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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 – 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.

“Pink Slime” and Lessons Learned Re: Labeling and Advertising

By now, the use of “lean, finely textured beef” (LFTB, known to its detractors as “pink slime”) in ground beef products is well-known.  And that’s the problem.  If its manufacturers had been proactive in disclosing (and even advertising) its use instead of waiting for others to define the debate, then they may have minimized their risk of huge financial losses.

The purpose of this posting is not to take sides in the “pink slime” vs. “boneless lean beef” debate or to argue that one side’s arguments are more palatable, no pun intended. 

Rather, it is to highlight the importance of labeling, advertising, and promotional practices as part of a proactive risk management program.  That’s why this blog addresses more than just food safety issues; regardless of the product’s purported safety or purity, the key issue appears to be the lack of disclosure to consumers.  Why did it take 20-plus years for consumers to be able to identify what products contain this ingredient?  How could BPI, the largest producer of this product, not have seen this PR train wreck coming?

The irony of industry complaints about how the media have “smeared” the product and its producers’ reputations is that the industry’s wounds are almost entirely self-inflicted.  The producers chose not to disclose the pervasive addition of the product to ground beef, so critics naturally focused on why it was concealed from the public.  Iowa Rep. Steve King called for congressional hearings about the product’s critics, stating “they’ll have an obligation then to explain themselves why they could not base their allegations on facts and what they’ve done to damage an industry.”  However, the congressman failed to address a key issue: if the producers had disclosed these “facts” proactively, there would probably have been no “damage” to the industry.  

Consumers for decades (if not longer) have expected their ground “100 percent beef” to appear this way, not this way.  Similarly, BPI does not have even one picture of its product anywhere on its website or in its YouTube video rebuttals to films like Food Inc.  Its published images portray children enjoying burgers and the high technology used to produce its product.  Its videos feature company officers, a scientist who can’t make eye contact with the camera, and a lobbyist.  The lack of disclosure begs the question of what else might be in food fed to children?

Now, imagine that the companies producing this product had focused proactively on its claimed merits: that it’s a safesustainable, low cost, way to enjoy beef.  Photos of production machinery that looks like an indoor oil refinery just might appeal to the market segment that enjoys products like toxic waste candy.  Perhaps a catchy brand name like “spin safe” ™ could have defined the debate about using centrifuges to separate fat from lean meat.  Most importantly, calls for mandatory labeling of the product would become irrelevant; half of consumers do not read labels anyway

Lesson learned: manage labeling, advertising, and promotional issues proactively.

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.

Customers are (Still) Willing to Pay More for Safer Food

Today’s top story on Marler Clark’s Food Safety News site discusses a study (re-)confirming that people are willing to pay more for safer food.  (The March 2011 Deloitte Consumer Food Safety Survey reached a similar conclusion.)  However, as with most risk management plans, this recent study confirms consumers consider a cost/benefit analysis and will not pay an unlimited amount for minor safety improvements.

The bottom line for manufacturers, grocers, and restauranteurs: your customers will pay more to avoid food-borne illness (although they will not pay unlimited sums for minor food safety improvements), and a comprehensive food safety risk management plan may also reduce the costs and risks of litigation and lost brand value.

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.