9:30 am October 3, 2019 Claim Substantiation: Unwrapping ...€¦ · • NEVER permitted for foods -- claims that express or imply a food is useful in diagnosing, curing, mitigating,

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Food & Beverage Litigation, Compliance & Regulatory Exchange

9:30 am October 3, 2019

Claim Substantiation:

Unwrapping Leading Food & Beverage Advertising Claims

David Forkner, Partner

Andrea M. Bruce, Assistant General Counsel, the Hershey Company


Claim Substantiation: A Rough Roadmap for Out Time Together Today

• Categorizing my claim—what type of claim am I making?

• So many types, so little time

• What kind of substantiation do I need?

• What’s the applicable standard?

• What should I have in hand?

• What questions should I ask?

• What’s getting attention from the consumer class action bar?


Claim Substantiation: Why it Matters

• Loss of customer confidence

• Loss of government confidence

• Fines/lawsuits/enforcement

• Product Recalls

• Loss of Stock price and market share

• Example: Blue Buffalo/Purina lawsuit


Nutrition & Health Attributes: FDA Authorization Required for These Claims

• Nutrient Content Claims (21 CFR 101.13)• Claims that expressly or by implication characterize the level of a nutrient of the type required in nutrition labeling

• E.g., “sodium free”; “low sugar”; “rich in antioxidants”; “healthy”

• Health Claims (21 CFR 101.14)• Claims that characterize the relationship between a substance in a food and a reduced risk of disease or other health-related condition; to approve FDA must conclude there

is “significant scientific agreement” (SSA)

• E.g., “Diets low in sodium may reduce the risk of high blood pressure, a disease associated with many factors.”

• Qualified Health Claims (see Pearson v. Shalala, 164 F.3d 650 (DC Cir 1999)) • Supportive evidence available but does not rise to the level of SSA

• FDA permits the claim with qualifying language designed to tailor the claim to the underlying science

• E.g., “Consuming EPA and DHA combined may help lower blood pressure in the general population and reduce the risk of hypertension. However, FDA has concluded that the evidence is inconsistent and inconclusive. One serving of x provides y grams of EPA and DHA.”

• FDAMA Health & Nutrient Content Claims (FDA Modernization Act) • FDA Modernization Act of 1997 amended FFDA to permit nutrient content and health claims based on statements by “authoritative bodies”

• Notify FDA of authoritative statement and associated proposed claim; FDA has 120 days to reject

• E.g., whole grain foods and the risk of heart disease and certain cancers

• NEVER permitted for foods -- claims that express or imply a food is useful in diagnosing, curing, mitigating, treating or preventing a disease or health-related condition, aka, “drug claims”, e.g., “CBD has been linked to the effective treatment of Alzheimer’s disease” (Curaleaf Warning Letter, 7/22/2019)


FDA Preauthorization Not Required for These Claims But Definition or Guidance in Place

• Structure/function (21 USC 321(g)(C)): claims that a food or constituent in a food supports the healthy body or normal functioning of the healthy body

• Gluten Free (21 CFR 101.91): no wheat, rye, barley or cross-breeds, no derivatives of same unless processed to remove gluten, and any residual gluten or gluten due to cross-contamination not greater than 20 ppm

• Fresh (21 CFR 101.95): context dependent; when used in a context that implies a food is unprocessed, the food must be in its raw state and not been subject to any form of thermal processing or preservation (limited exceptions)

• Amount or percentage claims for nutrients (21 CFR 101.13(i))

• E.g., 5 g sugar per serving

• Whole grain content (still in draft form! https://www.fda.gov/regulatory-information/search-fda-guidance-documents/draft-guidance-industry-and-fda-staff-whole-grain-label-statements)

• What’s a grain, what’s not; what’s a whole grain; what does “100% whole grain” mean?

• Genetically engineered/bioengineered

• Voluntary statements that a food has or has not been derived from GE plants; recommends against use of “GMO-free”; does not define Non-GMO/Non-GE

• https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-voluntary-labeling-indicating-whether-foods-have-or-have-not-been-derived

• Natural

• FDA’s 1993 Policy Statement: Nothing artificial or synthetic (including all color additives regardless of source) has been added or included in the food that would not normally be expected to be there. See 56 Fed. Reg. 60421, 60466 (1991)

• Organic

• USDA’s bailiwick

• Well-defined and established; see https://www.ams.usda.gov/about-ams/programs-offices/national-organic-program

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/draft-guidance-industry-and-fda-staff-whole-grain-label-statements

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-voluntary-labeling-indicating-whether-foods-have-or-have-not-been-derived

https://www.ams.usda.gov/about-ams/programs-offices/national-organic-program


Not Defined by FDA(just a smattering)

• Made with Real Butter (or any other ingredient)

• Made with Old Fashioned Farmer Values

• Pure, 100% Pure

• Wholesome

• Simple

• Clean

• Keto Friendly

• X g Net Carbs

• Soy Free, Dairy Free

• No Artificial Flavors, Colors, Preservatives

• Vegan

• Pasture-based

• Humanely raised

• Real Food

• Plant-Based

• Raw


What Kind of Substantiation Do I Need? How Much Do I Need?

• What kind of claim are you making?

• If FDA authorization required, FDA sets the bar. Follow it.

• For nutrient content claims, check for possible required disclosures or qualifying statements (e.g., 21 CFR 101.13(g) and other specific requirements for the claim at issue, e.g., not a low calorie food” on products highlighted as “sugar free”).

• For health claims, ensure product satisfies “jelly-bean rule” (21 CFR 101.14(e)(6)) and does not exceed disqualifying levels of “bad” nutrients (21 CFR 101.14(a)(4)).

• For qualified health claims and FDAMA claims, read FDA’s authorization letter completely and carefully.

• If FDA has provided guidance, best to follow it . . .

• For structure/function claims, FDA wants “competent and reliable scientific evidence.” See https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-substantiation-dietary-supplement-claims-made-under-section-403r-6-federal-food and FTC discussion infra.

• FDA expects all other claims to be truthful and not misleading (21 USC 343(a)).

• Disclose material facts/avoid material omissions.

• Pay attention to statements of identity, i.e., the product name.

• In absence of FDA definition/guidance, many turn to 3rd party certification marks. Ensure independence & distinctiveness.

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-substantiation-dietary-supplement-claims-made-under-section-403r-6-federal-food


Other Relevant

Standards(aka, FDA is not the only

source of substantive guidance)

• Federal Trade Commission

• National Advertising Division (NAD)

• Competitors (Lanham Act)

• Putative Consumer Class Actions (state consumer protection statutes)

• State Attorneys General


FTC: Some Details• FTC & The Law:

• Sections 5, 12 and 15 of the FTCA prohibit “unfair and deceptive acts and practices” as well as “false advertising” that is “misleading in a material respect.”

• Jurisdiction overlaps with FDA but focus on advertising, not labeling.

• Expects advertising to be “truthful and not misleading” and advertisers to have substantiation before claim is made.

• Deception occurs when representation (or omission) is material and likely to mislead the consumer acting reasonably under the circumstances.

• And that means?

• For health-related claims have “competent and reliable scientific evidence” defined as “tests, analyses, research studies conducted in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.”

• Courts seem to have rejected FTC’s attempt to create a de facto minimum of two (2) double blind, placebo-controlled studies in all instances

• Competent and reliable scientific evidence remains a flexible standard

• For everything else, have a “reasonable basis”

• Tips?

• Consider both implied and express claims; evaluate “net impression.”

• Need qualifying information to cure potential misimpression? Consider prominence, presentation and placement.

• Ignore what FDA has said (or not said) at your peril! See https://www.ftc.gov/public-statements/1994/05/enforcement-policy-statement-food-advertising; https://www.ftc.gov/news-events/press-releases/2019/07/ftc-approves-stipulated-order-settling-charges-against-gerber

• The science must fit your claim! Watch out for exaggeration, mischaracterization of certainty or results.

• What your social media influencers say counts!

• “Made in USA” claims getting attention (and thought from FTC https://www.ftc.gov/news-events/events-calendar/made-usa-ftc-workshop).

• Making environmental claims? Relying on 3rd party certifications? FTC’s Green Guides: https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguides.pdf

https://www.ftc.gov/public-statements/1994/05/enforcement-policy-statement-food-advertising

https://www.ftc.gov/news-events/press-releases/2019/07/ftc-approves-stipulated-order-settling-charges-against-gerber

https://www.ftc.gov/news-events/events-calendar/made-usa-ftc-workshop

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguides.pdf


Other Considerations

• NAD: Self-regulatory, efficient. In general, FTC standards applied.

• Lanham Act:

• The Law: Section 43(a) of the Act prohibits misrepresentations of “the nature, characteristics, qualities, or

geographic origin of . . . goods, services, or commercial activities.” (15 USC § 1125(a))

• No cause of action for consumers, just business competitors.

• Requires false or misleading statement with capacity to result in material deception; monetary damages

require proof of actual consumer reliance.

• Putative Consumer Class Actions (the main event!)

• In general, state consumer protection statutes require plaintiff to show material false or misleading

representation that the plaintiff relied on to her detriment

• For health-related benefit claims, courts typically do not recognize cause of action for lack of

substantiation; defendant’s failure to possess adequate substantiation not actionable standing alone; must

allege facts supporting actual falsity (although outside CA some courts may permit lack of substantiation

challenges to establishment claims). See e.g., Kwan v. SanMedica Int’l LLC, 854 F.3d 1088 (9th Cir. 2017);

Engel v. Novex Biotech, LLC, 689 Fed. App’x 510 (9th Cir. 2017).


Recent Trends in

Consumer Class Actions

• Acids and Acidulants

• Sugar & Health Claims

• Characterizing Flavors

• Socially Conscious Litigation

• New Plaintiffs’ Mechanisms


Recent Trends – New Take on Natural

• Flavoring Claims

• Fruit juice labeled “no artificial flavors” includes malic and fumaric acid. Class partially certified. Hilsley et al. v. Ocean Spray Cranberries Inc. et al., 3:17-cv-02335 (S.D. Cal.).

• Throat drops labeled as “naturally soothing” contain malic acid and ascorbic acid. Comfort v. Ricola USA Inc., 6:19-cv-06089 (W.D.N.Y.).

• SweetTarts labeled “no artificial flavors” contain malic acid. Settlement terms include changing labeling. Littlejohn v. Ferrara Candy Co., 3:18-cv-00658 (S.D. Cal.).

• Preservative Claims • Capri Sun juice advertised as containing “no preservatives” when in fact it contains citric acid.

Tarzian et al. v. Kraft Heinz Food Co.,1:18-cv-07148 (N.D. Ill.).

• Putative class claims “no preservatives” representations deceptive because Arizona beverages contain citric acid and/or ascorbic acid. Kubilius et al. v. Arizona Beverage Co. LLC, 1:18-cv-09075 (S.D.N.Y.).


Recent Trends – Sugar & Health Claims

Sugar Litigation

• Plaintiffs claim Clif bar labeling and packaging “convey[s] a health and wellness

message that is deceptive due to the amount of sugar in Clif bars, which can be

detrimental to health. Motion to dismiss denied August 2019. Milan et al. v. Clif Bar &

Co., 3:18-cv-02354 (N.D. Cal.).

• Plaintiffs claim belVita breakfast bars are specifically markets towards consumers

“who have health and wellness in mind,” have a high level of added sugar.

McMorrow v. Mondelez Int’l, 3:17-cv-02327 (S.D. Cal.)

• In August 2019, General Mills successfully won dismissal of putative class action

accusing the company of misrepresenting sugary cereals and bars with sugar as

healthy, ruling that the product label discloses the exact amount of sugar that they

contain. Truxel et al. v. General Mills Sales, Inc. 4:16-cv-04957 (N.D. Cal.)


Recent Trends – Characterizing Flavors

• Vanilla

• Vanilla ice cream - Charles et al. v. Friendly’s Mf’g & Retail, 1:19-cv-06571 (S.D.N.Y.).

• Vanilla oatmeal - Howard Haut v. Glanbia Performance Nutrition, 1:19-cv-04566 (E.D.N.Y.).

• Vanilla almond milk - Cicciarella et al. v. Califia Farms LLC, 7:19-cv-08785, (S.D.N.Y.).

• White Chocolate

• White Chocolate Macadamia Nut Clif Bar - Joslin et al. v. Clif Bar & Co., 4:18-cv-04941 (N.D. Cal.

Aug. 26, 2019) (dismissed without prejudice in August 2019).

• Starbucks White Chocolate Doubleshot Energy Drink – Marten v. Starbucks Corp., 1:18-cv-

09201(S.D.N.Y.) (settled August 2019).

• Hazelnut

• Hazelnut Crème Coffee - Dumont v. Reily Foods Co., 934 F.3d 35, 37 (1st Cir. 2019) (reversing

dismissal of putative class action law for hazelnut-labeled coffee that did not contain hazelnuts).


Recent Trends – Socially Conscious Suits

• Environmental Consciousness • Two non-profits claim Tyson Foods misleads consumers by marketing their poultry products as produced under environmentally

responsible and humane standards, when they allegedly use farm factory conditions and fail to meet environmental standards. Food &

Water Watch, Inc. v. Tyson Foods Inc., 1:19-cv-2811 (D.D.C.) (removed from D.C. Sup. Sep. 18, 2019).

• Proposed class action claiming Kuerig labeled its coffee pods as recyclable when in fact they are nonrecyclable. Smith v. Keurig Green

Mountain Inc., 4:18-cv-06690 (N.D. Cal.).

• Animal Welfare • Fairlife milk product labels state that Fairlife provides “extraordinary care and comfort for our cows,” but suit alleges cows were treated

inhumanely. Salzhauer v. The Coca-Cola Company et al, 1:19-cv-02709 (N.D. Ga.)

• Claim that portrayal of chickens on cartons of Nellie’s eggs as leading happy, healthy, lives on small farms where they can freely roam is

false and misleading. Lugones et al v. Pete and Gerry's Organics, LLC et al, 1:19-cv-02097 (S.D.N.Y.).

• Supply Chains & Child Labor • Series of California putative class actions alleging consumer fraud claims related to alleged child labor in supply chains - McCoy v. Nestle

USA, Inc., 730 F. App’x 462, 463 (9th Cir. 2018); Dana v. Hershey Co., 730 F. App’x 460 (9th Cir. 2018); Hodsdon v. Mars, Inc., 891 F.3d

857 (9th Cir. 2018).

• Suit by former child laborers alleging the company aided and abetted slave labor. Doe v. Nestle, S.A., 929 F.3d 623 (9th Cir. 2018), rh’g

denied, (July 5, 2019)


Socially Conscious Suits – Plaintiffs’ Mechanisms

• Omissions Claims – Supply Chain Litigation

• Omissions-based product labeling claims for social issues have been largely unsuccessful

• McCoy v. Nestle USA, Inc., 730 F. App’x 462, 463 (9th Cir. 2018).

• Dana v. Hershey Co., 730 F. App’x 460 (9th Cir. 2018).

• Hodsdon v. Mars, Inc., 891 F.3d 857 (9th Cir. 2018).

• Affirmative Sustainability-Based Claims

• In addition to claims for straightforward affirmative misrepresentations (e.g., free range chickens are not free range), plaintiffs have looked

to companies’ “sustainable” claims as an umbrella for affirmative misrepresentation claims.

• Walker v. Nestle USA Inc. et al., 3:19-cv-00723 (S.D. Cal.) - Alleges “sustainably sourced” marketing claims, including third-party

certifications, are false and misleading because of slave labor in the supply chain.

• Food & Water Watch, Inc. v. Tyson Foods Inc., 1:19-cv-2811 (D.D.C.) Suit claims Tyson’s claims of “environmental stewardship” are

false and misleading because they mistreat chickens and fail to meet environmental standards.

• Complaints for both cases strategically use materials published on the companies’ website about their efforts to address these issues to

build their claims.

• Alien Tort Statute

• Doe v. Nestle, S.A., 929 F.3d 623 (9th Cir. 2018), rh’g denied, (July 5, 2019).

• Claim for aiding and abetting violations of international law. Not a consumer class action, but raises interesting issues.

• Cert petition to the Supreme Court is expected.


Never Ending Slack-Fill Challenges

• Recent Class Certifications - Breathing New Life Into Slack-Fill Claims

• Escobar v. Just Born, Inc., 17-CV-01826 THJ (PJW) (C.D. Cal.) • Certifying a California slack-fill class action for Mike and Ike® and Hot Tamales®

• In re McCormick & Company, Inc., Pepper Products Marketing and Sales Practices Litigation, MDL Docket No. 2665Misc. No. 15-1825 (ESH) (D.D.C.)

• Certifying Missouri, California, and Florida slack-fill class actions.


Questions?


Partner

[email protected]

202-434-5316

David A. Forkner is Chair of the firm’s Food, Beverage, and Pet practice group and focuses

his practice on complex litigation. He has successfully defended commercial, class action,

and criminal cases for a wide array of corporate and individual clients before federal and

state courts, regulatory agencies, and arbitrators throughout the country.

David has extensive experience representing clients in the food, beverage, and pet

industries having practiced in this area for more than a decade. For more than a decade,

David has represented global pet and food companies in both state and federal courts.

David also has experience representing clients in connection with a variety of substantive

claims, including products liability, false advertising, consumer protection, unfair competition,

antitrust, legal malpractice, medical malpractice, accounting malpractice, securities and

financial services, trade secrets, health care, gaming, and corporate espionage.

Born in Colorado and raised in Wyoming, David received his B.A., magna cum laude, from

the University of Denver in 1993 and his J.D. from the University of Denver School of Law,

where he was General Editor, University of Denver Law Review. Before joining Williams &

Connolly in 2000, David completed two federal clerkships; the first for Thomas M. Shanahan

of the United States District Court for the District of Nebraska; the second for Judge Jesse E.

Eschbach of the United States Court of Appeals for the Seventh Circuit.


Documents

9:30 am October 3, 2019 Claim Substantiation: Unwrapping ...€¦ · • NEVER permitted for foods -- claims that express or imply a food is useful in diagnosing, curing, mitigating,