The past several years have seen an increase in the amount of litigation involving the labeling, marketing and advertising of food and beverages. Typically, the suits are filed under state consumer fraud statutes and allege that consumers would not have purchased the product or paid the price that they did had they known the truth behind the representations made. As a result of this litigation, a body of law regarding consumer protection claims premised on food mislabeling has begun to develop.
These lawsuits can be costly. For example, in 2010, after a period of intense litigation, The Dannon Company agreed to pay $45 million to settle a class action pertaining to its labeling of Activia yogurt. In related litigation, Dannon agreed to pay $21 million to settle claims brought by attorneys general from 39 states. The company also agreed to replace the phrases "clinically proven" and "scientifically proven" on its labels and advertisements for Activia and other related products with less-definitive language such as "clinical studies show." Dannon must also place qualifying statements on the products' labels and company's website that explain that the yogurt and other products are not intended to treat medical conditions, and that consumers eating the products will not see an immediate improvement to digestive health.
Much of the mislabeling litigation targets manufacturer claims that their product is "all natural," "trans fat free," or "clinically proven." Although some terms, such as "organic," are defined by regulations, there are no federal regulatory standards defining the terms "healthy" or "natural" as applied to food products. The U.S. Food and Drug Administration ("FDA") has defined "natural" only in the limited context of flavors. See 21 C.F.R. § 101.22. Otherwise, manufacturers are guided only by the FDA's informal policy statement that "natural" means 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 the food." See 58 Fed. Reg. 2302, 2407 (1993.)
Litigation has also been filed with respect to products that are marketed as being healthy but contain allegedly unhealthy ingredients, such as trans fat or high-fructose corn syrup. Beverage makers are a popular target, the allegations against them being that it is false and misleading to label beverages that contain high-fructose corn syrup as "all natural" given the type of mechanical processing required to refine HFCS from raw corn. See, e.g., Holk v. Snapple Beverage Corp., 575 F.3d 329 (3d Cir. 2009); Coyle v. Hornell Brewing Co., No. 08-02797, 2010 U.S. Dist. LEXIS 59467 (D.N.J. June 15, 2010).
In situations where both federal statutes or regulations set labeling requirements, manufacturers might be able to utilize federal preemption as a defense to claims brought under state laws. The preemption doctrine, based upon the so-called "Supremacy" Clause of the U.S. Constitution, holds generally that state laws that conflict with federal laws cannot be enforced. The recent decision in Brod v. Sioux Honey Ass'n Coop., No. 3:12-cv-1322-EMC, 2012 U.S. Dist. LEXIS 129391 (N.D. Cal. Sept. 11, 2012), demonstrates how preemption might apply. In Brod, the plaintiffs claimed that the defendant violated California law by marketing its product as "honey." Federal law required the product to be labeled "honey," but the manufacturer had removed pollen from the product and California law prohibits the removal of pollen from honey. California law also makes it unlawful for any person to "mislabel any container" of honey. Since a federal law required Sue Bee Clover Honey to be labeled with its common name, "honey," the California law prohibiting the label was unenforceable. As local governments pass food labeling legislation that conflicts with federal law, preemption may prove to be an even more valuable defense.
The guarantee of free speech found in the First Amendment to the U.S. Constitution has also been used with some success as a defense in food labeling litigation. Commercial speech - including advertising and product labeling - is protected under the First Amendment unless it is misleading, although the protection is more limited than that provided to noncommercial or political speech. Statutes and regulations that control or restrict commercial speech are unconstitutional unless they are designed to protect a "substantial" governmental interest, and unless the regulation directly advances that interest without being more restrictive than necessary.
On the other hand, regulations mandating disclosure of accurate, factual commercial information for consumer protection are subject only to "rational basis" scrutiny, meaning that the mandate may be imposed so long as there is a rational connection between the purpose of a disclosure requirement and the means employed to realize that purpose. See, e.g., International Dairy Foods Association v. Boggs, 622 F.3d 628, 642 (6th Cir. 2010).
Commercial freedom of speech also extends to a manufacturer's right not to speak through its advertisements and labels. The "freedom not to speak" defense was tested in the 1996 case of International Dairy Foods Association v. Amestoy, 92 F.3d 67 (2d Cir. 1996). After Vermont passed a statute requiring the labeling of milk products from cows treated with recombinant bovine somatotropin (rbST), a synthetic hormone used to increase milk production, the dairy industry challenged the law in federal court, arguing that the milk producers could not be forced to speak through their labels absent a substantial government interest. The court of appeals agreed, holding that Vermont's asserted interest - the public's "right to know" - was not sufficient. Mere "consumer curiosity," the court decided, could not be the basis for abridging the dairy producers' First Amendment rights.
The parameters of the right not to disclose will become particularly important in the face of a wave of new legislation at the state level mandating disclosure of the presence of genetically modified organisms in food products. One such proposed statute was defeated by California voters in 2012, but consumer groups in Washington, Oregon, Connecticut and Vermont are already advocating for similar measures, with a Washington state ballot initiative expected this year. Passage of such legislation is likely to release a flood of potentially costly litigation - by consumers and food industries alike - to determine the boundaries of permissible government restrictions on commercial speech, and the First Amendment is certain to play a key role in establishing those boundaries.
Several commentators have suggested that an increase in food labeling litigation has been directly linked to an increase in the number of FDA warning letters and Federal Trade Commission enforcement actions. Lawyers and consumer groups are evidently keeping their eyes open for such letters and actions as identifiers of corporate targets. For example, on November 10, 2010, the FDA sent a warning letter to TWS Marketing Group, the distributor of HomeMaker Premium 100% Pure Florida Squeezed Orange Juice, complaining that its product is mislabeled. Within six months, a class action complaint was filed in the Northern District of Alabama (Leftwich, et al v. TWS Marketing Group) specifically citing the FDA warning letter. The plaintiffs demanded over $5 million in damages as well as injunctive relief. The negative publicity due to an FDA warning letter or a similar warning letter from a consumer advocacy group can not only be harmful to a business's image, but can provoke litigation which might otherwise never have been filed.