It’s no secret that consumers are focused on their health these days which has resulted in an increase in demand for products that are “healthy” and “all-natural.”  If you quickly browse the grocery store aisles it may appear as though the food and beverage industry has responded with a plethora of new, improved healthy (or at least healthier) options.  Of course, a closer inspection reveals some legitimate questions and concerns regarding the industry’s use of these claims.

For example, is it misleading to refer to a product as  “all-natural” when when it contains high-fructose corn syrup, a sweetener that is derived from corn BUT comes from genetically modified corn and is highly processed?

The FDA and USDA have joint regulatory authority over food and nonalcoholic beverages, and, the FTC regulates food advertising.  Yet, despite all of this regulatory oversight, there is still no hard-and-fast definition of the word “natural.”  This is in stark contrast to the “organic” label, whose use is strictly regulated by the USDA.  Only foods that have been grown and processed according to USDA National Organic Program guidelines may be labeled with the “Certified Organic” seal or face an $11,000 fine per violation.

As a result of this policy gap and increasing consumer confusion we have seen a lot of legal activity surrounding natural claims.  For instance, California residents recently voted on the hotly-contested Proposition 37, which would have required disclosure of the use of Genetically Modified Organisms (GMOs) in products as well as limitations on labeling products as “natural”.

In addition, new class-action lawsuits are continuously filed against food and beverage companies that label products as “natural” alleging fraudulent labeling practices and calling for the cessation of product sales.  Among other things, these lawsuits claim that companies are deliberately misleading consumers into thinking their products are healthier than they actually are.  Among the companies accused of such practices are conglomerates such as ConAgra Foods, PepsiCo and General Mills.  For the companies, the most frightening aspects of these suits are the damages:  the plaintiffs wish to tie the damages to product sales, which could result in billions of dollars should plaintiffs’ efforts prove to be successful.

Critics of the suits claim that the attorneys involved – many of whom were leading players in the Big Tobacco suits of the 1990s – are looking for the next big payday.  California is known for its robust consumer protection laws, and the suits were intentionally filed there, both due to those protections and to take advantage of the Proposition 37 battle.  However, it remains to be seen if the suits will survive past the pleadings or class certifications stage, mainly because it will be a significant burden to meet plausibility and reliance standards.  (For an in-depth review of defenses available to food companies in this context, see here).  Regardless of the result, these actions are sure to promote increased public dialogue and awareness over labeling disclosures and requirements.

For information on the USDA Organic Program, see here.
For information on the California labeling suits, see here.