified organisms. But the program would be voluntary, and does not require genetically-modified foods to be labeled. Thus, it would preempt state laws requiring mandatory GMO labeling (i.e., Vermont, Maine and Connecticut).

Currently, the FDA currently supports voluntary labeling in which food manufacturers indicate whether their products have or have not been developed through genetic engineering “provided such labeling is truthful and not misleading.” Which, in lay terms, means no federal requirement for GMO labeling exists.

Whatever side you may be on, this is going to be a fight of historic proportions as money continues to pour in from both sides. Stayed tuned for updates as we closely follow these bills while they make their way through the legislative process.

New York Passes GMO Labeling Bill

On March 3, 2015, the New York State Assembly Committee on Consumer Affairs and Protection voted to pass bill which would require all food made with genetically modified organisms ("GMOs") to state the presence of GMOs on their label.

The bill would require labeling for raw agricultural commodities, processed foods, seed and seed stock produced with genetic engineering.   Under this proposed law, any food for human consumption, seed or seed stock offered for retail sale in New York is misbranded if it is entirely genetically engineered or partially produced with genetic engineering and that fact is not clearly and conspicuously disclosed on the product’s packaging.  Fines for misbranding are a civil penalty of not more than $1000 per day, per product.

Any person, firm, corporation, or other legal entity may be held responsible for false labels and misrepresentations, but retailers are not subject to penalties unless: (a) the retailer is the manufacturer of the GMO raw agricultural commodity, processed food, seed, or seed stock and sells the GMO product under a brand it owns; or (b) the retailer’s failure to label was knowing and willful.

However, there are various exemptions for misbranding built into the bill.  For example, food consisting entirely of, or derived entirely from, an animal that has not itself been produced with genetic engineering does not need to be labeled as GMO, regardless of whether the animal was fed with any food produced with genetic engineering.

Other exemptions include:  products that were grown, raised, produced, or derived without the knowing and intentional use of GMO seed or food if the manufacturer provides a written statement in support of this lack of knowledge and intent; alcoholic beverages that are subject to regulation by the Alcoholic Beverage Control Law; food that has been lawfully certified to be labeled, marketed, and offered for sale as “organic”; and food that is served, sold, or otherwise provided in any restaurant, food facility, or food retailer that is engaged in the sale of food prepared and intended for immediate human consumption.

This proposed statute bears a striking similarity to the statewide GMO labeling bill rejected by California lawmakers in 2014, with nearly identical definitions and safe harbor exemptions.  Unlike the proposed California law, however, New York would enforce the law through civil penalties issued by the State Department of Agriculture and markets rather than through an injunction sought by the state Attorney General to stop continued violations of the law.  Further, unlike Connecticut and Maine’s GMO-labeling laws, New York’s proposed law does not have a triggering requirement based on when a certain number of states approve related legislation.

If passed, New York’s GMO labeling law would take effect twenty-four months after it becomes law. New York would be the fourth state to approve a GMO-labeling law, which would then trigger Connecticut and Maine’s related laws.  New York’s GMO labeling law, however, will likely face legal challenges similar to the lawsuit filed by the Grocery Manufacturers Association seeking to rescind Vermont’s GMO-labeling statute.

Stay turned for further updates as the bill makes it way through the New York state assembly.

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.

Nature Valley Isn't Natural Anymore

General Mills Inc., the maker of Nature Valley, agreed to keep the phrase "100% natural" off of its food products as part of legal settlement with several consumers and advocacy groups.  In doing so, General Mills follows a string of other food companies, including Trader Joe's, Kashi and PepsiCo, that have agreed to settle similar cases without admitting liability to avoid further litigation costs. The real issue here is whether General Mills violated the law?  Well, under the current FDA regulations it appears they didn't.

Up to this point the FDA has refused to define the term "natural", but has noted on an informal statement support for the policy that "nothing artificial or synthetic is included in, or has been added to, the product that would not be expected to be there."  58 Fed. Reg. 2302, 2407 (Jan. 6, 1993).  The USDA, however, has defined "natural" (when applied to meat, poultry or eggs) as a product containing no artificial ingredient or added color and is only minimally processed.  "Minimally processed" means that the product was processed in a manner that does not fundamentally alter the product.

The Food Labeling Modernization Act would prohibit the use of the word "natural" on a food that includes any synthesized ingredient, or any ingredient that has undergone chemical changes such as corn syrup, high-fructose corn syrup, high-maltose corn syrup, maltodextrin, chemically modified food starch, or alkalized cocoa.  The bill also calls on the FDA to develop a more encompassing definition of natural.

Here, the plaintiffs accused General Mills of making misleading statements by marketing Nature Valley products as natural when they contained genetically modified and processed ingredients. Under the terms of the settlement, General Mills agreed not to use the "100% natural" claim for products that include processed ingredients, including corn syrup and the food additive maltodextrin. The settlement also prohibits the company from using the phrase on products that contain more than a trace amount of genetically modified ingredients.  Interesting to note, new packages for Nature Valley granola bars now have a stamp that claims "made with 100% natural oats".

Labeling and marketing your food product to comply with state and federal regulations is a difficult and time consuming process.  If you need assistance in either of these regulatory areas please contact our attorneys at Morsel Law.

Calories...Ready or Not, Here They Are!

On Tuesday, the FDA announced sweeping rules that will require chain restaurants, movies theaters, pizza parlors, vending machines, amusement parks, convenience stores, bakeries and the prepared foods sold inside many grocery stores across the country to post calorie counts on their menus. The menu labeling final rules go into effect one year from now and applies to restaurants and retail food establishments if they are part of a chain of 20 or more locations, doing business under the same name and offering for sale substantially the same menu items.

If you are a small business owner these new rules will have a significant impact on your operations. What it means is that calorie counts will have to be displayed for popcorn at a theater, food from a salad bar, hot dogs from a convenience store and takeout pizza. In addition, vending-machine operators with at least 20 locations also will be required to post calorie counts.

Calorie information also will be required for some alcoholic beverages served in bars and restaurants. This would apply to beverages listed on menus and menu boards, however, this would not apply to mixed drinks ordered at the bar. Craft brewers should take notice. Even if the rules may not directly affect beer manufacturers, those that sell their brews to chain retailers may be forced to supply calorie counts or take their products elsewhere.

While the purpose behind these rules are to combat obesity in America, where over one-third of meals are consumed outside the home, the effect is to burden retailers with significant compliance costs. Retailers are now faced with the choice of passing this additional cost onto the consumer or eliminating certain products from their menus. While not an easy decision for businesses to make, non-compliance can lead to legal action by the FDA.

If you need assistance to determine the affect of the FDA rules on your business, please feel free to 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.

"Gluten-Free" Must Now Be Gluten-Free

After a year of phasing in compliance, the Food and Drug Administration now requires any food labeled “gluten-free,” to contain no more than 20-parts per million of gluten, which is the lowest level detectable in food and one that would generally be acceptable even for those who suffer extreme gluten-intolerance health problems. The rule also holds foods labeled “without gluten,” “free of gluten,” and “no gluten” to the same standard.  The rule also brings the United States in line with international labeling standards that are employed across Europe and other parts of the world.

Products must not contain any wheat, barley or hybrids, or be derived from a gluten-containing grain that has not been processed to remove gluten.  However, some products that are labeled "gluten-free" that have levels above the defined levels of acceptability for gluten-free products may still be allowed to remain on shelves for the next six months to a year as the ban isn’t retroactive.  While the FDA has insisted that companies phase out above-acceptable levels of gluten in their gluten-free products, those with long shelf-lives, like pasta, may remain on shelves.

The FDA will engage in additional rulemaking to establish how it will determine compliance for hydrolyzed and fermented foods (e.g., yogurt, sauerkraut, hydrolyzed protein) because the current methods cannot quantify gluten in these foods.  In the meantime, hydrolyzed and fermented foods that meet the definition of "gluten-free" may bear a gluten free claim.  The FDA will exercise enforcement discretion to beer that currently makes a “gluten-free” claim and that are (a) made from a non-gluten-containing grain or (b) made from a gluten-containing grain, where the beer has been subject to processing that the manufacturer has determined will remove gluten.  This enforcement discretion pertains only to beers subject to FDA’s jurisdiction and that were making a "gluten-free" claim as of August 5, 2013. Please note that the FDA regulates non-malt beers (beers made without malted barley or hops).

The effective compliance date of the rule is August 5, 2014.  Products labeled prior to the compliance date that bear the claim “gluten-free” will not be subject to regulatory action by FDA.  However, any product labeled by the manufacturer on or after August 5, 2014, bearing a “gluten-free” labeling claim that does not comply with the definition will be subject to regulatory action.  The "gluten-free" final rule applies only to packaged foods, the FDA expects restaurants that use “gluten-free” on their menus are consistent with the federal definition; however, the final rule does obligate restaurants to be in compliance.  

If you need assistance to determine whether your food product is in compliance with the FDA labeling requirements, please contact the attorneys at Morsel Law.

Is My Product Organic or Natural?

As the natural and organic market continues to gain strength, with sales topping $81 billion in 2012, businesses are striving to meet consumer demand.  However, for businesses that are entering this sector in hopes of capturing some of the market share, understanding the difference between labeling your product as "organic" and "natural" is essential to ensure you don't run afoul of federal regulators.

All agriculture products sold, labeled or represented as organic need to be in compliance with the Organic Foods Production Act of 1990 (the "Act").  Pursuant to the regulations promulgated by the Act, organic growers and handlers (including food processors and distributors) must be certified by state or private agencies/organizations under the uniform standards developed by the USDA; however, farmers and handlers who sell less than $5,000 of organic products per year, and retail food establishments that sell organic products but do not process them, are exempt from certification.  In order to label your product as "organic" at least 95% of the contents need to be certified organic.  Products labeled as "made with organic" ingredients must contain at least 70% organically produced ingredients.  Obviously, if you label your product "100% organic" it must be true.  The USDA organic seal may be used only on products that are "100% organic" or "organic".  Fines of up to $11,000 per violation can be levied against any person who knowingly sells or labels a product as organic that is not produced in accordance with the regulations.

Now labeling your product as"natural" is a whole different story.  Up to this point the FDA has refused to define the term "natural", but has noted on an informal statement support for the policy that "nothing artificial or synthetic is included in, or has been added to, the product that would not be expected to be there."  58 Fed. Reg. 2302, 2407 (Jan. 6, 1993).  The USDA, however, has defined "natural" (when applied to meat, poultry or eggs) as a product containing no artificial ingredient or added color and is only minimally processed.  "Minimally processed" means that the product was processed in a manner that does not fundamentally alter the product.  Although there has been much litigation concerning natural labeling, there is no clear standard under the 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.