Naked Juice Labels to be Stripped of "All Natural" and "Non-GMO" Claims in False Advertising Settlement

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Naked Juice Labels to be Stripped of "All Natural" and "Non-GMO" Claims in False Advertising Settlement
PepsiCo has agreed to pay $9 million to settle a class action battle over its use of the words “All Natural” and “Non-GMO” (non-Genetically Modified Organism) on its Naked Juice drink products.  As part of the settlement, PepsiCo agreed to change its labeling.

If approved by the district court, the settlement would resolve five separate class action lawsuits, which were consolidated with the lead case Pappas v. Naked Juice Co. of Glendora, Inc., in March 2012.

The case against PepsiCo stems from allegations that statements on the Naked Juice labels constitute false advertising.  The plaintiffs sued for violation of a number of California statutes – the Consumer Legal Remedies Act (CLRA) and False Advertising and Unfair Competition Laws.

According to the plaintiffs, independent testing revealed genetically modified soy protein in some Naked Juice products.  The plaintiffs also alleged that several ingredients in the Naked Juice products are non-natural, including ingredients like beta carotene and biotin which do occur naturally but are produced synthetically when added as supplements to foods, and a fiber ingredient that is produced by chemically rearranging corn starch molecules.  All of these ingredients are listed in the ingredient panel, but according to the plaintiffs, a reasonable consumer wouldn’t scrutinize the ingredient list for information contradicting the plain, conspicuous statements “All Natural” and “Non-GMO.”

The settlement in the PepsiCo case is likely to lead to many more class action lawsuits against businesses that advertise their products as “natural” or “all natural.”  Unlike use of the word “organic,” use of the word “natural” is not explicitly regulated by federal or state law, leaving the door open for claims of false or misleading advertising by consumers.

What’s the moral of this story?  An ounce of prevention is worth a pound of cure.  It is important to scrutinize health-related language used in advertising, especially on food products, and ensure there is documentation to back up claims.  CK&E routinely works with clients to evaluate the language on product packaging and in advertising as part of a comprehensive risk analysis so they can make informed choices for their businesses.  CK&E also has extensive experience defending clients against consumer false advertising claims.

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2
AUG
0

Advertising and Labeling, Beauty Industry, Class Actions, Consumer Legal Remedies Act, Food, Craft Beer and Nutrition, Manufacturing, Regulatory Compliance, Sales, Unfair Competition

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2012: A Bountiful Year for Prop 65 Plaintiffs and Their Lawyers

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2012: A Bountiful Year for Prop 65 Plaintiffs and Their Lawyers
Proposition 65 requires that businesses warn about the presence of chemicals believed by the State of California to cause cancer or reproductive harm.  Private citizens may file lawsuits “in the public interest” against businesses alleging a failure to provide the required warning.  Such lawsuits are often filed by private law firms (sometimes called “bounty hunters”), in the names of repeat-plaintiffs like “Center for Environmental Health,”  after sending Notices of Violation. The apparent primary purpose is to obtain quick cash settlements from bewildered, unsuspecting businesses.

2012 Prop 65 Settlements Bar Chart by Year2012 was a particularly “bountiful” year for Prop 65 private plaintiffs, according to data recently released by the California Attorney General’s Office. In 2012, private plaintiffs settled 397 cases.  The settlements totaled nearly $20.5 million. When combined with the additional settlements by District Attorneys and the Attorney General’s Office, there were 437 Prop 65 settlements during 2012, totaling over $22.5 million.  2012 was the second-highest annual dollar total for Prop 65 settlements since 2000, and shows a clear upward trend in the settlements extracted from businesses that receive Prop 65 Notices of Violation.

It should surprise no one who studies Prop 65 issues that the bulk of the $22.5 million paid in Prop 65 settlements during 2012 went to the plaintiffs’ attorneys:  Attorneys’ fees made up more than $14.5 million, or 71.34% of all private settlements.  Private plaintiffs can also take 25% of any civil penalty assessed as a “bounty”.  In 2012, the civil penalties retained by plaintiffs represented an additional $755,000 or 3.7% of all private settlements.

2012 Prop 65 Settlement Pie ChartA lesser-known fact is that private plaintiffs and their attorneys can and do make even more money from Prop 65 settlements.  A portion of each Prop. 65 settlement is supposed to go toward causes or activities that further the purpose of Prop 65, so Prop 65 allows parties to structure some of their civil penalty allocation as a “Payment in Lieu of Penalties” (aka “PILP”).  Some Prop 65 plaintiffs have kept such PILP recoveries to support vaguely stated causes; some Prop 65 plaintiffs have even argued that funding more private litigation itself is activity that furthers the purpose of Prop 65, justifying PILP recoveries from settlements.  In 2012, PILP money made up 13.88% of all private settlements.  That means almost $3 million landed in the hands of private plaintiffs and their attorneys, in addition to the attorneys’ fees and civil penalty bounties they received.

Statewide, there are only a few active Prop 65 plaintiffs.  Aggregated settlement data can be useful in achieving cost-effective resolutions of Prop 65 claims.  CK&E routinely defends businesses who have received Prop 65 Notices of Violation.  CK&E also works with businesses to develop compliance strategies to minimize the risk that they will be future targets of Prop 65 plaintiffs.

This Blog Post was Co-Authored by Jackson McNeill, Law Clerk, UCLA School of Law, Class of 2014

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30
JUL
0

Beauty Industry, Food, Craft Beer and Nutrition, Manufacturing, Proposition 65, Regulatory Compliance, Sales, Technology, Unfair Competition

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Proposition 65 Bounty Hunters Target Titanium Dioxide in Personal Care Products

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Proposition 65 Bounty Hunters Target Titanium Dioxide in Personal Care Products
Titanium dioxide (TiO2) is commonly used in personal care products.  It can be found in cosmetics, skincare products, and sunscreens.  Products that may contain titanium dioxide include nail acrylic powders, eye shadows, loose and pressed face powder, powder foundation, bronzers, blushes and spray-on sunscreens.

Titanium dioxide was added to the list of Proposition 65 chemicals in September 2011, and warning requirements took effect in September 2012.  The addition of titanium dioxide (airborne, unbound particles of respirable size) to the Office of Environmental Health Hazard Assessment (OEHHA)’s list of chemicals subject to regulation under Proposition 65 has caused professional Prop 65 plaintiffs to send out a number of “Notices of Violation” to manufacturers and distributors in the personal care products industry.  They do this because the law requires that a Notice of Violation be served before a private party may commence a Prop 65 lawsuit.

Prop 65 plaintiffs – motivated by the potential to recover civil penalties and attorney’s fees – have seized on the new listing to go after numerous companies, including those in the beauty products business, for failing to provide a warning that titanium dioxide is known to the State of California to cause cancer.  Often, such Prop 65 Notices of Violation are motivated more by a desire for a quick settlement than for a long dispute.

Since its listing, titanium dioxide has been the subject of four Notice of Violations – two by the Center for Environmental Health, and two by the Public Interest Alliance.  The Center for Environmental Health is a well known Prop 65 plaintiff represented by Mark N. Todzo of Lexington Law Group in San Francisco.  Its Notices of Violation with respect to titanium dioxide have attacked manufacturers and distributors of spray-on sunscreens.

The Public Interest Alliance is new to the group of Prop 65 plaintiffs and is represented by Jeffrey M. Judd of Judd Law Group in San Francisco.  It has only sent out two Notices of Violation since it appeared on the Prop 65 scene, but both have been over titanium dioxide, and the two Notices combined attack more than 100 companies.

Manufacturers and distributors of personal care products should carefully review the contents of products that may contain titanium dioxide.  CK&E has helped clients with personal care products businesses understand and comply with the requirements of Prop 65, to avoid being one of those who receive a Notice of Violation.  If a Notice of Violation is received, CK&E works aggressively to help clients resolve the claims as quickly and economically as possible, without being held captive to the bounty hunters’ demands.

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14
JUL
0

Beauty Industry, Personal Care Products, Proposition 65

Lead in Baby Food? Failure to Warn Leads to Unusual Prop 65 Trial

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Lead in Baby Food? Failure to Warn Leads to Unusual Prop 65 Trial
Proposition 65 actions are notoriously expensive and difficult to defend.  For that reason, most Prop 65 cases settle.  But a rare case involving allegedly high levels of lead in baby food, packaged fruits and juices is in trial in the Alameda Superior Court.

In September 2011, the Environmental Law Foundation (one of a handful of organizations in California that files Prop 65 actions in the name of the public interest) brought a lawsuit against food companies Beech-Nut Nutrition, Dole, Gerber, Del Monte Foods, and many others.  ELF claimed that the manufacturers made and sold baby and children’s food containing lead, without a warning as required by Prop 65, California’s Safe Drinking Water and Toxic Enforcement Act.

What is at stake in the Prop 65 action is whether baby food and children’s food such as carrot and potato baby food, grape juice and fruit cocktail must include a warning that the foods contain a chemical known to the state of California to cause cancer or reproductive harm.  Naturally, the food manufacturers do not wish to be forced to warn potential consumers that their foods contain harmful chemicals.

The food companies’ defenses are being tried to Superior Court Judge Steven A. Brick.  The food companies claim that their products contain only trace levels of lead that are below the level required for a Prop 65 warning.  They also claim that the lead is “naturally occurring” in the foods and therefore no duty to warn is required under the “naturally occurring” exposure defense to Prop 65.  Finally, the food companies have argued that Prop 65’s warning requirements are preempted by the Food, Drug and Cosmetic Act and the Nutrition Labeling and Education Act.  They contend that the FDA has determined that the baby food and children’s food in question do not pose unacceptable risks to health, so a Prop 65 warning requirement would create a conflict between federal and state law.

This will be a closely-watched case, because the Court’s ruling on these defenses is likely to have a significant impact on the defenses available to businesses faced with Prop 65 actions in the future.  Regardless of the outcome, CK&E’s lawyers will continue to work with businesses to help them develop a plan of compliance so that they can achieve their goal of minimizing the risk of being named as a defendant in a Prop 65 lawsuit.  If a lawsuit is threatened or filed, CK&E’s lawyers apply can create and implement effective and cost-efficient defense strategies to minimize its impact.

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25
APR
0

Food, Craft Beer and Nutrition, Proposition 65, Regulatory Compliance, Unfair Competition

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Starting a Fire: "Tris" Listing Increases Risks of Prop 65 Claims

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Starting a Fire: "Tris" Listing Increases Risks of Prop 65 Claims
Tris / TDCPP is a common flame retardant additive used in the manufacture of polyurethane foam, resins, plastics, textile coatings and rubber. Tris / TDCPP is found in a wide variety of common products such as upholstered furniture and padding. California’s Office of Environmental Health Hazard Assessment (OEHHA) recently added the chemical Tris(1,3-dichloro-2-propyl) phosphate (chlorinated Tris or TDCPP) to its ever-growing list of chemicals “known to the State of California to cause cancer or reproductive toxicity.” As a result, Tris / TDCPP is now subject to Proposition 65, California’s Safe Drinking Water and Toxic Enforcement Act of 1986.

Prop 65 has a well-earned reputation as a “bounty hunter” statute, and is presently the subject of reform legislation, AB 227. This notorious “right to know” law does not ban any particular chemical from being used in products. In most cases it simply requires a generic warning label if a product contains chemicals found on the OEHHA’s Prop 65 list.

Because of the recent addition of Tris / TDCPP, products containing that chemical now must have a warning label in order to comply with Prop 65. Manufacturers and distributors who use outdated labeling and inadvertently fail to include the required warning are likely to be targeted by lawyers and claimants looking for violations on which they can capitalize. The penalties imposed by Prop 65 include fines as well as liability for the plaintiff’s attorney’s fees and costs.

Prospective Prop 65 plaintiffs are required to serve a “Notice of Violation” and wait at least 60 days before they can file a lawsuit. (California Health and Safety Code section 25249.7(d)) A review of the 159 Notices of Violation with respect to Tris / TDCPP served in the past 6 months reveals that just two law firms are actually behind the onslaught of Prop 65 notices regarding Tris / TDCPP:

  • The Chanler Group of Berkeley, California, through attorney Josh Voorhees and the firm’s “usual plaintiffs” (Peter Englander, Laurence Vinocur, Russell Brimer and John Moore) – 146 of the 159 Notices (92%).
  • Lexington Law Group of San Francisco, California, through attorney Mark N. Todzo and the firm’s plaintiff, Center for Environmental Health – 13 of the 159 Notices (8%).

The products identified in these notices have included foam-cushioned upholstered furniture, such as chairs, ottomans, stools and benches, foam-cushioned mattress toppers, back and seat cushions, car seats, and foam mats and pads for children and infants.

Manufacturers and distributors should promptly assess whether their products contain Tris / TDCPP. CK&E’s lawyers are experienced in helping clients take action to protect themselves from Prop 65 liability, and to help put out the fire if a Notice of Violation is delivered.

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2
APR
0

Advertising and Labeling, Fashion, Manufacturing, Proposition 65, Regulatory Compliance

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Prop. 65 Reform — Is a Safe Harbor from Bounty Hunters on the Horizon?

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Prop. 65 Reform — Is a Safe Harbor from Bounty Hunters on the Horizon?
California’s now-infamous Proposition 65 (Prop. 65, Cal. Health & Safety Code § 25249.5) allows a private citizen to file a lawsuit against any business that fails to post adequate warnings about the presence of chemicals known to cause cancer or reproductive harm.  The private enforcer may seek an injunction, penalties of up to $2500 per violation, per day, and an award of attorneys’ fees.

Assembly Member Mike Gatto (43rd District of California)  recently proposed legislation, Assembly Bill 227, that would reform Prop. 65 by providing a “safe harbor” in the form of a 14-day period for businesses to correct alleged violations.  If enacted as proposed, a business who receives a demand under Prop. 65 would have a brief opportunity to demonstrate its compliance with Prop. 65 requirements to the California State Attorney General, or the responsible city attorney or district attorney.  If the business takes advantage of that “safe harbor” then the claimant would be barred from filing a lawsuit against that business.

While the purpose of Prop. 65’s private enforcement provision is to allow private citizens to act on behalf of the public to ensure warnings are properly posted, supporters of AB 227 criticize Prop. 65 as a “bounty hunter” statute that primarily benefits plaintiff’s attorneys.  In 2011, businesses paid a total of nearly $16 million to settle lawsuits brought by  private citizens, of which almost $12 million was paid to the plaintiffs’ attorneys.  In fact, nearly half of the attorneys’ fees were paid to a single firm: The Chanler Group.

AB 227 would give businesses the opportunity to come into compliance with Prop. 65 warning requirements without paying exorbitant settlement fees to prevent costly litigation.  But businesses would have to take swift action.  As CK&E attorneys John A. Conkle, Amy Burke and Mark Riedel discussed in their November 2012 presentation to the Personal Care Products Council, What’s Your Game Plan?, it is important for businesses to develop strategies for ensuring regulatory compliance and for handling notices of violation quickly and efficiently.  AB 227, if signed into law, would be another reason that businesses should prepare contingency plans for the day that they receive a notice of violation from plaintiffs seeking to take advantage of Prop. 65 — a business could avoid being sued at all if it responds quickly and correctly to take advantage of the safe harbor.  CK&E advises clients in regulatory compliance, responding to warning and demand letters, and developing an individualized game plan to suit each client’s needs.

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18
MAR
0

Beauty Industry, Food, Craft Beer and Nutrition, Manufacturing, Proposition 65, Regulatory Compliance, Sales, Technology, Unfair Competition

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