The food and beverage industry continues to face increasing scrutiny over labeling and advertising. Despite the pandemic, the number of class actions targeting the food and beverage industry increased last year and shows no signs of slowing down in 2021.
The top five categories of food and beverage class action filings were false labeling, followed by cases challenging products flavored with vanilla, “all natural” cases, place of origin cases, and slack-fill cases. In 2020, New York had the most class action cases filed. California came in second, with Missouri and Washington, D.C., a distant third and fourth. The number of class actions filed against beverage companies in New York increased while the number of cases filed in California decreased.
Though class actions increased, the overall number of food sector cases were at a five-year low with approximately 80,000 cases filed nationally in 2020. Accounting for all these filings, the top three jurisdictions for food law cases were the state courts in Wisconsin and California, with the California federal courts coming in third.
Most food and beverage claims are concentrated on food labeling, including whether identified ingredients or flavors are artificial (i.e., vanilla). Claims have also been made about functions of certain ingredients, as well as about aspects of the supply chain for those ingredients. Lawsuits continue to contest the origin of the ingredients (e.g., Kona coffee, Australian beer, and Italian olive oil), the use of sweeteners (i.e., excess sugar or the presence of artificial sweeteners), the number of servings in packaged goods, and slack-fill claims. Baby food safety litigation and plant-based products also entered the fray.
Of the labeling cases, some have centered on the accuracy of the amount of a nutrient or ingredient in a product and claims that a product was not made in the manner indicated. These cases also focused on reference to ingredients as “real” when they were purportedly processed, as well as misstating the number of servings per package.
Vanilla continues to be a stalwart in the class action arena. These cases typically assert that a “reasonable consumer” anticipates that a product labeled as being flavored with vanilla will not get its flavor from sources other than from pure vanilla or vanilla extract.
For several years, the Food and Drug Administration (FDA) suggested a new definition of “natural” in human food labeling would be forthcoming, but it has yet to issue a formal definition. For that reason, consumer challenges are likely to continue in the “natural” category. Cases filed last year generally alleged that a product labeled “natural” contained some ingredient that was artificial.
Place of origin claims generally allege that terms and descriptions on products mislead consumers into believing that a product is made in a particular locale or has ingredients from a specific place. Some of these cases allege that the product name itself is misleading. In this regard, courts generally apply a “reasonable consumer” standard concluding that geographical names and related descriptions alone are typically not misleading.
Slack-fill lawsuits are typically putative class actions in which consumers allege a product’s packaging is deceptive because it contains too much empty space, or nonfunctional slack fill, that disguises the amount of product in the package. In one case, the complaint alleged that a bag of chips with 59 percent empty space contained nonfunctional space because another company sold a bag of chips with only 43 percent empty space.
Baby food manufacturers are facing mounting class action lawsuits for allegedly failing to disclose that their products contain dangerous amounts of heavy metals. A congressional report released in February found many of the products made by the country’s largest commercial baby food manufacturers contain significant levels of toxic heavy metals, including arsenic, lead, cadmium, and mercury, which can endanger infant neurological development. A lawsuit filed against one of the named companies only days after the report was released accused the company of “deceptive and misleading” labeling of products that “contain heavy metals, including arsenic, cadmium, and lead at levels above what is considered safe for babies.”
“For years, these baby food companies have known that their products contained high levels of toxic heavy metals,” plaintiff’s attorney Christopher Leung said in a press statement. “That’s unacceptable, and we intend to hold these companies accountable.”
One of the named companies posted in a message on its website that “[p]arents and caregivers can be confident that [our] foods and beverages you feed your little ones are high-quality and safe.” The company further proclaimed that “[a]ll of our foods meet our safety and quality standards, which are among the strictest in not just the U.S., but the world. We thoroughly oversee all levels of the growing and the production process. Where government standards don’t currently exist, we develop our own high standards by evaluating the latest food safety guidance.”
Once a niche market, the plant-based protein market size in 2020 was approximately $10.3 billion. With the rise of plant-based alternatives to conventional meat products, the industry has come under scrutiny from government regulators and increased risk for litigation. More than half the states in theUnited States considered legislation limiting the ability of plant-based protein producers to label their goods with terms associated with animal meat. Many industries contend that these products are misleading consumers into believing that the alternatives are the real thing or that the products are better for consumers than the real thing.
“There’s inconsistencies in terms of how one state may define a term versus another state,” notes Martin H. Hahn, Washington, DC, in Food Business News. “If you’re going to come out with a plant-based product, don’t call it plant-based ground beef. Call it a plant-based burger. Use a term that’s not solely identified with an established meat or poultry product.”
Likewise, demand for plant-based dairy alternatives is booming and, with it, lawsuits and legislation aimed at restricting how those products are labeled. Scott Gottlieb, former FDA commissioner, remarked in 2018 that almond milk should not be called milk “because almonds don’t lactate.” The same argument has been used in court to argue plant-based dairy alternatives that use the term “milk” are misleading consumers. “Opportunities exist under state consumer protection laws to bring actions against the industry,” explains Hahn. “The areas where we do have vulnerabilities are if you’re marketing a plant-based product that has milk in its name and you’re nutritionally inferior. If you’re coming out with a plant-based product that is an alternative to meat, be smart. Find terms that allow the consumer to know what that product is going to be and distinguish it from the standardized product.”
Given the competitive plant-based protein segment, the food and beverage industry should expect a substantial uptick in litigation.
The year 2020 saw a 10-year high in food and beverage class action filings. Overall, there was an 80 percent increase in class action filings from the prior year. The upward trend in class action litigation and the burgeoning area of plant-based products suggest that the business of food litigation is anything but stale.
