It’s the Law: Don’t Sell Your Homebrew!

Posted in FDA, Food & Beverage Industry, Food Litigation

Homebrewing and drinking craft beer are both widely popular. Currently, there are more than 6,000 craft breweries in the U.S., and over 2,000 homebrew clubs. As brewing for fun and profit has become more widespread, the applicable legal framework has also developed – and compliance is just as important for hobbyists as for professionals.

At the outset, it’s important to note that homebrewing and commercial brewing are subject to very different sets of laws. The most basic distinction is that homebrew can’t legally be sold, a golden rule (and actual rule) those of us in the homebrewing community can’t be reminded of enough. Therefore, homebrewers are unaffected by many of the regulations for-profit brewers must comply with – but are limited in what they can do with the final product (i.e. you can’t sell it).

Brewing at any scale requires a lot of water. On average, seven gallons of water are needed to make one gallon of beer – and most of that water ends up as waste. Commercial breweries must obtain Industrial User permits, allowing them to discharge wastewater to municipal treatment plants, if they discharge an average of 25,000 gallons per day or more of water. Each permit will describe and limit what compounds the discharged water may contain, and heavy fines may be levied if the permit’s terms are violated. In 2016, Pennsylvania brewery Yuengling learned firsthand what the cost of noncompliance can be – the brewery entered a consent decree with the United States to resolve a dispute over alleged discharge permit violations, agreeing to pay nearly $10 million in combined facility improvements and penalties – expenditures of the type we avoid by not selling homebrew. Yuengling’s discharges primarily contained sugar and yeast – not toxic or hazardous compounds – and exceeded permit limits for phosphorus and zinc, pH, and biological oxygen demand.

Fortunately for homebrewers, smaller production volumes obviate the need for discharge permits and much of the concern over wastewater disposal. In Pennsylvania, homebrew production is limited to 300 gallons annually per household – an amount far lower than would trigger discharge permit requirements. So long as you adhere to that limit, you should avoid regulatory scrutiny. Don’t forget – not selling your homebrew helps you avoid regulatory scrutiny as well. While penalties for brewing water disposal are generally not applicable to homebrewers, best practices in water management should be followed. Water used for cleaning brewing equipment or chilling wort can be dumped down the drain or used to water a yard or garden. However, brewing effluent, like other waste, shouldn’t be dumped into storm drains or bodies of water. Particularly in drought-prone areas, water conservation should be a focus. Water that’s piped through a counterflow chiller, for example, generally remains clean and can be used to wash equipment after brewing, or for other purposes. A batch of sanitizing solution – which is mostly water – can be used to clean multiple items before losing effectiveness, and most commercial sanitizers used by homebrewers are biodegradable and non-toxic.

The other main biproduct of brewing is spent grain – malted barley and other grains from which most of the fermentable sugar has been extracted. Despite its name, spent grain still contains nutrition, and lends itself to a variety of uses. Breweries commonly donate or sell spent grain to be used as animal feed, eliminating the need for costly disposal of the would-be waste. This practice is allowed by the FDA, so long as the brewers comply with human food safety regulations, ensure spent grains aren’t commingled with other waste or contaminants, and do not transform the grains after brewing by cooking or otherwise processing them. The agency considered more stringent handling and packaging rules for breweries offering spent grains as animal feed in late 2013, but withdrew the proposal following widespread industry pushback against what were expected to be costly and duplicative requirements.

Homebrewing isn’t subject to these regulations under which the FDA allows spent grains to be sold as animal feed. Therefore, just as you should never sell your homebrew, entrepreneurial homebrewers should not sell their brewing biproducts either – at least, not without researching all requirements governing the intended use of the grains or other waste. Homebrewers can, however, use their spent grains for personal consumption or composting. Because spent grain output from a home operation is much smaller than that of a commercial brewery, local waste management should easily dispose of whatever’s left over once you’ve had your fill of spent grain bread (or granola, or pizza dough, or pretzels, or dog treats…) and your compost bin and your neighbors’ are overflowing.

If you’ve read this far, you’ve probably gathered that you’re not allowed to sell your homebrew. And I can’t accept homebrew in exchange for legal services. I know, it’s a bummer. But look on the bright side: as homebrewers, we deal with far fewer regulatory restrictions on our brewing and waste disposal processes. And we can be innovative and experimental, free to break the law of the Reinheitsgebot.

Oh, one last thing: don’t sell your homebrew!

Kathleen Kline is a litigator and environmental lawyer who handles a variety of matters, including disputes over water pollution as well as professional liability. Kathleen also serves as Legal Advisor to the Philadelphia Homebrew Club, in which capacity she constantly reminds Club members that it’s against the law to sell homebrew.

Illinois Proposes Stricter Lead Rules for Public Intervention, Enforcement Actions

Posted in Consumer Safety

Illinois is proposing a new rule that would lower the state’s “action level” for children with lead in their blood. The new rule would also stiffen penalties for those who violate the Lead Poisoning Prevention Act and Code.

The rule, proposed by the Illinois Department of Public Health (IDPH), would lower the threshold level of lead in a child’s blood that would require state officials to intervene. Currently, that level is set at 10 micrograms per deciliter. The proposed rule would lower the level to 5 micrograms per deciliter, which is the level recommended by the Centers for Disease Control and Prevention (CDC).

Any blood test results showing a child has blood lead levels at or above 5 micrograms per deciliter would require state officials to take various actions, including visiting the child’s home. The rule requires state officials to provide information to the child’s parent or guardian concerning the risks posed by lead and how to reduce a child’s lead exposure. Under the rule, any blood test showing a child has elevated lead levels must be reported to the IDPH within 48 hours.

Public officials expect lowering the action level will affect thousands of children in Illinois. According to the IDPH, of the 229,000 children tested for lead in 2017, more than 7,000 children had blood lead levels at or above 5 micrograms per deciliter. But more than 5,600 of those children had blood levels below 10 micrograms per deciliter, meaning that they would not receive state intervention under the current rule. The CDC has recommended lowering the action level to 5 micrograms per deciliter since 2012 and based the recommendation on a growing number of studies that found even low blood lead levels may cause life-long negative health effects for children.

The new rule would also expand the IDPH’s enforcement authority. It would allow the IDPH to levy fines not only against licensed professionals, like lead abatement contractors, but also against anyone who violates the Lead Poisoning Prevention Act or the Code, which would include property owners who fail to perform lead remediation on properties where affected children live.

The rule would also stiffen penalties for violators, raising the maximum penalty for first-time offenders from $1,000 to $5,000, and the minimum penalty for repeat offenders from $1,000 to $5,000. The rule would also raise fines from $1,000 to $5,000 for violations that cause lead dust or debris to be spread to surrounding areas during remediation work.

The IDPH published its first notice of the proposed rule in the Illinois Register on Aug. 17, 2018 and is accepting public comment through Oct. 1, 2018. The citation for the Lead Poisoning Prevention Code is 77 Ill. Adm. Code 845.

˘ Not admitted to the practice of law

Appellate Court Opens Door to Jury Trials in Proposition 65 Cases

Posted in Class Action Defense Strategies, Class Action Litigation, Class Action Suits, Litigation, Prop 65

The California Court of Appeal, First Appellate District (First District) recently reversed course on an important issue in the Proposition 65 world by indicating that a jury trial may be available to defendants in certain circumstances. The decision, Nationwide Biweekly Administration, Inc., et al., v. The Superior Court of Alameda County, Opinion, A150264, (June 13, 2018), rebuked both the legal reasoning and conclusion of the First District’s precedent on the issue, DiPirro v. Bondo Corp., 153 Cal.App.4th 150 (2007), which held that Proposition 65 defendants did not have a right to a jury trial.

In DiPirro, the court reasoned that jury trials are not available in Proposition 65 cases because the essential character and purpose of the law is to provide equitable relief, not to impose civil penalties. Id. at 180-81. DiPirro was based on a widely recognized principle in American jurisprudence under the Seventh Amendment to the U.S. Constitution – that litigants in traditional legal actions (i.e., monetary damage cases) are guaranteed the right to a jury trial, whereas litigants in equitable actions do not have such a right.

The First District’s recent decision in Nationwide Biweekly Administration expressly calls into question the legal reasoning and conclusion of DiPirro. The First District states that the DiPirro court misconstrued the rule, and that “a right to jury trial does exist as to liability in a government enforcement action seeking statutory penalties” but does not exist as to the amount of those penalties. Of course, Proposition 65 is not strictly an equitable relief statutory scheme – it includes a significant penalty component. On this basis, the First District stated that “we cannot endorse DiPirro’s analysis” given its unsupported conclusion that a right to jury trial does not exist when determining liability for penalties under Proposition 65.

Nationwide Biweekly Administration looks to be a positive development for defendants in Proposition 65 cases, but it does not expressly overturn DiPirro nor undo other fundamental problems with the law, including the fact that the burden of proof is often placed on the defendant. While the First District’s decision is a step in the right direction, it likely will not alter the ultimate conclusion for most Proposition 65 defendants – that settlement is a more cost-effective approach than engaging in lengthy litigation.

Greenberg Traurig’s Gene Livingston to Chair Prop 65 Clearinghouse Annual Conference

Posted in Event, Prop 65

Greenberg Traurig’s Gene Livingston, shareholder and chair of the Proposition 65 & Green Chemistry Practice, will be chairing Prop. 65 Clearinghouse’s 13th Annual Prop. 65 Conference at the Julia Morgan Ballroom in San Francisco. The Conference will take place on Monday, Sept. 24. According to the organization, attendees will be privy to hands-on advice from government, industry, and plaintiff organizations. The conference will include panels on the impact of OEHHA’s changes to the Prop. 65 warning regulations, how new chemical listings affect your business, and the use of litigation to regulate chemicals in food. Register here.

 

Standing and the Right to Sue Under Illinois’ Biometric Information Privacy Act

Posted in Class Action Suits

Greenberg Traurig Shareholder Brett M. Doran authored an article published in DRI titled “Standing and the Right to Sue Under Illinois’ Biometric Information Privacy Act.” The article examines Illinois Biometric Information Privacy Act (BIPA) class actions and how courts have treated challenges to plaintiffs’ standing or right to sue. Click here to read the full article.

Prop 65 Ruling Based on Old Science

Posted in Prop 65

Greenberg Traurig Shareholder Anthony J. Cortez and Associate Will Wagner co-authored an article in the Tea and Coffee Trade Journal titled “Prop 65 Ruling Based on Old Science,” discussing a recent Proposition 65 ruling that affects the sale of coffee in the state of California. To read the full article, please click here.

Illinois Appellate Court Recognizes Joint Defense Privilege

Posted in Litigation

An Illinois appellate court has formally recognized what both state and federal courts have already considered to be the law—that coparties to a lawsuit who agree to share information pursuant to a common interest in defeating their opponent do not waive either the attorney-client or work-product privilege when they do so.1Parties may object to disclosing these communications when sought by the opposing side in discovery.2 The necessity of this holding as a matter of first impression may come as a surprise to many practitioners who already regularly assert the joint defense privilege in Illinois state courts. The Selby court recognized that “a lot of practitioners and judges will be surprised to learn that [the joint defense privilege] has not already been recognized in Illinois.”3 The doctrine has implicitly existed in federal courts sitting in Illinois for decades, and practitioners have routinely asserted the defense in both state and federal tribunals.4 But although federal courts have conclusively stated that Illinois state law recognizes the joint defense privilege, Selby is the first Illinois appellate court case to finally do so.5

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EPA Concludes Glyphosate is Not Likely to be Carcinogenic to Humans

Posted in Consumer Safety

EPA concluded in draft risk assessments that a widely used herbicide in the United States that controls weeds and grasses— glyphosate—is “not likely to be carcinogenic to humans.”  Importantly, the assessment also “found no other meaningful risks to human health when the product is used according to the pesticide label.”  According to EPA, this finding is consistent with the 2017 National Institute of Health Agricultural Health Survey as well as conclusions by science reviews in other countries.

Use of glyphosate dates back to the 1970s and glyphosate is undergoing Registration Review—which requires EPA review of registered pesticides every 15 years.  The herbicide has been classified in multiple chemical categories since 1985.  Initially classified as a Group C Chemical (Possible Human Carcinogen) due to the discovery of kidney tumors in male mice, the agency reclassified the herbicide in 1986 as a Group D Chemical (Not Classifiable as to Human Carcinogenicity) due to equivocal data.  After additional peer review, in 1991, the agency classified glyphosate as a Group E Chemical (Evidence of Non-Carcinogenicity for Humans) based on studies of mice and rats.  In 2015, the Cancer Assessment Review Committee reevaluated prior data and classified glyphosate as “Not Likely to be Carcinogenic to Humans.”

As discussed previously by this blog (“EPA: Research Shows Herbicide Glyphosate Unlikely to Cause Cancer” and “Glyphosate Litigation Primer”), there has been significant national and international debate surrounding the use of the herbicide.  The International Agency for Research on Cancer, a subdivision of the World Health Organization (“WHO”), identified glyphosate as a probable carcinogen in March 2015.  But, in November of that year, the European Food and Safety Authority concluded the herbicide was “unlikely to pose a carcinogenic hazard to humans.”  Another subdivision of WHO reached a similar finding in 2016, concluding “glyphosate was unlikely to pose a carcinogenic risk to humans from exposure through the diet.”  While some European countries have sought to ban the herbicide, other countries have stood behind the finding that glyphosate is unlikely to cause cancer in humans.

In light of this backdrop, EPA characterized its 2017 evaluation as a more comprehensive evaluation compared to its prior 2015 human health review.  While the draft human health assessment finds the herbicide is unlikely to be carcinogenic to humans, EPA stated that the ecological risk assessment showed a “potential for effects on birds, mammals, and terrestrial and aquatic plants.”

The draft risk assessments and supporting documents are available on EPA’s website.  EPA will receive public comments for 60 days following the publication in early 2018 of the draft risk assessments to the glyphosate registration review docket, EPA-HQ-OPP-2009-0361.  EPA states that the agency will publish in 2019 the proposed interim registration review decision for glyphosate.  If deemed necessary, that decision would identify any proposed mitigation measures to reduce risk.

Plaintiffs Must Plead Facts Which Directly Contradict Allegedly False Statements to Plead ICFA Claims Based on Falsity

Posted in Advertising, Consumer Fraud

In a recent decision by Judge Thomas M. Durkin of the Northern District of Illinois, the Court recognized an important distinction for Illinois Consumer Fraud Act (ICFA) claims between a claim for “actual falsity” and one for “lack of substantiation.” Spector v. Mondelez Int’l, Inc., 15 C 4298, 2017 WL 4283711, at *10 (N.D. Ill. Sept. 27, 2017). In making this distinction, the Spector court has made clear that false advertising cases brought under ICFA must plead facts which directly contradict the advertising claim. Id. at *4 (holding that under Illinois law “a plaintiff may bring a lack of substantiation claim only if the defendant makes a substantiation claim in its advertisement.”). It is important to note that, in Illinois – unlike in many other states – a private plaintiff may bring a lack of substantiation claim where the advertisement included an establishment or substantiation claim (e.g., “Tests show that . . .”).

In Spector, the plaintiff alleged that the product at issue did not provide “4 hours of nutritious steady energy” as the defendant had represented. Id. at *2. In discussing the various factual allegations put forward by the plaintiff, the Spector opinion makes clear that the pleading standard for false advertising claim is a high bar. Id. at *3-10. Judge Durkin notes that “[i]n virtually all of the cases in which courts have held that the plaintiff adequately pled actual falsity in a false advertising case, the complaints in question cited to testing or studies that directly contradicted the advertising claim at issue.” Id. at *3. Factual allegations of falsity are insufficient when, as in Spector, they do not directly support a plaintiff’s allegation of falsity, but instead require the court to make a speculative leap. Id. at *7.

First, the plaintiff in Spector relied on a study which found that a 42 gram version of the product at issue was insufficient for the “4 hours of nutritious steady energy” claim and argued that, as a result, the 50 gram dose – when consumed without breakfast – must also be insufficient for that claim. Id. This argument would have required the court to make a speculative leap to allow the litigation to continue. As a result, the court found that plaintiff’s allegations were not sufficient to meet the required plausibility threshold. Id. at *9 (“While lack of substantiation evidence may be supportive of Plaintiff’s false advertising claim, it is not sufficient to give rise to a plausible claim of falsity.”).

Second, the plaintiff argued that the nutritional requirements of individuals vary based on a number of variables and as a result, “the 230 calories provided by a 50 gram serving of the Products could not guarantee 4 hours of nutritious steady energy for every consumer.” Id. at *9. The court found that this argument was also insufficient to state a claim. The court noted that “individual variations may exist but not impact the 4 hours of steady nutritious energy claim (which could be the floor below which no individual would ever fall).” Id.

Third, the plaintiff in Spector advanced the argument that “Plaintiff consumed the Products and did not herself experience 4 hours of steady energy.” Id. at 10. The court responded to this argument by quoting from Toback v. GNC Holdings, Inc., 2013 WL 5206103, at *3 (S.D. Fla. Sept. 13, 2013). The court held, in line with Toback, that an allegation that the plaintiff used the product and was not satisfied is insufficient to state a claim. Spector, 2017 WL 4283711, at *10. Instead, such allegations require “further detail or support.” Id. (quoting Toback, 2013 WL 5206103, at *3.) In addition, such an allegation is “too conclusory without further factual details to support the injury element of [the] ICFA claim.” Id. at *10 n.16.

The Spector decision provides a clear framework for analyzing whether a plaintiff has plausibly alleged a false advertising claim under ICFA or is simply attempting to cloak a claim for lack of substantiation in the language of falsity where the advertisements at issue do not include any such establishment or substantiation claim. The plaintiff in Spector is appealing the decision to the Seventh Circuit. The outcome of this appeal could have a substantial effect on which false advertising claims will survive a motion to dismiss going forward. The Spector court noted the stakes at play in resolving these issues:

it is not enough if those supportive factual allegations suggest “the mere possibility” of falsity. Otherwise, “a plaintiff with a largely groundless claim [would] be allowed to take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.”

Id., at *1 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)) (internal citations omitted).

Responding to Consumer Demand Letters Under the Massachusetts Consumer Protection Act

Posted in Class Action Litigation, Consumer Protection

The Massachusetts Consumer Protection Act (Chapter 93A, Section 9) prohibits a business from engaging in unfair or deceptive acts or practices. Chapter 93A litigation usually is time consuming, expensive, and exposes a company to mandatory multiple damages (if the act or practice was a knowing and willful violation of Chapter 93A) and attorneys’ fees. These provisions provide a consumer’s counsel significant leverage when litigating and attempting to settle Chapter 93A claims – particularly when brought in a class-action setting. Chapter 93A, however, affords a business an opportunity to gain that leverage back and limit exposure to the statute’s mandatory multiple damages and fee shifting provisions as well as foster more meaningful settlement discussions, if appropriate. Taking advantage of this opportunity, which occurs usually only once and before the litigation begins, can be beneficial for a company.

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