Ahead of the Class

Last month, I had the good fortune to participate in the inaugural FoodVision USA, three days of roundtable discussions, engaging presentations and interactive programs in Chicago, IL among the food industry’s movers and shakers. The conversations, debates and seminars challenged how we think today about the food industry, and they foreshadowed the opportunities, risks, rewards and innovations on the horizon for manufacturers and consumers alike. (Attesting to the breadth and quality of topics covered at FoodVision, I should point out that, as a lawyer who is generally uncomfortable in the World of Science, I thoroughly enjoyed Hod Lipson’s (Columbia University) presentation on 3D printing of food! I can’t wait to swap my food processor for a food printer someday.)

Besides that particular futuristic Jetsons-like seminar, five highlights from the engaging programs stand out in particular, from both a food manufacturing and food litigation perspective:

(1) Choose Your Words Wisely: As I wrote this past April, the tsunami of food label lawsuits over the past several years has included: (1) claims that labels allegedly violate the state law equivalents of the federal Food, Drug & Cosmetic Act and/or Food and Drug Administration (FDA) regulations; and (2) claims that labels, while technically legal or unregulated under federal and state law, are allegedly misleading under state consumer protection statutes. Without question, the single most popular claim in the latter category for several years running has been the “natural” label lawsuits alleging that: one or more ingredients or processing phases of a food product rendered it “unnatural”; the plaintiffs supposedly purchased the product in reliance on it being labeled as “natural”; and the consumer allegedly paid a premium for the product’s “natural” attributes or suffered other damages after having purchased it based on its label. After a steady succession of national consumer fraud class actions against food manufacturers with products bearing “natural” labels, many players in the industry started to regard “natural” as a litigation bulls-eye and began jettisoning the term from their packaging and marketing. Some have speculated that “natural” is on its way out the door.

However, the Food and Drug Administration announced earlier this month that it is accepting public comment on the term “natural” in the labeling of food products, including foods that are made from genetically modified ingredients or processing. In its comment request, the FDA pointed out its “longstanding policy” (adopted in 1991) regarding the use of the term “natural” in food labeling: “The FDA has considered the term ‘natural’ to mean that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in that food.” In 1993, the FDA had invited comments on a potential rule defining “natural” but ultimately concluded instead that “whether an ingredient qualif[ies] for use of the term ‘natural’ [will be decided] on a case-by-case basis, rather than a consistent, uniform policy.” As of today, the FDA does not object to the use of the term if the food does not contain added color, artificial flavors or synthetic substances.

In its public comment invitation this month, the FDA has requested general comments on the term “natural” as well as answers to specific questions: (1) Is it appropriate to define the term “natural”?; (2) If it is appropriate to define the term, how should the agency define “natural” and what types of foods should be allowed to bear a “natural” label? For example, should the term apply only to raw agricultural products, single-ingredient foods or unprocessed foods?; (3) Should the agency ban the use of the term “natural” in food labeling?; (4) How should the agency determine the appropriate use of the term “natural” on food labels? The FDA also seeks information on whether consumers associate or are confused by the use of the terms “natural” and “organic” and whether consumers associate the terms “natural” and “healthy.” (https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-28779.pdf ) Public comments are due by February 10, 2016.

In light of this re-igniting of FDA involvement in the “natural” arena, one might reasonably query whether manufacturers might someday resuscitate use of the term on product packaging without fear of litigious repercussions. If there’s a glimmer of hope for either, it’s definitely the former and not the latter. Even if “natural” might fly under the radar one day, other terms will rise to the surface to replace it.

During the October 27 “Fight Out In The Food Court” debate at FoodVision over the tidal wave of consumer fraud product labeling litigation engulfing the food industry, Stephen Gardner, former Director of Litigation at the Center for Science in the Public Interest, predicted that the next phase of class actions will involve “amorphous words like ‘raw.’” In other words (pun intended), yesterday’s “natural” will be tomorrow’s “raw.”

My takeaway from this as counsel for consumer product manufacturers? Use product labeling alternatives to broad terms that are undefined in federal regulations. Talk instead about the attributes of the product (delicious, sweet, etc.), and let them speak for themselves.

(2) Do It Better, Or Don’t Do It: At FoodVision’s October 28 “From Challenger To Brand No. 1” presentation, Peter McGuinness, Chief Marketing Officer for Chobani, commented: “We believe people have great taste. They just need great options.” Mr. McGuinness said the future of food is in DNNA: delicious, nutritious, natural and affordable. “If you can’t do it better, don’t do it,” he said. When Chobani launched in 2007, advisors cautioned against trying to establish tart Greek yogurt within the American market’s palette. Now with the fastest growing platform in the dairy aisle in 2015, Chobani’s entrepreneurial story has cashed in on the risk-reward calculus.

My takeaway from this for food manufacturers? A reminder to stay in tune with the consuming public’s latest taste trends and sourcing interests that are aligned with the company’s values (for Chobani, that included non-GMO, sustainable manufacturing and antibiotic-free milk sourcing) and recognize that, as Mr. McGuinness said, “without risk, there is no reward.” Kevin Klock, CEO of Talking Rain (2015’s Beverage Company of the Year), echoed those sentiments at the October 29 expert panel when he reflected on Talking Rain’s 2010 decision to become a business with an entrepreneurial spirit and remarked that taking risks is important. Within reason, of course. When I asked Mr. Klock about the recent national litigation trends involving beverage companies sued in class actions for employing “healthy” and similar functional-claim labels, Mr. Klock (2014 Pacific Northwest Entrepreneur of the Year) (commented that Talking Rain had made the decision to focus on “the fun and refreshment of beverages, not functional claims.” As a class action defense litigator, I’d say: wise decision. (See, e.g., Benjamin Careathers v. Red Bull North America Inc., No. 1:13-cv-00369 (S.D.N.Y.) (plaintiff alleged company spends millions of dollars misleading customers about the superiority of the “functional beverage” and its ability to “give you wings,” while ignoring reports by The New York Times, the European Food Safety Authority and scientific journal Nutrition Reviews that found energy drinks like Red Bull to have the same benefit as the average dose of caffeine consumed in coffee).

(3) Your Target Market Is Everybody: At FoodVision’s October 28 panel on CEO Innovators, Lifeway Foods’ President and CEO, Julie Smolyansky (), talking about her personal and the company’s core vision: changing the world’s health through food. She described an a-ha moment: in a popular theme park with her family, she found it “sad that I have to bring my own food in order to eat healthy.” With a product focused on offering the health benefits of cultured (fermented) food, Lifeway Foods’ target consumer “is everybody, because everyone wants to lead healthier lives,” she said.

Similarly, Christine Day, CEO of Luvo, described her frustration reading labels of ingredients without nutritional value. So, Ms. Luvo assembled a team of leading chefs to create nutrition-based frozen food under the $5.00 price point. The result? Luvo is now driving 70% of ShopRite’s frozen food aisle.

My takeaway from this for food manufacturers? This one has two.

First, put your company’s science where your customers’ taste buds are. Ms. Smolyansky stated that “you need to have science behind your claims. We’re here to empower and educate consumers to make better choices.” To Ms. Smolyansky’s astute observation, I would add the following as a class action defense litigator: keep impeccable, readily-available records of the science that substantiates your product labels’ claims. So, when the class action storm clouds gather, your company is better positioned to move quickly to produce the evidence needed to take the wind out of plaintiffs’ sails in the early stages of litigation. Don’t wait to argue the law at the class certification phase. Shut the barn doors with claim substantiation documents before the horses even get out.

Second, the good news is that your target market is everybody (i.e., product sale opportunities galore!). The bad news is that your target market is everybody (i.e., innumerable ways for consumers to interpret the labels on your products). What “Reasonable Consumer #1” understands “raw” (e.g., flash frozen and packaged after picking?) to mean might be vary greatly from #2’s interpretation (e.g., no processing and no added ingredients after harvesting?). Keep your company’s marketing and legal departments in constant communication before product launch so that labels can reflect current law in your jurisdiction(s) as to whether certain label terms are or are not fraudulent under governing consumer protection laws and applicable regulations.

Congratulations to FoodVision USA on a tremendously successful 2015 program launch. Comprehensive topical coverage, interactive programs, leading industry innovators. I can’t wait to see what’s on next year’s menu.