Food Law
| Publication year | 2017 |
| Author | By Christopher Van Gundy, Maria Jhai and Shalini Dogra |
By Christopher Van Gundy, Maria Jhai and Shalini Dogra
Food litigation has continued to be a hot area in California law. The cases shape the legal landscape, driving developments in class-action law in particular. The cases also track changes in the industry. Some labeling claims continue apace: slack-fill suits, as well as challenges to the use of the terms "natural," "healthy," and "added sugar," continue to be hotly litigated. Others arise as companies respond to evolving consumer preferences. For example, we see legal challenges to "fresh-pressed" and "cold-pressed" labeling claims related to the increased prevalence of high-pressure processing. The term "milk" used to described plant-based beverages still prompts litigation, despite prior pleading-stage dismissals, perhaps because of the growing ubiquity of products that use cow-milk alternatives. The sustained progression of food law as a practice area seems to be the result of a perfect storm: the reasonable-consumer standard itself, that allows for some indeterminacy regarding what labeling claims may engender liability; the health-conscious and ever-changing preferences of modern consumers; the market-power of small-company disruptors who are adept at responding to, and driving, consumer preferences; and the growing trend for major food companies to acquire, or mimic, those disruptors, putting their big-company deep pockets in play. This collection of cases from 2017 illustrates those big-picture trends, as well as some of the nuts-and-bolts changes in the day-to-day practice of law in this area.
In Briseno v. ConAgra Foods, Inc.,1 the Ninth Circuit categorically rejected a defense to class certification especially promising for food companies previously announced by the Third Circuit. In Carrera v. Bayer Corp.,2the Third Circuit required purported class representatives to demonstrate that it was "administratively feasible" to identify absent class members in order to obtain class certification.3 Although not referenced explicitly in Rule 23 of the Federal Rules of Civil Procedure ("Rule 23"), which sets forth the requirements for class certifications, the Third Circuit nevertheless opined that this requirement was a necessary to tool to ensure that the "class will actually function as a class."4
Food companies hailed this requirement as an important procedural safeguard to defend against class actions in the "Food Court" because consumers buy food products for many different reasons (such as taste) not necessarily based on specific labeling claims challenged by plaintiff's counsel (e.g., a cereal may not be "GMO free" as advertised, but many consumers may have bought the product simply for the taste). The purported class in Briseno consisted of consumers of Wesson-brand cooking oil who allegedly were deceived by the "100% Natural" labeling when in fact the product was made with genetically modified organisms ("GMO"). In rejecting this new defense, the court in Briseno concluded that "Rule 23's enumerated criteria already address the interests that motivated the Third Circuit and, therefore, that an independent administrative feasibility requirement is unnecessary."5
In reaching this conclusion, the Ninth Circuit affirmed the district court's class certification of consumers who purchased the challenged product in eleven separate state classes but could not demonstrate "administrative feasibility." The district court thus did not require the class representative to produce, as urged by the defendant, sales receipts of individual consumers or testimony proving the purchase of the product at issue. The Ninth Circuit approved and explained that it was bringing its interpretation of Rule 23 into line with similar holdings in the United States Court of Appeals, Sixth, Seventh and Eighth Circuits.
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In rejecting the Third Circuit's reasoning, the Ninth Circuit applied the "[t]raditional canons of statutory construction" and found that the prerequisites of Rule 23 constituted an "exhaustive list."6 The court explained that imposing this additional, unwritten requirement would "render that manageability criterion largely superfluous," violating the statutory construction canon that a rule should be interpreted to give effect to every clause.7 The "manageability criterion" of the "superiority" requirement of Rule 23 rendered the new "administrative feasibility" requirement unnecessary because, as explained by the Ninth Circuit, Rule 23 already requires courts to consider how and whether a class action would be superior to other methods for fairly and efficiently adjudicating the dispute.8
The court in Briseno continued by comprehensively discussing and ultimately dismissing various other policy reasons espoused by the Third Circuit for this new requirement. Perhaps the strongest argument pursued by the defendants in Carrera was based on the Due Process clause of United States Constitution, whereby defendants claimed that without the administrative feasibility requirement, they could not fairly defend against claims without knowing specifically how many consumers bought the product. The Ninth Circuit noted, however, that defendants would have a chance to raise individual issues during the claims process of any class action.
While the decision in Briseno may be disappointing for purported class defendants, the opinion was well-reasoned and in line with a majority of the federal circuit courts that have considered this issue. Purported class defendants would be well-advised to focus their opposition to class certification motions on more successful defenses, such as "implausibility" and plaintiffs' inability to develop a credible damages theory.
In July of 2013, the U.S. Food and Drug Administration ("FDA") and the Centers for Disease Control ("CDC") used supply chain "traceback/traceforward" and cutting-edge whole genome sequencing ("WGS") technologies to identify defendant Goknur Foodstuffs Import Export Company ("Goknur"), a Turkish supplier of pomegranate arils (a.k.a. the seeds or juice sacs), as the source of a Hepatitis A virus outbreak in the U.S. among Costco members. Hepatitis A virus infections are very rare in the U.S. but very common in Turkey. Approximately 165 consumers of a Townsend Farms "five berry blend" containing the contaminated pomegranate arils were hospitalized, and one required a liver transplant.
Townsend Farms recalled the five berry product under the auspices of the FDA and its recall procedures. The scope of the recall approved by FDA was limited to those Townsend Farms products containing certain lots of pomegranate arils from Goknur. The traceback/traceforward analysis permitted FDA to quickly determine that the Goknur arils in the Townsend Farms product were the "likely" source of the outbreak, but the relatively new WGS technology permitted FDA to confirm this conclusion because consumers of the Goknur arils were exposed to the genetically identical virus.
Townsend Farms brought a recovery action against Goknur, which defended by challenging to the accuracy of FDA's use of WGS in this case. Goknur maintained that the 86% match of virus samples across outbreak victims raised doubt as to liability. Goknur also argued that there was another supplier of pomegranate arils at least partially to blame. Although the court refused to enter into evidence much of the FDA report explaining why Goknur was the source of the Hepatitis A virus, Townsend Farms adduced expert testimony as to the correctness of the WGS technology and the traceback/traceforward analysis, all linking the Goknur arils to the Hepatitis A outbreak.
On April 14, 2017, the jury found Goknur liable on all claims for relief and awarded Townsend Farms the entire $7.5 million in damages claimed on its own behalf. Interestingly, of the $7.5 million awarded to Townsend Farms, $4.8 million was awarded as punitive damages, $2.7 million in costs, and nothing for lost profits.
This case illustrates the importance of new technologies in identifying liability in the food supply chain, but also the challenges of gaining the admission of government records and conclusions into evidence.
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Although widely reported in the food press as a significant supply chain issue, food fraud is rarely the subject of litigation. In this case, consumers of Bertolli and Carapelli brand "extra virgin" olive oils claimed they were deceived because the oils did not meet standards for the "extra virgin"-the highest quality grade of oil-as represented on the product labeling. The purported class also claimed deception because the oils were not "Made in Italy," as also represented, but rather were a collection of low quality oils from all over the Mediterranean, bottled in Italy and exported from there to the U.S.
The defendants opposed class certification on the ground that Rule 23(b) was not satisfied because common questions of law and fact did not predominate. Defendants argued that individual consumers in the class would have to establish that specific bottles they purchased did not meet standards for extra virgin olive oil and that such issues were inherently not subject to class-wide determination. The court rejected this argument and instead framed the issue as whether defendants "breached any legal obligation to take reasonable steps to ensure its oils meet the...
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