Natural Products Insider

MAR-APR 2019

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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44 INSIDER March/April 2019 Consumer class actions alleging deceptive labeling and advertising claims have become a signifi cant—if not the most signifi cant—risk food and supplement companies face. Where once claim enforcement concerns stemmed from government actors, now lawsuits brought by a cottage industry of private plaintiff attorneys, purportedly representing consumers who have been deceived by claims, has proliferated to unprecedented levels. Many of these private suits follow a pattern and involve the same types of claims. Recently, claims that have not been widely targeted before are starting to get more attention. Nutrient-content claims are facing a growing number of challenges, which can be more vexing than other cases because few defenses are available for non-compliant claims, and settlements can be extortionate. FDA has detailed regulations specifying how nutrition information is presented on food and supplement labels. The most obvious example is the Nutrition Facts and Supplement Facts panels, but the requirements go deeper. The regulations cover a surprisingly large number of claims about the nutritional content of the product. Certain terms are explicitly identifi ed and have specifi c requirements for making the claim. For example, for a food product to claim it is "low calorie," it must 1 have fewer than 40 calories per reference amount customarily consumed (RACC, and if the RACC is small—less than 30 g or 2 tablespoons—per 50 g as well), and 2 if this is not a result of special formulation or processing, disclose all foods of this type are low calorie (e.g., "celery, a low-calorie food") (21 Code of Federal Regulation [CFR] 101.60(b)(2)). If the product makes a claim, and does not meet FDA's defi nition or conditions, it is considered to be misbranded. At fi rst glance, if a product makes a non- compliant nutrient-content claim, it would seem as though this is only an FDA issue because they are FDA regulations, and only FDA can enforce its rules. Unfortunately, private plaintiffs have found ways to indirectly enforce FDA's rules. Class action suits are generally premised on an argument that a reasonable consumer has been deceived by a claim—this is the case with claims such as "natural" and "no preservatives." But other legal theories bypass this deception requirement and, in essence, allow enforcement of FDA's defi nitions and requirements without having to show a consumer was deceived. Many states, including California, have enacted "mini" versions of the Federal Food, Drug and Cosmetic Act (FD&C) that incorporate FDA's regulations; and courts have allowed private plaintiffs to pursue actions alleging "unlawful" conduct based on violations of state law as a basis for the claim, even if the true nature of the claim is compliance with FDA regulations. Actions based on FDA's nutrient-content claim requirements have increased; however, the full extent of this trend is hard to gauge as many of these suits never become publicly fi led. In a typical situation, the class action attorney will send a private letter to a company, asserting a nutrient- content claim is not in compliance with FDA rules and disclose their intent to fi le a class action lawsuit unless a pre-litigation settlement is reached. Whether a nutrient-content claim meets FDA's requirements is usually a black-and-white issue. Some defenses are available for the unlawful conduct allegation overall, but these often cannot resolve a suit in its early stages. Even the initial stages of litigation can be costly, and many companies opt to privately and confi dentially settle claims prior to a suit being publicly fi led to avoid the time, expense and headache. The good news is these types of suits are easily avoidable. Because the claims are premised on non-compliance with specifi c regulations, ensuring all nutrient- content claims meet these requirements can prevent even getting a demand letter in the fi rst place. The regulations can be nuanced, complex and even confl icting. Often, what is an FDA-defi ned claim is not intuitive, and a label may unintentionally be making a claim. For example, if a product touts apples are a good source of vitamin C (which is true) and the product contains apples, there may be an implied claim the product overall is a "good source" (defi ned by FDA as 10 to 19 percent of the daily value) of vitamin C (which may not necessarily be the case). Another tricky situation is the regulations may require disclaimers, even for truthful statements. An example is a "no sugar added" claim— even if the claim is accurate, if the product overall is not "low calorie," it must disclose that fact in immediate proximity to the claim. Review by a skilled compliance team can help sift through the technical FDA requirements and ensure labels are compliant before printing. As the number of consumer class actions continues to grow, staying one step ahead is more important than ever. While cases challenging FDA nutrient-content claims are on the rise, a good compliance offense can stop these cases in their tracks. Jennifer M. Adams, associate, Amin Talati Upadhye (amintalati.com), focuses on defending companies in challenges from FDA, USDA, FTC, state attorney generals, advertising class action lawsuits and the National Advertising Division (NAD). Class Actions Take a Nutrient-Content Turn by Jennifer M. Adams Legal: Lawsuits INSIDER Q&A Explore two court decisions with potentially broad implications, FTC's priorities under a Republican administration and the agency's guidelines pertaining to social media in a recent Q&A with four health and nutrition industry attorneys. naturalproductsinsider.com/regulatory Scan Here

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