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BPI Former Employee: “Pink Slime Ate My Job.” Or was It BPI’s Decision Not to Disclose LFTB on Labels?

Former Beef Products, Inc. (BPI) employee Bruce Smith has filed a lawsuit concurrently with publishing his new book, “How Pink Slime Ate My Job.”  (Apparently, Mr. Smith alleges that media publicity concerning the widespread, unlabeled addition of Lean, Finely Textured Beef (LFTB) to ground beef decreased BPI’s sales and resulted in company layoffs.)  Free copies of Smith’s book and his lawsuit will be available at his June 26, 2012 press conference.

Iowa Rep. Steve King has stated he supports Mr. Smith’s use of the court system to “get to the bottom of this” alleged controversy, but why?  And why has he stated that the federal government should order public schools to buy LFTB for their discounted lunch programs?  (Only three states have chosen to purchase LFTB next year due to public demand to curtail its use.)

Do these have anything to do with the fact that BPI is one Rep. King’s top 20 campaign contributors?  For other social issues, Congressman King has raised a concern that the nation’s “runaway judiciary” plays an “active role in the lives of our children.”  Rep. King also contends he is “a firm believer in states’ rights” and the need to “protect parental rights from being infringed by the federal government.”   Why is the LFTB/pink slime controversy any different?

Another unanswered question for Mr. Smith and Rep. King: if LFTB is so great, why did BPI make a concerted effort to avoid labeling it instead of just disclosing it on product packaging?  The free market Rep. King supports requires freely-available information so consumers can make intelligent buying decisions.  Two LFTB producers have submitted labeling requests to the USDA, because some consumers who have learned more about the product want to buy it.  Good for them.  As Marion Nestle (quoting Carolyn Scott-Thomas) noted, if companies selling this product had proactively disclosed its presence in the first instance, they might have minimized customer outrage (and BPI job losses) from its recent publicity.

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Food Fraud Presents Risks of Criminal Prosecution

The latest reminder of the risks of perpetrating food fraud: on May 22, 2012, the U.S. government filed felony charges against a seafood importer for allegedly falsifying Country of Origin Labeling (COOL).  According to the filing, Worldwide Shrimp Company and others conspired to violate the Lacey Act by labeling Mexican shrimp as a product of the U.S.

The defendants, of course, are innocent until proven guilty beyond a reasonable doubt.  The purpose of this posting is not to suggest otherwise.  Rather, it is to identify three (of many) underlying reasons why COOL laws are important to businesses and consumers.

First, some consumers choose not to buy imported foods like shrimp and honey, because they may be contaminated with banned chemicals that might cause personal injury.

Second, even if no one suffers personal injury from an imported food, in some states, economic injury is enough to provide standing for plaintiffs to sue, because labels matter.  Consumers often are willing to pay more for foods from certain countries (or to avoid buying foods from others) for many reasons not directly related to safety, such as supporting local jobs or reducing energy use.

Finally, companies that are accused of violating COOL laws should keep in mind they risk conviction in the court of public opinion.  Many consumers understand that companies willing to violate COOL laws may also be more likely to break other laws that affect food safety.

Nutrition Facts Labeling: Do it Right the First Time

Please see my article at FoodandBeveragePackaging.com regarding the importance of including Percent Daily Value figures in the Nutrition Facts box for food products.

Food Fraud – An Emerging Litigation Risk

April 24, 2012 2 comments

Food Fraud presents an emerging litigation risk in California and nationwide.

What is Food Fraud?

Food fraud occurs when someone sells a product that is not what it purports to be.  A few examples include short weighting (e.g., including the weight of excessive ice glazing) of frozen seafood, species substitution, dilution of premium olive oil with inferior oil, and misrepresenting a product’s country of origin.

How do Fraudsters Get Away with It?

Many times, only minor distinctions differentiate competing products, so it can be difficult even for trained professionals to detect fraud.  Almost two hundred years ago, British writer Cyrus Redding stated that consumers could avoid food fraud by becoming “perfect[ly] acquaint[ed] with that which is good.”  But how can one become “perfectly acquainted” with the differences between conventionally-produced and “free range” eggs, other than by the price paid?

Why is this an Emerging Litigation Risk?

Food fraud is economic fraud, because labels matter, and customers want to get what they pay for.  Some states have already seen food fraud class actions filed that allege honey laundering.  Food fraud also presents a risk of food allergy personal injury litigation for companies that substitute cheaper finfish products like surimi for shellfish like crab.   Food fraud also may result in criminal indictment and imprisonment.  There  are also the indirect costs of negative publicity arising from conviction in the court of public opinion.

What can be Done to Manage Food Fraud Risks?

Companies that implement food fraud risk management plans that include traceability systems like RFID and third-party verifiers may be able to reduce their food fraud risks and increase sales.

Instant Soup Manufacturers: Does Your Product Package Increase the Risk of Burn Injury?

This story discusses the relatively high risk of serious burns young children may incur from tipping over cups of some brands of instant chicken noodle soup.

The purpose of this posting is not to critique any particular manufacturer’s product design, or to analyze the factual support for the National Institutes of Health study upon which the news story was based.  Rather, it is simply to call attention to a risk management issue — why sell a product in a relatively unsafe package when consumers will buy it in comparably-priced, safer packaging?

Some readers may ask whether this issue is just a redux of the purported McDonald’s hot coffee lawsuit impetus for tort reform.  It is not, for at least three reasons.

First, regardless of the disputed merits of the McDonald’s lawsuit that involved an adult who should know coffee is served hot, the chicken soup study addressed injuries children incurred.  Even if a jury finds that a child was comparatively negligent in causing his or her burn injuries, it may find that the child was less culpable than a similarly-situated adult.  Children are also often sympathetic plaintiffs; even more so if they have incurred an horrifically painful burn injury that resulted in permanent scarring.

Second, the cost of selling the soup in a more stable package (e.g., a foam bowl) is likely minimal.  Consumers will also likely buy just as much soup sold in a bowl (or another tip-resistant container) instead of a cup — a plaintiff’s attorney will almost certainly contend at trial that many manufacturers seem to have no trouble sourcing foam bowls and selling their products at competitive prices.

Finally, the cost of litigating just one serious burn injury case may approach the cost of switching to a more stable container.  A one-time investment in risk management may also pay dividends in the court of public opinion.

Labels (Still) Matter: Campbell’s Soup Pays Seven Figures to Settle “Low Sodium” Class Action

September 14, 2011 Leave a comment

The latest reminder that manufacturers must consider the costs and benefits of promoting health and nutrient content claims on product labeling:

Campbell’s Soup Company recently paid $1.4 million to settle a class action lawsuit that alleged its “Low Sodium” tomato soup labeling misled consumers.  The soup allegedly contained the same amount of sodium as the company’s regular soup, but Campbell’s sold it for a premium price.  (The complaint also alleged Campbell’s Healthy Request tomato soup claimed it was “Low in Fat,” even though it contained more fat than the company’s regular soup.)

Campbell’s denies liability and contends it complied with applicable laws. 

The purpose of this posting is not to comment on the factual or legal support for the parties’ claims or defenses.  The issue is that regardless of the merits, defending and resolving lawsuits arising out of product labeling claims can be very expensive.  Companies that invest proactively to minimize their litigation risks may avoid incurring these costs.

Are Health Claims on Kids’ Cereals Misleading? Why Should My Company Care?

August 16, 2011 1 comment

Yale University’s Rudd Center for Food Policy and Obesity recently published a study that found parents often misinterpreted the meaning of nutrient content and health claims presented on kids’ cereals.  The cereals included an “average [of] 3.1” “nutrition-related” messages per box, but they also contained an average of 35 percent added sugar by weight.

The study concluded that its participants misinterpreted the claims in two ways.  First, they “inferred” that the sugary cereals were “more nutritious” than competing products, despite their “below average . . . nutritional quality.”  Second, they attached broader meanings to the manufacturers’ health claims than their “literal interpretation.”   For example, 74% of the parents believed that an “‘antioxidants and vitamins’ (i.e. immunity) claim meant it might keep their child from getting sick.”

Most critically, the authors concluded the parents’ “beliefs predicted greater willingness to buy the cereals.”  Please recall my article regarding the Kwikset case that allowed a false advertising class action to proceed, because claims on “labels matter.”  Manufacturers of foods that some authors may deem have “below average . . . nutritional quality” may want to conduct a cost-benefit analysis evaluating the potential increased sales from advertising health claims against the risk that findings like those from the Yale study may support an unfair competition class action claim, as well as possible negative publicity in the court of public opinion.  Public interest groups may also attempt to support efforts to expand the jellybean rule to further limit manufacturers’ use of these claims.