As this space has addressed before (see here and here), the California Transparency in Supply Chain Act (Civ. Code section 1714.43), enacted in 2010, requires large retailers and manufacturers (those with worldwide sales in excess of $100 million) doing business in California to disclose on their websites their efforts to eradicate slavery and human trafficking from their direct supply chain for tangible goods offered for sale.

In Hodsdon v. Mars, a putative class action, the plaintiff alleged that this California consumer protection law required Mars, Inc. (of Mars Chocolate fame) to disclose on its products’ labels that the products’ supply chains may involve slave labor. The trial judge dismissed the complaint, and on June 4, 2018 the Ninth Circuit affirmed the trial court’s decision, holding that the California consumer protection laws do not obligate Mars to label its goods as possibly being produced by child or slave labor. The court explained that, in the absence of any affirmative misrepresentations by the manufacturer, manufacturers do not have a duty to disclose the labor practices in question, even though they are reprehensible, because they are not physical defects that affect the central function of the chocolate products. Continue Reading Where No Misrepresentation, Ninth Circuit Does Not Require Labels Disclosing Slave Labor

As we’ve previously reported, FDA has signaled its interest in reviewing the scope and meaning of the nutrient content claim “healthy,” in part as result of a dispute with KIND LLC about label claims for its KIND Bar products. Then last fall FDA released a new guidance document on what constitutes a “healthy” food and proper labeling of such foods, and the Agency simultaneously requested public input on a significant number of questions related to use of this particular claim.

Last week, FDA announced two actions that are intended to further advance this public consultation process for “healthy” label claims. First, it has extended the comment period that was initiated in October with the release of the draft guidance document until April 26, 2017. And it is convening a public meeting to discuss the use of the term “healthy” in the labeling of human food products, in part to further the feedback that may be received during this ongoing comment period. Continue Reading Reexamination of “Healthy” Continues with an FDA Public Meeting in March 2017

Some of our colleagues from Mintz Levin’s Class Action Practice, Joshua Briones, Crystal Lopez, and Grace Rosales, recently authored an interesting and timely article in the Bloomberg BNA Product Safety & Liability Reporter. The article examines certain defenses in consumer fraud class actions over product labeling – specifically, defenses based on faulty damages models. Beyond proving the factual truth of the allegedly misleading labeling claims, the authors tell us, food and other consumer product companies can combat meritless suits by showing that the plaintiff’s damages-calculation model does not meet the requirements established under Rule 23 of the Federal Rules of Civil Procedure.

When reviewing a purported class action lawsuit, Federal Rule 23(b) requires the court to determine that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Generally, a consumer’s damages in a false advertising case are equal to the amount of money needed to make the consumer “whole” — that is, to compensate the consumer for the harm caused by the false claim. But measuring the actual value received by a consumer and the but-for value that consumer would have received absent the false labeling by the product’s manufacturer requires a fact-intensive economic inquiry (for example, questions related to individual consumers’ behavior and preferences, the actual amount consumers paid for the product, time frame of the purchase, etc.). As a result, according to our expert litigators, defendants in product labeling lawsuits can oppose class certification or even file an early motion to decertify by showing that the plaintiffs’ damage model cannot be calculated with proof that is “common” to the class.

Joshua, Crystal, and Grace’s full article can be viewed here. Any manufacturer or retailer of consumer products that is facing a false labeling suit should give it a quick read!

shutterstock_268298027Allegations are increasing against The Honest Company, Inc. for false and misleading marketing of its products as “all natural” and “plant-based” when they supposedly contain synthetic ingredients.  The Honest Company sells personal care, cleaning, and baby products in multiple channels including at retail, online and through consumer subscriptions.  The company was co-founded by the actress Jessica Alba and guarantees that its products never contain certain harsh chemicals.  Last month, a proposed class action complaint was filed in the Southern District of New York against The Honest Company and then, just last week, another putative class action was filed in the District Court for the Central District of California.

In both cases, the plaintiffs allege that the company violated each state’s consumer protection laws and also allege some variation of misrepresentation, false advertising, fraud, breach of warranty, and unjust enrichment.  These lawsuits have been spurred, in part, by a recent Wall Street Journal report which showed that the results of independent tests proved that The Honest Company’s laundry detergent contained a chemical the company advertised as not being in its products.  Reasonable people may debate whether the timing of these class action complaints was also spurred by recent news reports that The Honest Company is working on an initial public offering with a valuation that could be over $1 billion (see Bloomberg article here).  A spokesperson for The Honest Company has defended its products, stating that the “allegations are without merit.”

As readers of this blog know, plaintiffs have for several years been targeting companies that distribute foods and beverages, cosmetics, and other consumer goods like soaps and cleaning products for allegedly deceptive labeling and advertising of those products with express and implied natural claims.  Although FDA has begun what will certainly be long process towards developing standards and criteria for labeling food products under its jurisdiction as “natural” (note – the comment period for this FDA request for information was extended until May 10, 2016), the lack of a comprehensive policy has left many companies that use natural and plant-based labeling vulnerable to lawsuit.  For instance, any future FDA guidelines for food may not fit comfortably onto cosmetics or personal care products due to the different types of processing techniques used in those different industries.  In addition, answers about whether trace amounts of a synthetic ingredient in an otherwise plant-based product may require a labeling or advertising modification have not yet been determined.  As a result of these litigation risks and the regulatory ambiguity surrounding the term “natural,” we believe that companies manufacturing natural products should carefully monitor developments in this area of law.  We  encourage you to check-in with this blog as we continue to highlight the legal and regulatory landscape of “natural” consumer products.

Barber v NestleWe recently blogged about a new wave of class action litigation related to California’s Transparency in Supply Chains Act.  In December, Nestlé USA won the dismissal of a complaint against it alleging that the company was “obligated to inform consumers that some proportion of its cat food products may include seafood which was sourced from forced labor.”  See Barber v. Nestle USAThe question was whether Nestlé had a duty to disclose on its packaging the possibility that some of its suppliers or suppliers’ suppliers used illegal labor practices, particularly when it is virtually impossible to trace such practices directly to their food products.  The Central District of California found that the law recognizes a “safe harbor” and that Nestlé complied with the law by providing a limited disclosure to its customers regarding the company’s efforts to ensure compliance with labor laws on its website.

It turns out that fish used in cat food is not the only product that may include sourcing from forced labor.  Suppliers of cocoa used to make chocolate may be using forced labor and child labor in cocoa fields.  Continue Reading Another California Dismissal of Proposed Class Action Regarding Disclosure of Forced Labor in the Supply Chain

sniper scopeAs we recently blogged about, in January the U.S. Supreme Court rejected the Rule 68 ‘pick off’ strategy in its Campbell-Edwald decision.  The ‘pick off’ strategy’ occurs when defense counsel offers the plaintiff full relief through a Rule 68 offer of judgment.  If that offer is rejected, then the defense argues the fact that the plaintiff was offered complete relief which, even if it was rejected, moots the case and requires dismissal.  While the U.S. Supreme Court rejected the ‘pick off’ strategy it left unanswered whether defendants could moot a class action by making an actual payment of full relief to named plaintiffs into a Court’s escrow.

On February 3rd, 2016, Judge Sandra J. Feuerstein of the U.S. Eastern District Court of New York dispelled any doubts about whether the decision in Campbell-Edwald left a Federal Rule 68 ‘pick off’ loophole by denying a Rule 67(a) motion to deposit the full payment with the court filed by diet pill maker, Basic Research LLC and its spokesperson, “Jersey Shore” star, Nicole “Snooki” Polizzi.  Judge Feuerstein closed the door on the actual payment option ruling that the purpose of Rule 67 is for safekeeping disputed funds pending resolution of a legal dispute and is not a means of altering contractual relationships and legal duties.  This ruling changes the landscape for companies looking to intercept class actions before they occur and likely quashes the ‘pick off’ strategy for good.

Our colleagues Michael Arnold and Gauri Punjabi recently discussed the U.S. Supreme Court’s rejection of the Federal Rule 68 “pick off” strategy on Mintz Levin’s Employment Matters Blog.  We previously blogged about this crafty strategy employed by class-action defense counsel back in November 2014.  Following the recent Campbell-Ewald Co. v. Gomez decision, defense counsel may no longer argue that a rejected Rule 68 offer that fully satisfies a named plaintiff’s claims is sufficient by itself to moot an action.  Under basic principles of contract law, the Court ruled, an offer of judgment once rejected has no force and parties retain the same stake in litigation as at the outset.  However, this decision does not necessarily foreclose defendants from “picking off” named plaintiffs by making an actual payment for the full amount of the claim.  To read more about the defeat of the Rule 68 “pick off” strategy and the actual payment option, click here.

 

 

The first round goes to the industry: on December 9, 2015, the Central District of California dismissed the complaint in Barber v. Nestle USA, a key bellwether case in a new wave of class action litigation related to California’s Transparency in Supply Chains Act. The Barber plaintiffs’ theory was that Nestle had violated California’s panoply of consumer protection statutes by failing to disclose that “some proportion of its cat food products may include seafood [that] was sourced from forced labor.”

Judge Cormac McCarthy disagreed, finding instead that Nestle’s disclosures under the Supply Chains Act were protected under California’s “safe harbor” doctrine. And as the details of the decision make clear, this is no one-off victory: the court’s reasoning sets the blueprint for companies defending against similar suits going forward.

Continue Reading Knockout in Round One: Court Dismisses California Supply Chains Act Class Action

The 2016 Omnibus Spending Bill recently passed by both houses of Congress ushers in important developments in the food safety, labeling, and nutrition spaces.  Following House and Senate votes December 18, it now goes to President Obama for his signature.

The bill includes important provisions for the Food and Drug Administration (FDA) and Department of Agriculture (USDA), as well as for supplemental nutrition programs.  Notably, the bill allocates $104.5 million to FDA for implementation of the Food Safety Modernization Act (FSMA), the most sweeping food safety reform in 70 years.  For an in-depth discussion of the various food-related funds and other provisions in the bill, as well as our end-of-year food litigation and regulatory outlook, please click here for the most recent ML Strategies/Mintz Levin Food Safety, Labeling, and Nutrition Update.

 

On December 2, 2015, the Grocery Manufacturers Association announced SmartLabel, a pioneering technology initiative that gives manufacturers and retailers an important new channel for disclosing information about their products directly to consumers. Through SmartLabel, simply by searching online or scanning the bar code on a product’s label, consumers can readily access a wealth of detail about that product’s ingredients, including whether any are derived from generally modified organisms (GMOs).

With more than 30 food, beverage, and consumer products companies already on board, SmartLabel is an ambitious effort to increase the amount of product information accessible to consumers. And by allowing companies to provide more context than can fit on a typical label or package, the initiative also gives companies a new tool for defending against false advertising suits attacking the use of marketing terms like “natural” and “non-GMO.” But at least in California—long a hotbed for this type of class action litigation—it is not clear that SmartLabel will in fact decrease the litigation exposure that participating companies face. One major reason: Ninth Circuit precedent instructing federal courts to focus first and foremost on the claims made on a product’s front label, to the exclusion of “fine print” and other less visible sources.

So what, exactly, is the Ninth Circuit’s position on ingredient disclosures?  And how will this stance affect how companies can use SmartLabel to defend against false advertising class actions?

Continue Reading What Does GMA’s SmartLabel Initiative Mean for False Advertising Litigation?