FDA Approves Peanut Allergy Prevention Claims on Baby Food Labels

It’s now recommended to introduce peanuts to young infants.

FDA has announced that companies will be able to label baby food products with advice about how the early introduction of peanuts in an infant’s diet may reduce the risk of developing a peanut allergy. This marks the first time the FDA has permitted a qualified health claim of food allergy prevention. These labels will be allowed on foods containing ground peanuts suitable for infant consumption, but not whole peanuts, which may be a choking hazard for young children.

The full story can be found here.

If you have questions about FDA labeling regulations, contact our attorneys at Morsel Law.

Your Organic Food May Not Be Organic

The USDA’s Inspector General recently released its annual report on the National Organic Program (NOP). The report found widespread problems with the NOP that could result in “reduced U.S. consumer confidence in the integrity of organic products imported into the United States.” The report cites the USDA’s Agricultural Marketing Service’s (AMS) failure to reconcile organic standards between different countries, verify documents at U.S. ports of entry and conduct mandatory audits of major exporters.

In visits to seven U.S. ports of entry, the IG found produce shipments of all kinds are fumigated at the border to prevent pests from entering the country. That practice, according to the IG, runs counter to the assurance U.S. consumers get from the NOP that “foreign agricultural products maintain their organic integrity from farm to table.” The IG recommends that the NOP come up with performance measures for timely audits and suggests adoption of a schedule to review each participating country every two years.

The failure of the AMS to do their job is inviting trouble. Food fraud is big business and will probably be even more so after this report is shared across the globe. If a farmer can sell his non-organic wheat as organic for twice the price, he might consider it, or he might not. But what about a wholesale broker run by a criminal enterprise looking for new sources of income, would they think twice about reclassifying products as organic to make more profit? Probably not.

Hopefully the IG report will lead to significant changes for the NOP, but in the meantime consumers should be vigilant about identifying the source of their organic foods. Maybe you’ll think twice about spending extra money on organic food that probably isn’t organic.

If you have questions about products labeling, contact our attorneys at Morsel Law.

Label Reviews Are Critical For Food Importers

I previously posted a similar article discussing the importance of label reviews for domestic produced products here. But a recent event reminded me to reiterate the importance of accurate labeling, especially for food importers. Non-compliant labels can cost you time, money and even your relationship with customers.

A few weeks ago, JFC International Inc. issued a voluntary recall for rice seasoning products shipped to the United States. Apparently, the recall was initiated after the company discovered the product was not labeled in English, which is required under U.S. law. Also, because the label was not in English, it is deemed to have failed to disclose allergens contained in the ingredients. Important to point out is that this isn’t JFC International Inc.’s first time being involved with a recall event; they issued a similar recall in 2016 for failing to label in English and undeclared allergens.

This event is an important illustration of how important it is to review your labels prior to shipping your products to the United States. First, one of the most common misbranding mistakes for imports is failure to label in English. This seems like a simple fix, but you would be surprised how often this occurs. Importers should require the shipper to forward a copy of the label prior to shipping to confirm compliance with U.S. law. Now this won’t stop mistakes by workers at the warehouse who load the EU labeled products onto a pallet instead of the U.S. bound product, but if you include language in your contract that makes the shipper responsible for all costs to correct the misbranding in the event the wrong product labels are attached, they will quickly change their quality control practices. This is especially true for shippers who have had to foot the bill after a container is stopped by U.S. Customs.

Second, does a voluntary recall trigger coverage under your product recall insurance policy? Generally, coverage isn’t triggered unless there is an “actual” contamination, which is usually proved by product testing or other evidence. For JCF International, if the recall was initiated for misbranding due to failure to label their products in English, the coverage would be denied. However, because the product contained “actual” allergens, then coverage would probably be triggered. But if the product didn’t contain allergens, then coverage would be denied. Even if the product didn’t contain allergens the company would still need to recall the product because it is still considered misbranded and in violation of the FDC Act, but the recall would potentially result is significant non-reimbursable expenses.

Most food label misbranding violations can be prevented through quality control measures. Importers should, if they have not already, institute best practices to minimize the risk of a potential violation that result in having to respond to FDA Notice of Action letter. These practices should also address who bears the cost and burden to deal with a misbranding violation. Prior planning can help ensure your business identifies and minimizes potential risks commonly associated with the food import industry.

If you have questions about labeling, contact our attorneys at Morsel Law.

KIND Petitions FDA: Should Investors Lose Confidence in General Counsel?

In a previous article I discussed how important it is for food businesses to conduct an in-depth label review prior to launching new products. Specifically, I addressed the FDA Warning Letter issued to KIND LLC and pointed out how costly labeling mistakes can be, especially when the risk could have easily been mitigated. In their response to FDA, KIND agreed to correct most of the technical errors noted in the letter; however, when it comes to changing their view of what foods are allowed to label themselves as “healthy” they don’t agree with what they refer to as “outdated” regulations.

In a citizen petition letter (“Petition Letter”) sent to FDA last week, KIND’s general counsel, Justin Mervis, notes that under current regulations “whether or not a food can be labeled “healthy” is based on specific nutrient levels in the food rather than its overall nutrition quality.” KIND then goes on to claim that new scientific evidence no longer supports this view and that, accordingly, FDA amend 21 C.F.R. 101.65(d)(2) in regards to nutritional content claims so that manufacturers may use the term “healthy” without regard to the total fat or saturated fat, if the source of such fat comes from fruits, vegetables, nuts, seeds, legumes, whole grains or seafood, provided that “such foods are used in their whole form or have been processed in such a way that did not materially degrade their nutritional value.”

While the Petition Letter makes several other recommendations, the majority of the Petition Letter is devoted to the argument that there is a disconnect between the Dietary Guidelines and what claims manufacturers are permitted to state on their labels. KIND argues that manufacturers should be permitted to make claims on their products labels (e.g., “nuts are part of a healthy diet”) that are consistent with federal dietary recommendations and current scientific evidence. As such, KIND goes on to request the FDA “undertake rulemaking to define a “dietary guidance statement” as a statement in food labeling about the usefulness of a food, or a category of foods, in maintaining healthy dietary practices.” The requested rule would permit claims on food labels to communicate that certain foods are useful in creating a diet that is consistent with current dietary recommendations, so long as those claims are not misleading.

While it isn’t a secret that food regulations, in some part, have become “outdated”, what makes KIND’s petition interesting is it comes after being caught violating the same regulations they are petitioning to amend. The real question is whether KIND knew their product labels were non-compliant when released into the marketplace or did they make a business decision to move forward with non-compliant labels in order to promote their “healthy” marketing campaign. While the saying “it’s better to ask for forgiveness then to ask for permission” may apply in certain situations, it’s probably not the best strategy when it comes to breaking federal law.

The role of the general counsel is to advise executive leaders on the state of the law, how certain laws affect their business and to provide pertinent information and/or legal advice to such leaders so they have the ability to make informed decisions. The general counsel is not required to be an expert in the industry in which their client operates (although it certainly helps); however, they should know the limits of their expertise and, when appropriate, bring in outside assistance with such expertise. If they don’t know their limits, or can’t identify potential legal issues outside their expertise, then their departure should be swift. After all what good is legal counsel if leaders are not able to rely on their advice?

It isn’t clear whether KIND made the decision to market their products with non-compliant labels, but if they did the general counsel shouldn’t take the blame. However, it took KIND six months to file their Petition Letter which leads me to believe the labeling violations occurred not because of a strategic business decision, but due to the lack of regulatory expertise and oversight from the general counsel’s office. If my presumption is correct, investors should demand answers and push for changes in the executive suite. These violations have resulted in significant expense revising labels, advertising and websites, in addition to substantial legal fees incurred responding to the Warning Letter and submitting the Petition Letter, and most recently defending consumer lawsuits. While attorneys play a significant role in advising businesses, legal fees cannot be entirely avoided; however, they can be efficiently managed. It is up to KIND’s investors to decide whether their capital in this situation was well-spent.

FDA Issues Another Blow to Maker of Just Mayo

Earlier this year, Hampton Creek Inc., the maker of Just Mayo, was sued by Unilever, the maker of Hellman’s mayonnaise, and accused of false advertising for calling its egg-less spread “mayo”. Even though experts thought the claims were strong, the case was eventually dropped due to the negative publicity Unilever received which painted it as a corporate bully. As mentioned in an earlier article, a class-action lawsuit was filed against Hampton Creek in Florida state court asserting similar claims, but this time by consumers who claim they were misled into thinking Just Mayo’s product was actually mayonnaise.

Well, unfortunately for Hampton Creek, the third time isn’t a charm. This time the feds are knocking on their door. On August 12th, FDA issued a warning letter to Hampton Creek citing various violations of the Federal Food, Drug and Cosmetic Act (the “FDC Act”) by their Just Mayo and Just Mayo Sriracha products. The warning letter specifically notes that both products make “cholesterol free” nutrient content claims on their labels (and website), but don’t include a statement that discloses the level of total fat in a serving of the product in immediate proximity to the cholesterol claims, which is a violation of the applicable regulations. The letter also notes both products make unauthorized health claims on their labels (and website) by implying that the products can reduce the risk of heart disease due to the absence of cholesterol. Under federal regulations (see 21 C.F.R. 101.14(a)(4)), a food is disqualified from making health claims if the food contains more than 13 grams of total fat per 50 grams. Both Just Mayo and Just Mayo Sriracha contain 36 grams of fat per 50 grams.

But the biggest blow is one that will set up plaintiffs for successful consumer protection lawsuits. Just like the accusations made by Unilever and the Florida consumer in their complaints, the FDA notes that because neither the Just Mayo and Just Mayo Sriracha products contain eggs, they don’t meet the definition of “mayonnaise” under the regulations (see 21 C.F.R. 169.140(c)), and thus are misbranded under the FDC Act. While the FDA goes on to list several additional labeling violations in the warning letter, this could be the most detrimental to Hampton Creek’s core business.

Many recent lawsuits have relied on FDA warning letters as evidence to support a claim that a manufacturer violated state and/or federal law and, in many instances, the plaintiffs have been successful. 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 lawsuits against Hampton Creek could have been avoided is difficult to determine. However, what I can say for certain is this warning letter is sure to bring additional lawsuits. So I hope for Hampton Creek’s sake they take the time to focus their attention internally and resolve the issues that could have easily been avoided by conducting a thorough regulatory review.

As mentioned above, 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.

Update: Ag Committee Passes Bill to Repeal COOL

The Agriculture Committee of the U.S. House of Representatives voted 38 to 6 to approve HR. 2393, a bill that would repeal Country of Origin Labeling (COOL) requirements for beef, pork and chicken products, while leaving intact the requirements for all other covered commodities, such as seafood and shellfish. This move comes just two days after the World Trade Organization (WTO) ruled against parts of the COOL law, a requirement that labels tell consumers what countries the meat is from: for example, “born in Canada, raised and slaughtered in the United States” or “born, raised and slaughtered in the United States.”

House Agriculture Committee Chairman Mike Conaway, R-Texas, a long-time supporter of the meat industry, stated “[w]e cannot sit back and let American businesses be held hostage to the desires of a small minority who refuse to acknowledge that the battle is lost.” But other congressmen don’t believe swift and immediate action is the way to react. Rep. Collin Peterson, D-Minnesota, ranking member on the Agriculture Committee, stated “I’m disappointed that the WTO ruled against the United States, but I think repealing COOL is premature…there are still several steps that have to occur before [retaliation from Canada and Mexico] would take place.”

What is interesting is how quickly Congress reacted to the WTO ruling, an international trade body with no input from American citizens. As mentioned in an earlier article, consumers are demanding increased transparency in the food supply, especially when it comes to knowing where their meat comes from. Moreover, more than 60 other countries have mandatory labeling requirements, including the European Union which requires indication of the country of birth, fattening and slaughter. Although the U.S. and EU laws are different, it is possible for Congress to review similar meat labeling laws and determine whether their is a suitable alternative to repealing the law outright. This may take some time, but it is better to get it right than to do it quick.

Congress is supposed to represent the people, not special interest groups; however, in passing this bill through committee it sends the message that their campaign donors are more important than voters. Time will only tell whether this bill goes anywhere, but I hope voters take notice and remember in November.

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 and post updates to our blog.

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.

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.