Will FDA Cane Juice Opinion Spur Deals, New Labels?

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By Julie A. Steinberg

June 1—The FDA's recent guidance equating “evaporated cane juice” with sugar strengthens claims of deception in food labeling suits and may prompt settlements, plaintiffs' attorneys say.

“The FDA’s action validates the claim, which itself is based on nutrition science, that use of the designation `ECJ' in place of `sugar' is misleading to consumers,” according to Maia Kats, litigation director at the Center for Science in the Public Interest in Washington, D.C.

Kats told Bloomberg BNA she would expect to see settlements where the product maker's ECJ assertion “is conspicuous and implies that the product is healthier or more natural or lower in sugar than comparator products with sugar.”

But defense lawyers say the guidance isn't legally binding and that all the general defenses to class actions apply to pending food labeling cases. They also say companies face litigation risks going forward if they don't nix the phrase.

Over the past few years, consumers sued makers of yogurt, chips and other products, alleging “evaporated cane juice” is a deceptive term that makes foods seem more healthful than they are.

They relied in part on a 2009 FDA draft guidance and several warning letters the agency sent to industry, saying ECJ isn't the common or usual name for any type of sweetener.

Courts stayed the suits after the Food and Drug Administration reopened the comment period in 2014 to seek public input on the phrase (15 CLASS 232, 3/14/14). The suits—which include cases over yogurt made by Chobani LLC, and snack crackers made by Late July Snacks LLC—are now expected to go forward.

The agency's final guidance, published May 26, says “evaporated cane juice” is a false or misleading phrase under the Federal Food, Drug and Cosmetic Act because it suggests that the sweetener is “juice” or is made from “juice.”

The term doesn't reveal that the basic nature and characterizing properties of ECJ are those of a sugar, the FDA said (see related story).

Juice covers only liquid obtained from fruits or vegetables, the FDA said.

Settlements Called Likely

Tim Blood of Blood Hurst & O’Reardon LLP in San Diego said the FDA guidance wasn't required for plaintiffs to recover under state false advertising laws, “but it establishes a clear standard for measuring whether the practice is deceptive.”

Blood, who represents consumers, told Bloomberg BNA he hopes all manufacturers “will immediately stop engaging in this practice.”

“However, for those who do not stop, a very good argument can now be made that they are intentionally deceiving consumers, which should lead to higher recoveries and possibly punitive damages for engaging in a practice that now is unquestionably deceptive,” he said.

Plaintiffs' attorney Stephen Gardner told Bloomberg BNA it's especially important that the FDA used as justification for its guidance 21 CFR §102.5, which requires food to be called by a common name that describes what it's like.

In part, Section 102.5(a) provides, “The common or usual name of a food, which may be a coined term, shall accurately identify or describe, in as simple and direct terms as possible, the basic nature of the food or its characterizing properties or ingredients.”

And Section 102.5(b) says, in part, that the common or usual name of a food shall include the percentage(s) of any “characterizing ingredient(s)” when the proportion of such ingredient in the food “has a material bearing on price or consumer acceptance.”

“In essence, it considers consumer beliefs the primary consideration for labeling,” said Gardner, head of the food law group at the Stanley Law Firm in Dallas and former CSPI litigation director.

“FDA hasn’t used it often, and the food lawsuits generally don’t use it either,” he said.

Now, companies “should be trying to settle like crazy,” he said.

Usual Hurdles Remain

But defense attorneys emphasized that the FDA guidance isn’t the law and said plaintiffs currently challenging the phrase still face all the usual hurdles in class action litigation.

The suits don't seem amenable to class certification and the ECJ terminology doesn't seem material to a consumer’s purchase decision for many products, David Biderman of Perkins Coie LLP in San Francisco told Bloomberg BNA.

“There are so many other purchase drivers for these products and ECJ (which is in the ingredient deck, which plaintiffs’ counsel claim few consumers read) would hardly seem to be material to a purchase decision—so materiality, commonality and predominance remain strong defenses,” Biderman, who defends food and beverage companies, said.

An ingredient deck, or panel, is the listing of ingredients in a product.

Take Heed Going Forward

But companies should take heed nonetheless, other defense attorneys said.

Plaintiffs' lawyers “still try to use guidances as proof of wrongdoing,” Justin Prochnow of Greenberg Traurig in Denver said. “And, even if isn’t proof, it does give plaintiff lawyers a `road map' to show a judge, which can have a prejudicial effect on the outcome,” Prochnow said.

Prochnow said he has “no doubt that many of these cases are winnable,” but noted it's expensive to litigate.

“So, if companies want to avoid the decisions involved in fighting such litigation, they would be well served to consider the comments made by FDA and identify the ingredient as sugar in some form or another,” he said.

Anthony Anscombe of Sedgwick LLP in Chicago said the main impact of the FDA's guidance “will be that, prospectively, food and beverage companies will be much less likely to use the term.”

Many have already stopped using it, in light of the risk of class litigation, he said.

But, “From a legal standpoint, the guidance for industry should not change much for companies facing class litigation,” said Anscombe, who co-chairs the firm's class action and food industry practice groups.

“Most of that litigation turns on whether the term is deceptive or misleading to consumers, and whether that confusion caused loss. FDA’s interpretation turns in large part on a regulatory definition of `juice,' which is not necessarily the same as what consumers understand of that term,” he said.

Plaintiffs will see the FDA’s interpretation as vindication of their arguments, “but defendants should be able to deflect this,” he said.

For one thing, FDA’s interpretation shouldn't be entitled to a high level of deference, as it's only non-binding guidance, and not the result of rulemaking, Anscombe said.

And to the extent that plaintiffs rely on the guidance to support claims under state consumer protection laws, they still have to show that the statutory violation had a consumer impact that caused loss, he said.

“In my view, most consumers will understand that ECJ is a type of sugar, and any confusion about sugar content should be eliminated by the Nutrition Facts panel. FDA’s pronouncement does not help plaintiffs with this,” Anscombe said.

Sugar Scrutinized

The agency's evaporated cane juice guidance came a week after the FDA issued its final regulations for the revamped Nutrition Facts panel, which will include an added sugars portion for the first time.

According to FDA guidelines, no more than 10 percent of an individual's daily calories should come from added sugar—sugars that don't occur naturally in foods.

The Nutrition Facts panel will take effect for most companies July 26, 2018.

As for evaporated cane juice, the FDA said products currently labeled as containing ‘‘evaporated cane juice’’ should be relabeled to use the name ‘‘sugar,’’ but the agency said it wouldn't object to the use of stickers to make a change until a company's next regularly scheduled label printing.

To contact the reporter on this story: Julie A. Steinberg in Washington at jsteinberg@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

The guidance is available at http://src.bna.com/fmV.

The Federal Register notice is available at http://src.bna.com/fmO.