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Food & Beverage Litigation Update

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Food & Beverage Litigation Update ISSUE 546 | NOVEMBER 21, 2014 FOOD & BEVERAGE LITIGATION UPDATE CONTENTS LEGISLATION, REGULATIONS AND STANDARDS Legislation, Regulations and Standards U.S. Codex Delegates Schedule Meeting U.S. Codex Delegates Schedule Meeting to Discuss Standards for Fats and Oils to Discuss Standards for Fats and Oils ...1 CSPI Seeks Disclosure of Sesame Seeds The U.S. Department of Agriculture’s Office of the Under Secretary for Food on Food Labels .........................1 Safety and the Food and Drug Administration’s Center for Food Safety and Navajo Nation Council Approves “Junk” Food Tax ................................1 Applied Nutrition have announced a January 13, 2015, public meeting in College Park, Maryland, to discuss draft U.S. positions for consideration during Litigation the 24th Session of the Codex Committee on Fats and Oils slated for February Kentucky Appeals Court Issues “Whiskey Fungus” Ruling. .2 9-13 in Melaka, Malaysia. Eighth Circuit Says Likelihood of MSG to Cause Harm Is Factual Matter ...........3 Agenda items at the January meeting include a proposed draft standard Wolfgang’s FACTA Suit to Proceed with for fish oils and discussion papers focusing on (i) cold pressed oils and (ii) Amended Complaint ...................4 amended standards for sunflower seed oils and high oleic soybean oil. See Bud Light Lime-A-Ritas® Too High-Calorie to Be “Light,” Putative Class Federal Register, November 19, 2014. Action Says .............................5 EU Court of Justice Allows Retailer CSPI Seeks Disclosure of Sesame Seeds on Food Labels Liability for Poultry with Salmonella .....5 Other Developments The Center for Science in the Public Interest (CSPI) has filed a citizen petition Rome Framework for Action and with the U.S. Food and Drug Administration (FDA) seeking a rule that would Declaration on Nutrition Adopted ......6 require sesame seeds and sesame products to be disclosed on food labels Rudd Center Report Targets Advertising Sugar-Sweetened Beverages in the same way that allergens, such as milk, eggs, fish, shellfish, tree nuts, to Children .............................7 peanuts, wheat, and soy, are disclosed. CSPI asks that sesame be added to USP Releases Draft Guidance on Food FDA’s list of allergens in its “Statement of Policy for Labeling and Preventing Fraud Mitigation ........................8 Cross-contact of Common Food Allergens” “to address both labeling and cross Scientific/Technical Items contact issues related to food manufacturing practices.” The petition includes Researchers Call for Better Energy Drink letters from parents of purported sesame-allergic children “explaining why Labeling ................................8 better labeling is so important for their families.” They claim that reactions Trans Fat Consumption Allegedly Linked to Diminished Memory . 9 to sesame have been severe and life-threatening. See CSPI News Release, Phthalates Allegedly Associated November 18, 2014. with Increased Stress Markers During Pregnancy ......................9 Navajo Nation Council Approves “Junk” Food Tax In a 10-4 vote, the Navajo Nation Council has approved a tax on “junk” foods sold on the largest reservation in the United States. If President Ben Shelly signs the measure into law, the Healthy Dine Nation Act of 2014 would apply to items like cookies, chips and soft drinks, and the revenue generated would be directed to a fund supporting farmers markets, the planting of vegetable gardens, purchase of exercise equipment, and other health-focused projects. Shelly evidently vetoed similar legislation earlier in 2014, reportedly saying FOOD & BEVERAGE that he supported the goals of the tax initiative but questioned its imple- LITIGATION UPDATE mentation. Proponents of the tax reportedly cite the high rates of diabetes among American Indians and Alaska Natives—the highest among U.S. racial ISSUE 546 | NOVEMBER 21, 2014 and ethnic groups—as the main reason to pass the legislation. See Associated Press, November 15, 2014. LITIGATION SHB offers expert, efficient and innova- tive representation to clients targeted by food lawyers and regulators. We know that the successful resolution Kentucky Appeals Court Issues “Whiskey Fungus” Ruling of food-related matters requires a comprehensive strategy developed in A Kentucky Court of Appeals panel has reversed a trial-court determination partnership with our clients. that trespass and nuisance claims filed by residents alleging damage from the For additional information on SHB’s Agribusiness & Food Safety capabilities, ethanol emissions of nearby distilleries are preempted under the Clean Air please contact Act (CAA). Merrick v. Brown-Forman Corp., No. 2013-CA-002048-MR (Ky. Ct. Mark Anstoetter App., decided November 14, 2014). A federal court considering similar issues 816-474-6550 [email protected] has also found that state law-based claims are not preempted. That ruling is summarized in Issue 519 of this Update. or Madeleine McDonough In the Kentucky state-court proceeding, the circuit court dismissed the action, 816-474-6550 ruling that the “federal Clean Air Act preempts source state air quality tort 202-783-8400 [email protected] claims of the type asserted by” the plaintiffs. They allege that the atmospheric If you have questions about this issue ethanol the distilleries emit promotes the growth of “whiskey fungus” that of the Update, or would like to receive causes a “pervasive black film covering virtually every outdoor surface,” which supporting documentation, please contact Mary Boyd ([email protected]) requires cleaning and power washing to remove. Plaintiff Bruce Merrick or Dale Walker ([email protected]); 816-474-6550. owns a company that makes stadium seating and claims that the whiskey fungus destroys any inventory stored out of doors and has “doubled the cost of replacing a commercial roof, and has otherwise caused substantial and ongoing pecuniary damages.” The complaint alleges negligence, nuisance and trespass claims and includes “an assertion that affordable and effective tech- nology exists to capture or otherwise prevent the release of ethanol vapors.” The defendants claimed that they comply with all federal laws, which preempt “all actions arising under state statutory and common law,” and that the fungus is naturally occurring in the environment. They filed a motion to dismiss, arguing that the state-tort claims arising from ethanol emissions, which are governed by the federal CAA, are preempted. Relying on a 2011 U.S. Supreme Court ruling finding that the CAA preempts federal common law claims, the circuit court concluded that the state-law tort claims were preempted because the plaintiffs had “not cited any authority decided since [then] that supports the argument that state tort claims are not preempted.” The court of appeals found persuasive a 2013 Third Circuit Court of Appeals ruling that the CAA “does not preempt state common law claims based on the law of the state where the source of the pollution is located.” According to the court, the language in the case is “clear, unambiguous and subject to but one interpretation,” in contrast with a 2010 Fourth Circuit Court of Appeals deci- 2 | back to top FOOD & BEVERAGE sion, “which held with less clarity that conflict preemption principles ‘caution LITIGATION UPDATE at a minimum against’ allowing state nuisance law to contradict joint federal- state air quality rules.” The court of appeals also noted that the circuit court ISSUE 546 | NOVEMBER 21, 2014 erroneously placed the burden on the plaintiffs to demonstrate the absence of preemption and cited U.S. Supreme Court precedent placing the burden of persuasion on the party asserting federal preemption of state law. The court remanded the matter for further proceedings. Eighth Circuit Says Likelihood of MSG to Cause Harm Is Factual Matter In a dispute over commercial liability insurance coverage, the Eighth Circuit Court of Appeals has ruled that a trial court erred in deciding, as a matter of law, that a recall of sausage breakfast sandwiches prompted by contamination with monosodium glutamate (MSG) was a covered incident. Hot Stuff Foods, LLC v. Houston Cas. Co., Nos. 14-1192, -1194 (8th Cir., decided November 17, 2014). When MSG is added to foods, it must be disclosed on the product label. Hot Stuff Foods makes sausage breakfast sandwiches with sausage that does not contain MSG and does not include it on package labels. The company also distributes sausage that contains MSG and learned in January 2011 that some of the MSG sausage was inadvertently used in the breakfast sandwiches. Because the product contained MSG not disclosed on the labels, it was misbranded under federal law. The company promptly reported the situa- tion to Food and Drug Administration and U.S. Department of Agriculture representatives and, following consultation, issued a voluntary recall, which included nearly 200,000 cases of breakfast sandwiches distributed between August 2010 and early January 2011. Approximately 40,000 cases of misla- beled sandwiches remained in commerce during the recall. Hot Stuff sought indemnification under a malicious product tampering/acci- dental product contamination policy issued by the defendant, which “denied coverage on the ground that the claim did not involve an ‘Accidental Product Contamination’ as defined in the policy.” Hot Stuff brought this declaratory judgment action to recover its loss. The trial court granted Hot Stuff’s motion for partial summary judgment, ruling that the company was entitled to indemnification of its covered
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