Greenberg Traurig’s Food & Beverage practice group recently gave a very well-attended presentation at the world’s largest natural, organic, and healthy products show of the year in Anaheim, California, Natural Products ExpoWest. The presentation, entitled “All Natural to Zero Calories: The A to Z of Claims,” addressed claims made for products in the food and beverages category, and the effects these claims can have on a variety of areas. Justin Prochnow, a shareholder in GT’s Denver office, kicked off the presentation, discussing the regulation of claims used in labeling and advertising, as well as some of the claims that have been frequently targeted by class action plaintiffs lawyers. Rick Shackelford, Los Angeles shareholder and co-chair of GT’s Class Action practice group, followed with a discussion about some of the recent class action lawsuits in the sector and what to do when presented with a demand letter or Complaint from a plaintiff’s lawyer. Anthony Cortez, a shareholder in the Sacramento office, next talked about Proposition 65 issues affecting the food, beverage, and supplement industries, including the disclosure of BPA in packaging. Finally, Ed Schultz, a Corporate practice shareholder in the Los Angeles office, provided some insights on factors that private equity groups and other investors might be looking at when investing in food and beverage businesses and considerations for owners looking to raise funds or sell their company. The result was a great opportunity to provide some valuable insights as well as outline the depth of experience and range of services that GT attorneys can provide to companies in the food, beverage, and supplement industries. Please do not hesitate to reach out to any of the GT attorneys who were involved in the panel discussion with questions related to the food and beverage sector.
In Briseno v. ConAgra Foods, Inc., ___ F.3d ___ (9th Cir. Jan. 3, 2017), the Ninth Circuit held that Rule 23 does not require plaintiffs to establish an “administratively feasible” means of identifying putative class members, expressly rejecting decisions like Carrera v. Bayer Corp., 727 F.3d 300, 306-08 (3d Cir. 2013). But the decision goes well beyond administrative feasibility. Plaintiffs counsel will argue that the decision also endorses aggregate liability and damages determinations in consumer fraud cases to be followed by a “claims process” overseen by claims administrators. The impact of the decision remains to be seen, but Briseno is bad news for class action defendants, as it likely will make class certification easier in the Ninth Circuit. This article discusses the Briseno decision and offers key takeaways for future cases.
The Ninth Circuit’s Briseno Decision
The Briseno case is one of many class actions challenging food labels. These cases have become substantially more popular in the plaintiffs’ bar, because they do not usually present any opportunity for defendants to move them into arbitration based on class action waivers in arbitration agreements. Customers who buy off the shelf do not agree to arbitrate their claims.
The Briseno plaintiffs claim that a “100% Natural” label is false or misleading because Wesson oils are made from bioengineered ingredients, which the plaintiffs argue are not “natural.”
Gretchen N. Miller, Products Liability & Mass Torts shareholder at Greenberg Traurig, is serving as Program Chair for the Defense Research Institute’s (DRI) 2017 Products Liability Conference. The annual event will take place Feb. 8-10, 2017, at the Cosmopolitan of Las Vegas. Miller will be welcoming conference attendees on Wednesday, Feb. 8, at 8:15 a.m., and providing additional remarks on Thursday, Feb. 9, at 8:15 a.m. In addition to Miller, Greenberg Traurig Intellectual Property & Technology Practice Group Shareholder Ed Chansky will be speaking on “Citizen Enforcers, Consumer Activists and ‘Mommy Bloggers’” on Feb. 8, at 11:30 a.m. To read the full press release, click here.
The Environmental Protection Agency (EPA) recently concluded that the available data at this time suggest that the herbicide, glyphosate, is “not likely to be carcinogenic to humans.”
The EPA’s Office of Pesticide Programs (OPP) undertook the glyphosate study as part of its periodic review of pesticides registered under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), the federal statute governing the registration and use of pesticides. These reviews are conducted at least every fifteen years to determine if pesticides (a term which encompasses herbicides like glyphosate) still meet the criteria for FIFRA registration.
According to the report, “In epidemiological studies, there was no evidence of an association between glyphosate exposure and numerous cancer outcomes; however, due to conflicting results and various limitations identified in studies investigating [non-Hodgkin’s lymphoma], a conclusion regarding the association between glyphosate exposure and risk of [non-Hodgkin’s lymphoma] cannot be determined based on the available data.” U.S. EPA Off. of Pesticide Programs, Glyphosate Issue Paper: Evaluation of Carcinogenic Potential, at § 6.7 (Sept. 12, 2016). The report goes on to state: “Overall, animal carcinogenicity and genotoxicity studies were remarkably consistent and did not demonstrate a clear association between glyphosate exposure and outcomes of interest related to carcinogenic potential.” Id. The release of the 227-page issue paper precedes an EPA-organized meeting of independent scientists that is scheduled for October 18. At the meeting, which will take place at the OPP headquarters in Arlington, Virginia, outside scientists will review the EPA’s findings.
Glyphosate is a non-selective, phosphonomethyl amino acid herbicide registered to control weeds in various agricultural and non-agricultural settings. An herbicide with a broad range of agricultural, commercial, and household applications, glyphosate has been the subject of intense debate surrounding its potential link to non-Hodgkin’s lymphoma and various other forms of cancer.
In March 2015, the International Agency for Research on Cancer (IARC), a subdivision of the World Health Organization (WHO), determined that glyphosate was a probable human carcinogen. The IARC also recommended that the Joint Meeting on Pesticide Residue (JMPR), another arm of the WHO, reevaluate glyphosate in light of the IARC’s findings.
Later, in November 2015, the European Food Safety Authority (EFSA) determined that glyphosate was unlikely to pose a carcinogenic hazard to humans. Additionally, in response to the IARC’s recommendation, the JMPR released its evaluation in May 2016, concluding that glyphosate was unlikely to pose a carcinogenic risk to humans from exposure through diet.
The EPA’s October 18 meeting will have significant implications for food manufacturers and agrochemical companies alike. Following the meeting, the EPA plans to release its final report in early-2017. In the report, the EPA is expected to make its final determination as to whether companies may continue to use and sell glyphosate and, if so, create guidelines for doing so. We intend to closely monitor this meeting and plan to outline the EPA’s final report on our blog once it is released.
*Not admitted to the practice of law.
“Ascertainability” in the context of civil litigation involves the identification of individuals who qualify for membership in a putative class action. Although not an explicit requirement under Rule 23, since the US Court of Appeals for the Third Circuit refused to certify a class due to difficulties in objectively and efficiently identifying class members in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), lower federal courts have been sharply divided over the meaning and extent of the ascertainability requirement for certifying a class.1 The ascertainability issue has taken on particular importance in low-value consumer class actions involving inexpensive retail products, as these cases have become an increasing burden for manufacturers, distributors, and retailers in the current litigation environment—involving a flood of class actions over labeling on consumer products.
Unfortunately, especially for companies that operate nationwide, the US Supreme Court has not yet intervened in this quagmire. After having denied certiorari in two cases last term that addressed ascertainability, the next spate of cases from the Ninth Circuit likely will not ripen for consideration by the Supreme Court until the 2017 Term. Thus, uncertainty and forum-shopping by plaintiffs’ lawyers exploiting the split among the courts are likely to persist for the foreseeable future.
Please note that this Legal Backgrounder is presented for informational purposes only and it is not intended to be construed or used as general legal advice nor as a solicitation of any type.
We previously blogged about Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), in which the Supreme Court held that an unaccepted Rule 68 offer of judgment does not moot a class plaintiff’s claims and, in turn, a class action. But the Court postulated that actual satisfaction of a class plaintiff’s claims – such as tendering a check or depositing funds in a bank account – might moot those claims.
Since then, some courts have held that a refund/deposit moots a class plaintiff’s claims and the class action. Others have disagreed. Some have refused to dismiss class actions even when the class plaintiff’s claims are moot, reasoning that the plaintiff retains an interest in pursuing the class claims.
This jumbled case law offers little guidance. One observation is that the payment should have no strings attached – the plaintiff should have immediate control of the funds. Where injunctive relief is sought, the defendant may need to cease the challenged conduct rather than just offer to do so. The payment also should be made before a certification motion is filed.
In Demmler v. ACH Food Companies, Inc., No. 15-13556-LTS (D. Mass. June 9, 2016), a court recently approved this strategy in dismissing a class action under Massachusetts’ Consumer Protection Act (93A). Demmler claimed that the use of “All Natural” on the labeling for ACH’s Weber barbeque sauces was unfair and deceptive in violation of 93A because the product contained an artificial coloring. As required by 93A, he sent a demand letter before filing suit. ACH responded by sending a check for $75 – more than the $25 statutory damages. The plaintiff rejected the check.
The court held that the plaintiff’s claims were moot because the check was an unconditional payment, not an offer. And because the class had not been certified, it lacked legal status and had no independent interests. Further, there was no evidence of ACH “picking off” plaintiffs to insulate its labeling from review.
The plaintiff did not seek to enjoin use of “All Natural” since the product had been discontinued. But a request for injunctive relief should be irrelevant. Once a plaintiff challenges labeling as deceptive, it can no longer claim to be deceived and thus has no personal interest in an injunction.
Demmler did not expressly turn on the fact that ACH was responding to a pre-suit demand letter. But there are advantages to doing so:
- To the extent that the filing of a lawsuit or class certification motion activates the class’s interests, making a named plaintiff whole before those events is critical.
- Minimal fees and costs likely will have been incurred by the demand letter stage. Thus, resolving a case early should help diffuse the argument that the named plaintiff has a separate interest in obtaining fees and costs.
- Consumer protection statutes require demand letters to encourage early resolution. It seems incongruous to characterize efforts to further this goal as improper “picking off.”
Few state consumer protection statutes require a pre-suit demand letter. But those that do offer a unique opportunity to moot a class action.
On May 20, 2016, the FDA announced that it finalized changes to the Nutrition Facts panel on the labels of packaged foods and beverages, as well as changes to the Supplement Facts panel on the labels of dietary supplements. The final regulations were published in the Federal Register on May 27, 2016. The final version of the revisions to regulations pertaining to the nutrition information are on the FDA website, as well as the final version of the revisions to the regulations pertaining to serving sizes and the Recommended Amounts Customarily Consumed (RACC). The FDA website also contains summaries and information links for the new revisions, including examples of the new format for the Nutrition Facts panel and side by side comparisons.
The following is a brief overview of the major changes:
- The type size for “Calories” is substantially larger on the new panels.“Servings per Container” and “Serving size” declarations are also larger and will be required to be in boldface type to highlight this information.
- Manufacturers must declare the actual amount and Daily Value percentage of vitamin D, calcium, iron and potassium. They can voluntarily declare the gram amount for other vitamins and minerals.
- The new footnote will read “*The % Daily Value tells you how much a nutrient in a serving of food contributes to a daily diet. 2,000 calories a day is used for general nutrition advice.” Continue Reading.
Plaintiffs’ lawyers in several states are investigating cases of non-Hodgkin lymphoma and other forms of cancer in individuals exposed to the widely used herbicide glyphosate. These investigations follow on the heels of a 2015 report by a working group at the International Agency for Research on Cancer (IARC), which concludes that glyphosate is probably carcinogenic in humans. At least five product liability lawsuits already have been filed, including one in California where the court recently denied defendant’s motion to dismiss. Manufacturers, distributors and users of glyphosate likely will see an increasing number of these cases and should be prepared to respond.
Glyphosate is one of the most widely used herbicides in the world, with a broad range of agricultural, commercial and even household applications. On July 29, 2015, an IARC task force published a monograph concluding that there is sufficient scientific evidence of glyphosate’s carcinogenicity in experimental animals and that the herbicide also caused DNA and chromosomal damage in human cells. Based on its review, the task force concluded that glyphosate probably is a human carcinogen and recommended that the Joint Meeting on Pesticide Residue (JMPR) reevaluate glyphosate, along with two other pesticides. JMPR is set to reevaluate glyphosate at its next meeting in May 2016.
The Joint Glyphosate Task Force, LLC (JGTF), which has more than 20 corporate members with a glyphosate technical registration in the U.S. or Canada, criticized the IARC report, noting that the monograph contained no new studies or data and pointing out that regulatory agencies around the world have conducted thorough and science-based risk assessments on glyphosate, concluding that it was not a human carcinogen.
In September 2015, the California Environmental Protection Agency’s Office of Environmental Health Hazard Assessment (OEHHA) issued a notice of intent to list glyphosate as a substance known to cause cancer under California’s Prop 65. According to OEHHA, California law requires the listing based on the IARC report. In early 2016, Monsanto filed a lawsuit against OEHHA seeking to block the proposed listing.
In April 2016, the Alliance for Natural Health published a study finding that 10 out of 24 common breakfast foods contained detectable levels of glyphosate that may result in the consumer ingesting more than EPA believes to be safe. The study concludes by recommending further evaluation by the FDA and EPA.
We are aware of five product liability lawsuits that have been filed following the IARC report. Three are pending in Delaware, one is in Hawaii and another in California. The California case is pending in the Northern District, where a federal judge issued a decision on April 8, 2016 denying the motion to dismiss. The court’s order rejects preemption arguments that were based on the Federal Insecticide, Fungicide, and Rodenticide Act and the EPA’s approval of glyphosate. The ruling likely will embolden plaintiffs’ counsel and lead to more cases being filed. Food producers also could be a litigation target based on recent research finding glyphosate residue on common foods. At least three class actions already have been filed against a major manufacturer of breakfast cereals, claiming that the product fails to disclose that it contains glyphosate. In addition, if glyphosate is added to the Prop 65 list, litigation is sure to follow, and many food manufacturers may need to consider adding warnings to products sold in California.
In Chen v. Allstate Insurance Co., — F.3d —-, 2016 WL 1425869 (April 12, 2016), the Ninth Circuit held that the offer and deposit of funds into an escrow account in an amount sufficient to satisfy the named plaintiff’s individual claim, combined with an offer of injunctive relief, does not “moot” the claim under Article III. This decision blocks one avenue not already closed by the Supreme Court’s ruling in Campbell-Ewald v. Gomez, 136 S. Ct. 663 (January 20, 2016), which held that an unaccepted offer of judgment in full satisfaction of a claim does not moot the claim, but left open whether or not a defendant could take other unilateral steps to moot a plaintiff’s claim. The Ninth Circuit also declined to follow the defendant’s suggestion that it direct the district court to judgment in plaintiff’s favor on the terms offered, thereby mooting the named plaintiff’s claim, stating that “even if Allstate could moot the entire action by mooting [plaintiff’s] individual claims for damages and injunctive relief, those individual claims are not now moot, and we will not direct the district court to moot them by entering judgment on them before [plaintiff] has had a fair opportunity to move for class certification.”
In Chen, two named plaintiffs alleged that Allstate made multiple unauthorized telephone calls to their cell phones in violation of the Telephone Consumer Protection Act (TCPA). The TCPA provides that “an aggrieved person may bring an action to enjoin a violation of this provision or to seek actual or statutory damages.” 28 USC § 227(b)(3). Statutory damages are $500 per violation, or $1500 for willful violations. 28 USC § 227(b)(3)(B). Before plaintiffs filed a motion for class certification, Allstate extended Rule 68 offers of judgment to plaintiffs for the maximum statutory penalties recoverable, together with reasonable attorneys’ fees and costs. Allstate also agreed “to stop sending non-emergency telephone calls and short service messages to [them] in the future.” Allstate indicated that the offer would remain open “until such time as it was accepted by plaintiffs or Allstate withdrew the offer in writing.” One plaintiff accepted the offer; the other did not. Allstate moved to dismiss the claims of the remaining plaintiff as moot under Article III, arguing that its offer and tender of funds extinguished any “case or controversy” between the parties. In denying Allstate’s motion, the district court relied on the Ninth Circuit’s decision in Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011), which held that although an unaccepted offer of judgment mooted an individual named plaintiff’s claim, it did not “moot” putative class claims. Recognizing that there were questions as to the continuing validity of Pitts, the district court certified its ruling for interlocutory appeal under 28 U.S.C. § 1292(b).
Plaintiffs in consumer data breach class actions have struggled to establish Article III standing. Article III standing requires an alleged ‘‘concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.’’ In Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013) the Supreme Court held that mere allegations of ‘‘possible future injury’’ are not sufficient for standing, though a well-pled allegation that such harm is ‘‘certainly impending’’ could establish standing. In the three years since the Clapper decision, courts have frequently cited Clapper in assessing standing in data breach class actions, mostly in dismissing actions.
In Remijas v. Neiman Marcus, 794 F.3d 688 (7th Cir. 2015) the plaintiff brought a putative class action against the company following a data breach involving customer credit card information. Shortly after learning of the breach, defendant publicly acknowledged that a data breach had occurred involving 350,000 of its issued credit cards and that there were over 9,200 cards known to have been used fraudulently. Defendant provided individual notice to its customers who were hit with fraudulent charges on their credit cards and offered a free year of credit monitoring. The plaintiff alleged both actual and future harms, including an increased risk of future fraudulent charges and greater susceptibility to identity theft. The district court dismissed the complaint, finding that neither the ‘‘fraudulent charge’’ injury alleged to have been incurred by the 9,200 customers, nor the risk that the same injury may befall others among the 350,000 customers at issue, is an injury sufficient to confer standing because Clapper requires an injury to be concrete, particularized, and at least imminent. In particular, the 9,200 customers whose cards had been fraudulently used did not suffer a ‘‘concrete’’ injury where such customers were not financially responsible for the unauthorized charges, and the remaining customers are not at a ‘‘certainly impending risk of identity theft.’’
The Seventh Circuit – with Chief Judge Wood writing for the three-judge panel – reversed the district court, ruling that a data breach plaintiff may have standing based strictly on an alleged impending harm. The Seventh Circuit concluded that the facts alleged by plaintiff support the finding that the plaintiff has standing to bring claims against Neiman Marcus for the imminent harms of future fraudulent credit card charges or identity theft. The court emphasized that the risk of fraudulent charges or identity theft in this instance is ‘‘very real’’ – noting that the plaintiff alleges that the data breach occurred when hackers deliberately targeted Neiman Marcus to steal credit card information. Given this alleged fact, the Seventh Circuit determined that ‘‘Neiman Marcus customers should not have to wait until hackers commit identity theft or credit-card fraud in order to give the class standing, because there is an ‘objectively reasonable likelihood’ that such an injury will occur.’’ Indeed, the court continued, ‘‘Why else would hackers break into a store’s database and steal consumers’ private information? Presumably, the purpose of the hack is, sooner or later, to make fraudulent charges or assume those consumers’ identities.’’
More recently, in Lewert v. P.F. Chang’s China Bistro, Inc., No.14-3700 (7th Cir. 2016) the plaintiffs sought damages resulting from the theft of their credit and debit card data. Concluding that the plaintiffs had not suffered the requisite personal injury, the district court dismissed the action for lack of standing. The Seventh Circuit — with Chief Judge Wood again writing for the three-judge panel — reversed and remanded the district court’s order in light of Remijas. The Court concluded that several of plaintiffs’ alleged injuries fit within the categories the Court delineated in Remijas: “[Plaintiffs describe the same kind of future injuries as the Remijas plaintiffs did: the increased risk of fraudulent charges and identity theft they face because their data has already been stolen. These alleged injuries are concrete enough to support a lawsuit.” The Court rejected P.F. Chang’s argument that, unlike in Remijas, it contests whether the plaintiffs’ data was exposed in the breach. According to the Court: “To the extent this is a valid distinction (and that is questionable), it is one that is immaterial. At the pleading stage, the plaintiffs’ factual allegations must ‘cross the line from conceivable to plausible.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).