United States: Restaurants & Retail Food Stores: The FDA Is On Its Way; "Misbranding" Is A Crime

Last Updated: December 3 2014
Article by Michael A. Walsh

The Food and Drug Administration (FDA) issued a 395 page Final Rule on Food Labeling entitled the "Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments" (the "Menu Labeling Rule"). FDA didn't come up with the idea for Menu Labeling Rule on its own. Section 4205 of the Patient Protection and Affordable Care Act a/k/a Obamacare (the "Act"), signed into law on March 23, 2010, requires nutrition labeling of "standard" menu items for chain restaurants with 20 or more locations and "similar retail food establishments." The Act directed the FDA to issue rules for the implementation of menu labeling requirements by March 2011. In conformance with those obligations, on December 1, 2014, FDA will publish its formal notice of the final rule to be effective December 1, 2015.

The Menu Labeling Rule applies a regulatory structure similar to "labeling" for drugs and medical devices to govern restaurants and "similar retail food establishments." Similar retail food establishments are defined broadly to include grocery stores, supermarkets, convenience stores, general merchandise stores, lodging facilities, recreational venues, sports venues, performing arts venues, and movie theaters.

What Is Required?

Under the Act, covered entities are required to:

  • Disclose, on menus and menu boards, the number of calories in an item as it is usually prepared and offered for sale;
  • Provide written nutrition information and nutrition claim information to consumers upon request;
  • Provide a "prominent, clear, and conspicuous statement on menus and menu boards about the availability of the written nutrition information; and
  • Provide, on a sign adjacent to each food item, the number of calories in the item or per serving for self-service items and food on display.

The Menu Labeling Rule specifies the nutritional information be displayed next to the name or price. For example, a multiple serving menu item, such as a pizza, requires a calorie count for the total pie (e.g. 1,600 cal) or per slice—as long as it is clear how many slices are in the pie. While most Americans might think the number of slices in a pizza is obvious, Yogi Berra famously told a server to cut his pizza into four slices because he wasn't hungry enough to eat six.

What Food Items Are Covered?

The Menu Labeling Rule's requirements apply to "standard menu items" defined as "food routinely included on a menu or menu board or routinely offered as a self-service food or food on display" but not custom orders, daily specials, food that is part of a customary market test, and temporary menu items, certain self-service foods and "alcohol on display." Alcoholic beverages that are standard menu items are included.

Substantiation: Proving The Accuracy of Menu Labeling.

The term "substantiation" is a term of art under the Food Drug and Cosmetic Act (FDCA), and federal and state regulators have broad discretion in deciding, after the fact, what level of scientific evidence is sufficient. The Menu Labeling Rule requires that a restaurant—or similar retail food establishment—provide an inspector with information substantiating nutrient values including the method and data used to derive these nutrient levels. (21 CFR §101.11(c)(6)) In addition, a "responsible individual" employed at the establishment, its corporate headquarters or parent entity must certify that the information contained in the nutrient analysis is complete and accurate. Only a responsible individual employed at the establishment, however, can "certify" that the establishment took reasonable steps to ensure the method of preparation adhered to the determined values.

What happens if you don't comply or don't get it right?

The Menu Labeling Rule "Misbranding" provision states that "[a] standard menu item offered for sale in a covered establishment shall be deemed misbranded under the FDCA (21 CFR §101.11(f)). It is notable that the Menu Labeling Rule renders menu content "labeling" under the applicable provisions of the FDCA (i.e. 21 USC §343(a)(f) and (q) and §321) and violating the Menu Labeling Rule renders the food "misbranded," constituting an FDCA violation. A violation of the FDCA is a misdemeanor and, in this regard, the Menu Labeling Rule states:

Persons exercising authority and supervisory responsibility over a restaurant or similar retail food establishment can be held responsible for violations under the FD&C Act. See United States v. Park, 421 U.S. 658, 659 (1978). ("The Act imposes upon persons exercising authority and supervisory responsibility reposed in them by a business organization not only a positive duty to seek out and remedy violations but also, and primarily, a duty to implement measures that will insure that violations will not occur....") (citing United States v. Dotterweich, 320 U.S. 277 (1943)). Agency decisions regarding enforcement actions will be determined on a case-by-case basis.

Under the Menu Labeling Rule and the FDCA, the FDA retains the discretion to hold those with supervisory responsibility, including those who are "responsible individuals" who certify the menu labeling, criminally liable for a misbranding violation.

What About Civil Litigation?

The Menu Labeling Rule does not expressly preempt consumer trade practices, misrepresentation or other tort claims. The principles of conflict preemption will apply. The industry should be mindful of the emerging theory of parallel state law claims for violations of the FDCA and FDA regulations. The Menu Labeling Rule creates yet more requirements and significant new risks for litigation.

Who Is Covered?

Under the Act: In addition to a restaurant chain with more than 20 locations, the Act also applies to "retail food establishments" whose primary business activity is the sale of food to consumers. A retail establishment's primary business activity is "the sale of food to consumers" if either: 1) the establishment presents or has presented itself publicly as a restaurant; or 2) either a) more than 50 percent of a retail establishment's gross floor area is used for the preparation, purchase, service, consumption or storage of food, or; b) more than 50 percent of the establishment's revenues are generated by the sale of food. If a facility selling restaurant or restaurant-type food is within the confines of other facilities, such as a coffee shop in a bookstore, determining whether the labeling rule will apply will require a case-by-case analysis.

The regulation is more expansive than originally expected. The Act states the new law applies to "restaurants or similar retail food establishments" and "similar retail food establishment" is defined in the Menu Labeling Rule to mean retail establishments that offer restaurant-type food, including:

  • Bakeries,
  • Cafeterias,
  • Coffee shops,
  • Convenience stores,
  • Delicatessens,
  • Food service facilities located within entertainment venues (such as amusement parks, bowling alleys, and movie theatres),
  • Food service vendors (e.g., ice cream shops and mall cookie counters),
  • Food take-out and/or delivery establishments (such as pizza take-out and delivery establishments),
  • Grocery stores,
  • Retail confectionary stores,
  • Superstores,
  • Quick service restaurants, and
  • Table service restaurants.

The Act considers each of these retail food establishments sellers of "restaurant-type food" rendering them "similar" to restaurants and within the scope of the Act and the Menu Labeling Rule.

Who is excluded?

Trains, buses, airplanes and other "mobile food operations without a fixed position or site, such as food trucks" are excluded from the requirements.

Federalism and Voluntarily Compliance?

The Act does not prevent states from enacting labeling requirements for warnings concerning food safety or nutrition labeling for non-covered establishments, e.g. those with less than 20 locations. For non-covered establishments such as certain schools, hospitals, transportation carriers and movie theaters, voluntary registration provides certain preemption from state or local requirements. While the federalism and preemption issue was murky in the earlier version of the rule, the final rule creates food nutrition labeling requirements that preempt non-identical State and local nutrition labeling requirements. It is uncertain whether there will be challenges to the constitutionality of the Menu Labeling Rule on federalism or compelled speech grounds.

FDA adds some optimistic statistics in its estimate of the total number of individual menu items impacted by the Menu Labeling Rule. FDA estimates nationwide that the Menu Labeling Rule will require labeling for 207,052 individual menu items and estimates a mere 15 minutes per menu item to perform the nutrition analysis.

Conclusion

Studies of restaurants that post caloric information found that some restaurants showed changes in per purchase caloric values but others found no change particularly with children. The menu law is "lean" on scientific support for the conclusion that more information on restaurant menus will cause overweight consumers to eat less and be healthier. As with the Act itself, it will be years before we know whether the Restaurant Menu Labeling Rule will achieve any health benefit. In the interim, the regulation goes into effect on December 1, 2015. Businesses should designate "responsible individual[s]" at both the establishment and corporate headquarters to ensure compliance and accurate recordkeeping. This designation should be one of the first steps take to avoid violating the Act or the Menu Labeling Rule.

Stay tuned for updates further detailing how the federal government and the states will enforce the new Menu Labeling Rule.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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