United States: Food And Beverage News And Trends - 6 August 2019

This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

  • Lawsuit challenges Arkansas restrictions on labeling of plant-based meat products. In a lawsuit filed July 22, Turtle Island Foods, the company that makes Tofurky, along with the American Civil Liberties Union, the Good Food Institute, and the Animal Legal Defense Fund, is challenging an Arkansas law that took effect on July 24. The law prohibits companies from using terms derived from the word "meat" to label or describe products that are plant-based or are made from anything other than traditional meat. Turtle Island Foods points out in the lawsuit that all of its products are clearly labeled as vegan or as not containing meat from slaughtered animals. The plaintiffs assert that the law infringes on the First Amendment rights of Turtle Island Foods and that it is intended to boost the state's meat industries by censoring truthful speech. Similar lawsuits against state laws of this sort are pending in Missouri and Mississippi. See some of our earlier coverage of this developing story here and here.
  • Gottlieb calls on FDA to act on CBD products. In a July 30 op-ed in the Washington Post titled "The CBD craze is getting out of hand. The FDA needs to act," former FDA Commissioner Scott Gottlieb urged the agency to act swiftly to address the booming CBD market, but without compromising its mission of public safety.Products containing the hemp-derivative CBD, cannabidiol, are soaring in popularity, he noted, but "many of the compound's expansive benefits are fanciful, and in fact, the sale of much of the product is illegal under current law." There is only one legally available purified form of CBD: the drug Epidiolex, approved in 2018 for treating seizures." The law still prohibits putting the chemical in food or pet food," meaning that, of the vast array of pills, gummies, snacks, pet treats and other CBD products now easily available online and even in stores, none are legal and many may be unsafe.Meanwhile, "the FDA is being pushed by all sides to act quickly." Gottlieb called for a legal path based on "a clear and efficient regulatory process and sound science" and set forth ways for the FDA to fulfill its public-health obligations while meeting the political demand for CBD goods: "It can approve the sale of some CBD products immediately, while effecting a framework for their safe and proper regulation and a pathway for an enforceable market for these goods," he said. "Obligating the industry to do the front end of this scientific work – and sweeping the market of those who won't – could advance a safe path and help establish the stable market for hemp-derived CBD envisioned by lawmakers." For example, "FDA could put the onus on manufacturers to bring forward petitions to demonstrate that CBD can be safely added to products such as food," such as through new dietary ingredient notifications or food additive petitions.
  • Hummus maker issues voluntary recall. Pita Pal Foods, LP, of Houston has issued a voluntary recall of some of its hummus products made between May 30, 2019, and June 25, 2019, due to concerns over the presence of Listeria monocytogenes.Nearly 90 hummus products nationwide are affected by the recall, many of them bearing store brands.The Listeria was identified at the manufacturing facility, not in the finished product, during a routine FDA inspection. Listeria monocytogenesis an organism that can cause serious and sometimes fatal infections in young children, frail or elderly people, and others with weakened immune systems. No illnesses have been reported to date for these products, and the company said it is issuing the recall out of an abundance of caution. The recall was announced July 17.
  • USDA Undersecretary Ibach in the news. Should GMO ingredients be allowed in organic foods? Recent comments by Greg Ibach, undersecretary of the USDA, appear to indicate that the current administration is open to allowing foods containing genetically modified or bioengineered ingredients to be classified as organic.In testimony on July 17 before the House Agriculture Subcommittee, Ibach said, "I think there is the opportunity to open the discussion to consider whether it is appropriate for some of these new technologies that include gene-editing to be eligible to be used to enhance organic production and to have drought and disease-resistant varieties, as well as higher-yield varieties available." At present, organic standards prohibit the use of GMO ingredients, but in June, President Donald Trump signed an executive order that instructed federal agencies to be more lenient on approvals for biotech crops.

    Next, on July 31, a coalition of House and Senate members wrote to Ibach to urge him to limit the influence of the poultry industry and meatpackers in rulemakings under the Packers and Stockyards Act. The coalition called on Ibach to prioritize "the rights of America's small independent cattlemen, hog producers, and contract poultry growers." Among those signing the letter were Senator Chuck Grassley (R-IA), Representative Marcy Kaptur (D-OH) and Senator Jon Tester (D-MT).
  • Massachusetts court upholds ruling against Total Wine's pricing structure. On July 24, the Massachusetts Supreme Judicial Court overturned a lower court ruling and held that the state's Alcoholic Beverages Control Commission was justified in finding that Total Wine was selling various liquors in the state at a price below its invoiced cost. This behavior, according to the state agency, amounted to a violation of a state law that prohibits predatory pricing.The state's highest court ruled that the agency's interpretation of the law was reasonable due to the "plain language" of the law and the commission's "need to effectively and uniformly its own regulations in accordance with its legislative mandate." Total Wine operates six stores in Massachusetts.
  • California changes the legal definition of "beer." The Orange County Register reported July 19 that California, a state often criticized for excessive regulation of business, has gone counter to that trend, acting to assist the state's craft-beer industry by loosening the definition of the term "beer." In California, "beer" can now include products that are made with the use of honey, fruit juice, fruit concentrate, herbs, spices and other food materials, as adjuncts in fermentation. This change will bring the definition in line with federal regulations. " This measure modifies the definition of beer in a way that will allow California breweries to expand their market, satisfying the consumer's demand for more varied and unique styles of beer," said a state assemblyman who wrote the bill.
  • New alcohol-distribution lawsuits spring up after Supreme Court ruling. In the wake of the US Supreme Court's landmark ruling last month on Tennessee's wine-distribution law, at least four new lawsuits have been filed in other states seeking to liberalize state liquor laws. The suits were filed in Indiana, Kentucky, New Jersey and Texas, which each allow wine shops within the state, but not out-of-state shops, to ship to consumers within the state. In addition, lawyers have asked a Michigan judge to enforce an order he issued last year that would open up shipping to out-of-state stores. The judge had stayed that ruling earlier to await last month's high court ruling. The majority opinion in Tennessee Wine & Spirits Retailers Association v. Thomas invalidates a Tennessee law that required sellers of beer, wine and liquor in that state to have lived there for two years before obtaining a permit to sell alcohol; the Court overturned the law because it discriminates against out-of-staters and thus violates the so-called dormant Commerce Clause of the US Constitution.
  • North Carolina comes closer to reform of alcoholic beverage regulatory regime. On July 16, the North Carolina Senate passed Senate Bill 290, known as the ABC Regulatory Reform Bill. The bill would allow distillers to use distribution rules that would be akin to the rules applicable to brewers and wine makers.It would make it easier for distillers to get their beverages into bars and restaurants by removing some of the strict ABC system regulations in the state. Distillers would also be able to serve cocktails to their customers and sell larger numbers of their products on-site. A similar bill is pending in the state's General Assembly.
  • Meatballs recall due to contamination with...cranberries. More than 53,000 pounds of frozen ready-to-eat meatballs manufactured by Home Market Foods, Inc. of Norwich, Massachusetts, have been recalled due to mislabeling.The company, which owns a number of brands, erroneously packaged frozen cranberry-stuffed meatballs in bags labeled Cooked Perfect Brand Homestyle Meatballs All Natural." The recall arose over fears that purchasers with a cranberry allergy could inadvertently consume the product. This is a Class I recall, says the USDA, because the product poses a high health risk.The meatballs were shipped to outlets in 10 US states on the East Coast.

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