Food Court Report: Food Authenticity Claims May Be Percolating Up In Food Law

Date: Apr 01, 2015

For several years, a substantial number of the purported class actions filed in California have involved alleged false advertising of food products. The "Food Court" (Federal District Court in Northern California) has a full docket of such cases, primarily involving "all natural" claims. These cases involve difficult issues concerning consumer perceptions or reliance, and the value of the alleged deception as to one characteristic of an otherwise safe and nutritious food product.

However, recent developments indicate that these "Food Court" cases may increasingly involve what some have termed "food fraud," where the alleged misrepresentation goes to the very question of whether the product is what it purports to be. As noted in a January 10, 2014 report on food fraud by the Congressional Research Service, leading food categories with reported cases of food fraud include: olive oil; fish and seafood; milk and milk-based products; honey, maple syrup, and other natural sweeteners; fruit juice; coffee and tea; spices; organic foods and products; and clouding agents.[1] Whether the term used is more properly authenticity, fraud, "economically motivated adulteration," or food counterfeiting, the problem is significant - the Grocery Manufacturers Association estimates that the yearly cost to the food industry is $10 billion to $15 billion per year.[2] 

In Kumar v. Salov North America Corp., for example, the purported class representative asserted two main claims against an olive oil importer/distributor: 1) that certain consumer-branded extra virgin olive oil products were not of "extra virgin" grade at the time of sale because they were mixed with lower-grade oils, and/or were packed in a way likely to degrade below extra virgin grade; and 2) that all products at issue were deceptively labeled as "Made in Italy."[3] In response, Defendant moved to dismiss these claims stating: 1) that Plaintiff lacked standing for injunctive relief, and had failed to assert with the requisite plausibility the "extra virgin claims," because Plaintiff did not allege that the bottle she purchased was one of the bottles that tested as allegedly not extra virgin; and 2) that the back label in fact disclosed that the oil was produced only in part from olives grown in Italy (and included olives from other countries as well), and disclosed that the oil was merely packed in Italy.[4] The Court, per Judge Yvonne Gonzalez Rogers, denied the motion on both grounds.[5] 

As to the asserted lack of standing for injunctive relief, the Court first found that "[t]he possibility of future injury is alleged sufficiently if the plaintiff would encounter the same statements today and could not be any more confident that they were true." [6] As to plausibility, the Court held that whether a particular bottle might not have degraded as alleged did not defeat the claim by quoting with approval Judge Richard Seeborg's conclusion in another "extra virgin" authenticity case: "each consumer who purchases 'extra virgin' olive oil, is entitled to receive oil that meets that definition by design, not by happenstance".[7] The Court also rejected the "Made in Italy" defense because there was no allegation that plaintiff read the qualifying statement on the back label, and because "reasonable consumers should [not] be expected to look beyond misleading representations on the front of the box." [8] 

Not only purported consumer class actions, but also government attorneys are taking action regarding food authenticity, or, in the case of the New York Attorney General, food supplement authenticity. Recently, New York Attorney General Eric T. Schneiderman sent cease and desist letters to major retailers regarding certain private label herbal supplements.[9] The allegations were that DNA barcoding testing revealed that the supplements contained little or none of the advertised herbal extract, and contained other undisclosed plant material.[10] GNC settled quickly, agreeing to a set of testing protocols and point of sale disclosures. In the press before the settlement, there were assertions that DNA barcoding was not an established method for the detection of plant extracts.

These cases illustrate that liability for food authenticity claims exist not only for manufacturers, but also for importers/distributors and for retailers. Moreover, this liability is not limited just to purported consumer class actions in the "Food Court," but also can come from government attorneys who face lower legal hurdles when prosecuting claims. Given this potential liability, it would be wise for all those in the food supply chain to identify at-risk products and to prepare protocols for mitigating that liability risk with knowledgeable food law counsel and consultants.

Keller and Heckman is hosting two upcoming Food Authenticity events, we hope you can join us.

Defending Your Supply Chain: The Case of Extra Virgin Olive Oil Seminar, Wednesday, May 27th in San Francisco, California. Please join leading stakeholders in the olive oil industry for this intensive one-day seminar. A panel of experts including industry leaders, scientists, lawyers, professors and government officials will review in depth the latest science, standards, legal developments and testing methodologies, particularly in light of new authenticity testing. For more information and to register click on the following link, http://www.khlaw.com/Olive-Oil-Seminar.

Defending Your Supply Chain: Issues In Food Authenticity and Insurance Webinar, Tuesday, June 9th at 12 PM (EDT). This complimentary webinar is being offered by Keller and Heckman's Food Litigation experts. For more information or to be added to the invitation list seminars@khlaw.com.  

To view this Food Court Report in the e-newsletter format, click here.

[1] Renée Johnson, Cong. Research Serv., Food Fraud and "Economically Motivated Adulteration" of Food and Food Ingredients 9 (2014).

[2] Id. at 3.

[3] Order Granting in Part and Denying in Part Motion to Dismiss at 2, Kumar v. Salov North America Corp., No. 14-cv-2411 (N.D. Cal. filed May 23, 2014).

[4] Id. at 5.

[5] Id. at 10.

[6] Id. at 5.

[7] Id. (citing Order Denying Motion to Dismiss at 6, Koller v. Med Foods, Inc., No. 3:14-cv-2400 (N.D. Cal. filed May. 23, 2014)).

[8] Id. (citing Williams v. Gerber Products Co., 552 F.3d 934, 939 (9th Cir. 2008)).    

[9] Press Release, Office of the Attorney General of New York State, A.G. Schneiderman Asks Major Retailers to Halt Sales of Certain Herbal Supplements as DNA Tests Fail to Detect Plant Materials Listed on Majority of Products Tested (Feb. 3, 2015).

[10] GNC, New York Reach Deal on Herbal Supplement Standards, CBS/AP (Mar. 30, 2015), http://www.cbsnews.com/news/gnc-new-york-attorney-general-agreement-herbal-supplement-safety/.