This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

  • San Francisco voters will decide again on tax on sugary soft drinks. San Francisco’s city supervisors have placed an initiative to tax sugary beverages by one penny per ounce on the ballot for this November. Such taxes have been proposed in many municipalities, and Philadelphia just approved a measure earlier this month (see the next item in this issue and our earlier reporting). In 2014, San Francisco voters considered a tax of this type, but it failed to obtain the two-thirds majority it needed for a dedicated tax. The 2016 proposal would be considered a “general tax” and would require only a simple majority. The soft-drink industry has spent heavily to defeat beverage taxes of this type across the nation. On June 21, the San Francisco supervisors voted to place the measure on the November ballot.
  • Beverage industry considers court action against Philadelphia’s soda tax. The soda industry has vowed to mount a court challenge to Philadelphia’s new tax on sugary beverages. The tax, which will add 1.5 cents per ounce to the cost of most sugar-containing and diet beverages in the city, will fund such city programs as an expansion of early childhood education and a revival of the city park system. One of the possible grounds for a court challenge is that the tax is actually a sales tax, which under Pennsylvania law can only be imposed by the state and not by a municipality. The tax is set to be collected starting on January 1, 2017, unless blocked by the courts.
  • Organic farm must allow USDA inspection. On June 29, the US District Court for Eastern Pennsylvania ruled that Miller’s Organic Farm of Bird-in-Hand, Pennsylvania, must submit to USDA inspection. Raw milk originating at the farm is linked to listeriosis illnesses in two consumers in Florida and California, one of whom died. Miller’s exclusively sells raw milk products to a private membership club. Such clubs, along with herdshares, are growing in number across the US, supported by individuals seeking to bypass the commercial food distribution system. Miller’s allies say the central issue in this case is “private food rights,” a concept giving primacy to contracts between private individuals to buy and sell foods. Owner Amos Miller has repeatedly refused access to the farm to Food Safety and Inspection Service inspectors. He says, “We don’t need big brother looking over our shoulder to do what is right.” Regulation of raw milk at the state level is a patchwork, but the FDA bans its interstate sale or distribution.
  • Judge rejects misrepresentation case against MillerCoors over Blue Moon beer. On June 16, the US District Court for the Southern District of California dismissed a consumer class action case brought by a self-described beer aficionado against MillerCoors which contended that the brewery misrepresented its Blue Moon beer as a craft beer originating in a microbrewery, whereas in fact it is mass produced by the brewing giant. The court held that Blue Moon’s advertisements made no affirmative misrepresentations that Blue Moon is brewed by a small, independent brewery. At best, the court ruled, the ads for Blue Moon “amount to mere puffery upon which a reasonable consumer could not rely.”
  • Panera will remove artificial flavors, sweeteners, preservatives and colors from packaged foods. US-based Panera Bread announced on June 16 that it will stop using artificial flavors, sweeteners, preservatives and colors in its packaged grocery store foods, such as its refrigerated soups, dressings and frozen breads, in the Panera at Home line by the end of 2016. The restaurant chain side of the business has also given itself the same deadline to reach its goal of eliminating all artificial preservatives, sweeteners, colors and flavors from its menu. Earlier, the company removed all antibiotics and non-naturally occurring trans fats from its products. Panera’s CEO said part of the reason for doing this is “to try to challenge the world a little bit.”
  • Sunflower seed recall keeps growing. The massive recall of sunflower seeds from Ontario-based SunOpta is still expanding. On June 20, the Earnest Eats company recalled certain lots of its granola bars, some shipped as recently as June 17, after SunOpta notified it of its recall due to the possibility that some sunflower kernels may be contaminated with Listeria monocytogenes. No illnesses have been linked to the recall, which covers numerous brands of cereals, snacks and bars sold in the US, Canada and the UK. See some of our earlier coverage of this story. On June 27, Reuters reported that SunOpta is consulting financial and legal advisers and pondering a shakeup of key executives as it resists pressure from its biggest shareholders to put itself on the market.
  • Air pollution suit against CAFO may proceed. A federal court in North Carolina on June 21 said it is allowing a lawsuit to proceed that charges a pork company with violating a federal air emissions law. The Humane Society of the United States and Sound Rivers, Inc. allege that The Hanor Company’s 8,000-pig CAFO (concentrated animal feeding operation) in North Carolina has not reported its ammonia emissions since 2011, a violation of the Emergency Planning and Community Right-to-Know Act. The suit focuses on ammonia emissions, but a number of environmental groups are leveraging it to point up the array of pollutants generated by CAFOs. Food Safety News comments that with 8,000 pigs, “Hanor produces excrement on a scale matching that of a small city. Unlike a city, though, the facility’s waste is not carefully piped and treated. Instead, it piles up and putrefies in giant open pits.” The publication adds: “The case apparently comes down to whether a CAFO must report on its air pollution, not whether it has to address it.” The US has about 20,000 CAFOs, containing billions of animals.
  • GMO labeling compromise faces uncertain fate. As Congress approached its summer break in late June, the fate of a compromise measure concerning the labeling of foods with GMO components remained unclear. Politico reported on June 29 that lobbying for and against the bipartisan compromise measure was under way in advance of the July 1 effective date of a mandatory labeling state law in Vermont. That state’s attorney general has said he would not begin to impose penalties against food companies that did not comply with the law until early 2017. The federal compromise measure would permit food companies to make GMO disclosures on the label, through QR codes that can be read on smartphones, or by directing consumers to a website. Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI), the leading legislators on both sides of the aisle on this issue, have endorsed the measure. In recent days, many major food companies have announced they will voluntarily provide information about GMO ingredients.
  • Six former FDA commissioners propose independence for the agency. At a conference in Aspen, Colorado, six former FDA heads from both Democratic and Republican administrations said on June 25 that Congress make the FDA an independent agency. They said that this step would make the agency less politicized and more capable of acting quickly to deal with public health crises. The former FDA commissioners said a good analogy was the EPA, which has cabinet-level status on its own, or even an independent regulatory agency like the FTC or SEC. They said they intend to draft a bipartisan plan that the next administration, of whatever party, could follow in making the FDA independent.
  • Private lawsuits allege that products with a trace of pesticide residue cannot be called “100% natural.” Lawsuits recently filed against Post Foods say that the company should not be allowed to call its Shredded Wheat products “100% natural” if they contain even trace elements of residue from glyphosate. The false-advertising lawsuits acknowledge that the levels of glyphosate, a common and potent pesticide, in these products are below the levels designated by the EPA as dangerous to human health. Nevertheless, the lawsuits allege that when a product is called “100% natural,” consumers expect it to have zero levels of pesticide residue. Similar lawsuits were filed last March against the Quaker Oats Company. An attorney for the plaintiffs said that Post “advertises Shredded Wheat as 100 Percent Natural, and glyphosate in any amount is not natural.” The most recent such complaint was filed in the US District Court for the Eastern District of New York on June 22.
  • Lawsuit alleges that citric acid is an added preservative and not a “natural” ingredient in snacks. A consumer class action filed June 20 in the US District Court for the Eastern District of New York alleges that more than a dozen Herr’s snack foods are being deceptively labeled as having no added preservatives. The lead plaintiff says in the lawsuit that the company’s labels are misleading because its products contain citric acid, an added preservative. She says that far from being a “natural” ingredient, citric acid is a “non-natural, highly chemically processed ingredient regularly used as a preservative.” It creates a highly acidic environment in which bacteria cannot thrive, she asserts.