What does it take to be a “natural” food product? Does a bag of snacks cease being “all natural” if it contains trace quantities of synthetic chemicals to enhance shelf life? What if it is made with genetically-engineered crops? These are good questions, but don’t ask the U.S. Food and Drug Administration (FDA) for help in answering them.
This is more than an interesting theoretical exercise, since a number of major consumer brands have recently paid multi-million dollar amounts to settle class-action litigation alleging that marketing claims to the effect that foods are “natural” are deceptive or fraudulent when these foods contain synthetic chemicals or ingredients that were made from crops that were genetically-engineered or genetically-modified organisms (GMOs).
PepsiCo paid $9M to settle a class action over use of “all natural” in advertising for its Naked Juice brand and revised its advertising and labels; Kellogg agreed to a $5M payment in settling another class action over claims that its Kashi line of products were “all natural,” and changed its labeling; Trader Joe’s agreed to a settlement with a value as high as $3.4M depending on the number of claims; PopChips settled for $2.4M. All of these settlements have been announced in the past year. There have been reports of as many as 100 such suits in various venues, primarily dealing with food products, with a distinguished list of familiar defendants, including Heinz, Ben & Jerry’s, Whole Foods, and Campbell Soup.
In contrast to the term “organic” which has a precise and detailed regulatory definition issued by the U.S. Department of Agriculture (USDA), the term “natural” has been left largely undefined by the USDA, the FDA or other federal regulatory agencies. In the face of a consumer preference for food described as natural, the result of this lack of definition has been predictable – a plethora of labels catering to those preferences. The FDA has respectfully declined to clarify the definition of “natural” when requested to do so by several courts who felt that the FDA was the proper authority to provide that definition.
Indeed, even if the FDA provided a definition of “natural” with respect to the science of synthetic chemicals and genetic engineering, the presentation of the marketing claims will be subject to further evaluation as a matter of false advertising law. The companion article in this issue of CWC Marketing and Media Law Updates, If Your Product Has A Label… describes that legal issue for you.
The lack of a clear regulatory definition and lack of a consensus in the general population might lead one to think that a company would be unlikely to face serious threat that a plaintiff – much less a class of plaintiffs – could successfully argue that they were misled by the allegedly false advertising. To the contrary, companies have chosen to agree to settle, removing the offending language from their labels and paying significant amounts to resolve these cases. Some of this may be rooted in the desire to avoid a public fight about the product ingredients, which could lead to a public perception that is worse than the impact of removing the “natural” claims from the label.
States have started to step into the void, particularly with respect to GMOs. Vermont passed legislation just this year requiring the labelling of genetically modified foods by July 2016. Other states have passed similar laws, but the labeling requirements won’t take effect until other states have taken similar steps. A California ballot initiative that would have required labeling products if they contain genetically engineered ingredients, Proposition 37, was defeated in the face of heavy opposition by food producers.
Furthermore, the lack of a clear definition, regulatory or in the common usage, has led groups such as Consumer Reports to conclude that the term is hopelessly misleading and start a campaign to ban the term “natural” from food labeling altogether. Public campaigns such as this may add to the pressure to develop a regulatory definition, or it may lead to consumers becoming sufficiently skeptical about “natural” claims on product labels to the point that such claims lose their luster.
Without clear regulatory guideposts, advertising statements must be truthful as understood by an ordinary consumer, rather than by the most zealous plaintiff. A company would thus improve its chances of prevailing in a dispute by hiring a truly independent marketing research company in advance of a re-branding campaign to survey and vet the consuming public about its understanding of the proposed advertising claims.
At the moment, given the spate of lawsuits and the lack of progress on developing regulatory clarity, companies should think carefully before touting that their products, particularly food products, are “all-natural.” Consider carefully how those claims might hold up if challenged in court. The marketing benefits might easily be outweighed by the consequences of being drawn into the current wave of “food fights.”