What’s in a Claim? Would a Food Not Labeled “Natural” Taste as Sweet?

March 2013

• US government agencies have not established clear requirements for the claim that a food or beverage is “natural.”

• Meanwhile, consumers are becoming increasingly more educated about the ingredients contained in their foods and beverages, and there has been an increase in consumer fraud class actions aimed at food and beverage companies over natural claims.

• Conservative labeling is the best way to avoid such actions, and understanding the latest legal developments in this area is the best way to prepare for such actions should they occur.

With apologies to Shakespeare, what’s in a claim? Specifically, what does a claim that a food or beverage is “natural” mean? Consumers purchase foods labeled as “natural” for a variety of reasons, assuming, for example, that these foods are less processed, have improved health benefits, or have less impact on the environment. But does a “natural” product provide all of those benefits, and what do manufacturers who use that label intend to communicate?

US federal government agencies responsible for regulation of food labeling have not established clear requirements for use of this claim, giving food manufacturers some flexibility in their use of natural food labels. Perhaps as a result of that flexibility, consumers have challenged natural claims as misleading in a number of recent lawsuits. This article describes the regulatory landscape, recent litigation, and how food producers can minimize their potential liability.

Regulatory framework

The US Food and Drug Administration (FDA) is responsible for federal regulation of labeling for most food products. (The US Department of Agriculture (USDA) regulates certain egg products, meat, and poultry.) FDA is charged with ensuring that food labels are not false or misleading but has acknowledged the difficulty of defining a food as natural because most foods have been at least minimally processed.

Historically, FDA has not objected to use of a natural claim for foods that do not contain added color, artificial flavors, or synthetic substances. Seeking a more specific definition of “natural,” FDA solicited comments on that term in its 1991 Notice of Proposed Rulemaking (NPR) for the Nutrition Labeling and Education Act (NLEA). In 1993, after reviewing public comments, FDA announced that it intended to maintain its policy allowing a natural label claim for products containing no artificial ingredients because the issue was too complex for resolution given FDA’s limited resources and other priorities. Since that time, FDA has typically relied on its 1993 guidance in dealing with natural claims.

FDA rarely acts against companies for improper use of “natural” and has issued only a few warning letters related to natural claims. On March 11, 2011, Shemshad Food Products, Inc. (Shemshad; Los Angeles, California) received a warning letter from FDA in which the agency stated that Shemshad’s Lime Juice Natural product was misbranded owing to a misleading label. FDA observed that the ingredient statement listed a synthetic chemical preservative, sodium benzoate 1%, and stated that the term “natural” is truthful and nonmisleading on a label only when nothing artificial or synthetic has been included. Likewise, on November 16, 2011, FDA issued a warning letter to Alexia Foods, Inc. (Alexia; Eagle, Idaho) after reviewing the labels for Alexia’s Roasted Red Potatoes & Baby Portabella Mushrooms products. Similar to the Shemshad warning letter, FDA stated that the declaration of disodium dihydrogen pyrophosphate, a synthetic chemical preservative, caused any natural claim on the food label to be false and misleading.

These warning letters appear to be isolated cases, and FDA has expressly and continually declined to define “natural” in any regulatory or formal policy statement. This ambiguity has prompted some groups, such as The Sugar Association, to petition FDA to define the term. FDA has not responded meaningfully to these petitions, and it is unlikely the agency will address the issue in the near future.

USDA also has been reluctant to define “natural” and has adopted a policy similar to that of FDA, prohibiting the use of a natural label for any product containing an ingredient identified as artificial by FDA. In addition, USDA prohibits a natural label for meat and poultry that is “more than minimally processed.” In 2006, USDA solicited public comments in an attempt to establish a more detailed definition of “natural.” USDA received over 12,000 comments regarding an appropriate definition. The agency still has not issued a regulation and, given the controversy reflected in the public comments, USDA is likely to proceed with caution in developing a definition of “natural.”

The Federal Trade Commission (FTC) is charged with protecting consumers from deceptive practices and may take regulatory action for false or misleading advertising claims such as deceptive food labeling. However, FTC has decided not to address the “natural” label issue, recognizing that consumers have inconsistent perceptions of natural and that both FDA and USDA have declined to define the term. The agency has provided general guidance stating that a marketer’s natural claim must capable of being substantiated to a “reasonable” consumer. This reasonableness standard is flexible and FTC defers to FDA and USDA for enforcement actions.

Litigation and emerging trends

In recent years, numerous consumer fraud class actions have been filed based on natural food and beverage claims. These lawsuits often allege that using the term “natural” is deceptive when a product contains ingredients such as high fructose corn syrup or soy that are made from natural ingredients but are alleged to be processed and therefore not natural according to the plaintiff-consumer. Many of these suits are filed under plaintiff-friendly state law consumer fraud and protection acts, such as those in California and New Jersey.

In 2009, for example, plaintiffs brought suit against Snapple (Plano, Texas) under California’s Unfair Competition Law, alleging that the natural label on Snapple’s drink products was “deceptive, misleading, and untrue advertising” because the beverages contained high fructose corn syrup, an allegedly nonnatural ingredient. However, the judge ruled in Snapple’s favor by finding that the plaintiffs suffered no injury and granted a motion for summary judgment.

Unlike in the Snapple suit, plaintiffs are now alleging injury because they would not have purchased the product had they known it was not “all-natural,” and this strategy has been more successful in court. In a November 2012 decision, in a case based on a similar allegation that high fructose corn syrup is not natural, a US federal judge in California certified a class action filed against AriZona Beverage Co. (Cincinnati, Ohio). The court held that plaintiffs presented enough evidence to confer standing to seek declaratory and injunctive relief, although it refused to allow plaintiffs’ claims for monetary damages or for restitution and disgorgement.

Most of these lawsuits that allege that certain foods contain non-naturally occurring substances have been either settled or dismissed at the class certification stage. However, suits filed more recently— such as those against General Mills’ Nature Valley products (high fructose corn syrup), Dreyer’s Grand Ice Cream (potassium carbonate in alkalization process), ConAgra’s Wesson oils (genetically modified crops), and Ben & Jerry’s ice cream products (alkalized cocoa)— are still pending.

In another example of these types of claims, plaintiffs filed a class action against Frito-Lay (Dallas, Texas) in 2012 under Florida’s Unfair and Deceptive Practices Trade Act, alleging that the company’s bean dip contained substances “known to be derived” from genetically modified organisms (GMO). Therefore, according to the plaintiffs, the bean dip’s “all-natural” label was “likely to mislead the public.” This case and others are undergoing consolidation into a multidistrict litigation, which is pending before the court.

The use of GMO ingredients is becoming increasingly contentious as evidenced by California’s Proposition 37 (Prop. 37) ballot initiative. The ballot initiative would have mandated disclosure of GMO ingredients in food and only allowed the use of a natural label in very limited circumstances. Although it failed to pass, Prop. 37 demonstrates that use of GMO ingredients and natural claims is clearly on the public’s mind.

Risk mitigation

As a result of ambiguous regulations and permissive consumer protection statutes in many jurisdictions, the only risk mitigation measure that is sure to prevent a consumer class action is conservative labeling. Thus, if a manufacturer wants to include a natural label, it should avoid ingredients such as high fructose corn syrup, which consumers have alleged are processed and therefore not natural. This avoidance has the added benefit of ensuring compliance with admittedly ambiguous FDA regulations.

If food manufacturers were to be sued for a natural label claim, they could mount several defenses. At the pleading stage, courts have dismissed class action lawsuits based on the failure of plaintiffs to file a complaint with “enough facts to state a claim for relief that is plausible on its face” or for a lack of specificity in the complaint, as a federal judge did with part of ConAgra’s Wesson oils suit. In that suit, the plaintiff did not adequately describe how ConAgra allegedly misled consumers.

Manufacturers could also argue that consumer fraud claims made under state law are expressly preempted by federal law under NLEA. The main drawback of this defense is that FDA does not provide a legal definition of “natural,” so state law that purports to regulate all-natural labels may not be expressly preempted. However, companies have had success dismissing suits using the primary jurisdiction doctrine, in which courts can conclude that the preliminary decision-making authority remains with the relevant agency, such as FDA, rather than the courts. Also, certain states, such as California, have safe harbor exceptions to consumer protection laws that may apply if the conduct is permitted by federal statutes or regulations.

Given the recent increase in consumer fraud class actions aimed at food and beverage companies, manufacturers must remain vigilant about the labeling of their products and keep up to date on the latest legal developments in this arena. Consumers are becoming increasingly more educated about the ingredients contained in their foods and beverages, and heightened consumer awareness may prompt future FDA and USDA regulations on what constitutes an all-natural product as well as continued debate about this issue in the courts.

Cathy L. Burgess is a partner in the Health Care Law Group at Alston & Bird LLP. Her practice focuses on regulatory compliance, product risk management, enforcement and policy matters affecting industries regulated by the Food and Drug Administration (FDA). She can be reached at Cathy.Burgess@Alston.com.

Scott A. Elder is a partner in the Products Liability Group at Alston & Bird LLP. He represents corporations throughout the country, litigating cutting-edge scientific evidence issues involving pharmaceuticals, electronic products, and foods and beverages. He can be reached at scott.elder@alston.com.

Aliyya Haque and Guillermo Cuevas, who are Associates with Alston & Bird, assisted in writing this article.