Sugar Cane

In a long-awaited pronouncement, on May 25, 2016 the Food and Drug Administration issued its final guidance recommending that food and beverage manufacturers discontinue their use of the term “evaporated cane juice” (ECJ) to refer to sweeteners extracted from sugar cane. As the agency explained, “the use of ‘juice’ in the name of a product that is essentially sugar is confusingly similar to the more common use of the term ‘juice’”—which FDA regulations define as a liquid, puree, or concentrate derived from “one or more fruits or vegetables.”

When the FDA first issued this Guidance, many questioned whether it would reinvigorate a genre of litigation that had recently grown quiet: class actions alleging that the use of “ECJ” on product labels and packages misled consumers. Now, thanks to the Northern District of California’s July 27 decision in Reese v. Odwalla, Inc., the answer is becoming clearer: the ECJ class action is due for a comeback.

FDA Guidance: “ECJ” Is Sugar, Not “Juice”

The Guidance for Industry released May 25 sets forth FDA’s view that the use of the term “ECJ” on labels and ingredient lists is “false and misleading”: ECJ “should instead be declared on food labels as ‘sugar,’ preceded by one or more truthful, non-misleading descriptors if the manufacturer so chooses (e.g., ‘cane sugar’).”

FDA regulations require manufacturers to refer to ingredients on their products’ labels “by [their] common or usual name.” And the core of the agency’s objection to ECJ is that “juice” is the “common or usual name” for products derived from fruits and vegetables—not products extracted from sugar cane, which should be named “sugar” or “syrup.”

Simply put, ECJ is a sweetener, not a fruit or vegetable. As the Guidance explains, ECJ is derived from sugar cane, and its manufacturing process shares many of the same steps as other “products derived from sugar cane,” including many sugar varieties. Juice, by contrast, commonly “covers only liquid obtained from fruits and vegetables.”

All things considered, this guidance comes as little surprise: the agency has long telegraphed its disapproval of the term “ECJ.” In October 2009, FDA published draft guidance recommending that manufacturers avoid using the word “juice,” which it considered potentially misleading, and instead refer to ECJ as “dried cane syrup.” But when FDA re-opened the comment period on March 5, 2014 “to request further comments, data, and information about the basic nature and characterizing properties of [ECJ], how this ingredient is produced, and how it compares with other sweeteners,” some hoped it was a sign that FDA was open to changing its position.

In fact, many in the industry capitalized on this signal of openness by submitting comments, and their input had an impact. For example, the latest guidance no longer recommends that ECJ be labeled as “dried cane syrup,” citing the fact that the “majority of comments objected to [this] term” as inaccurate. Ultimately, though, FDA declined to back down from its long-held position that the word “juice” is misleading when used to refer to sweeteners.

Reese v. Odwalla: Floodgates Re-opened?

The most immediate impact the Guidance is likely to have is uncorking the bottleneck of class actions put on hold after the FDA re-opened the comment period for ECJ in 2014. Several recent decisions from the Northern District of California—Morgan v. Wallaby Yogurt and Figy v. Amy’s Kitchen, to name just a couple—either stayed or dismissed ECJ claims under the primary jurisdiction doctrine in anticipation of the FDA’s guidance. And just this past March, in Kane v. Chobani, the Ninth Circuit reversed the district court’s dismissal of the plaintiffs’ ECJ claims but stayed the case pending FDA’s input.

One of these stayed ECJ cases, Reese v. Odwalla, Inc., has already emerged from deep freeze in response to the Guidance. On July 27, 2016, in a two-page order, the Northern District of California dissolved the stay in Reese and ordered Odwalla to file its renewed motion to dismiss. Reese is likely only one of several cases, either stayed or dismissed, that plaintiffs will seek to revive in the wake of the FDA’s pronouncement.

In assessing what impact the FDA’s recommendation could have on Reese and other ECJ class actions going forward, though, it is important to note that the FDA’s Guidance for Industry is just that: guidance. And while “this guidance reflects the current thinking of the [agency] on this topic,” it is not itself legally “binding on FDA or the public.” Federal courts consider such statements only relevant—not conclusive—evidence of whether a “reasonable consumer” would find the term ECJ “misleading.”

The fact that courts relying on the 2009 Guidance reached widely inconsistent  decisions is telling. In Morgan v. Wallaby Yogurt and Gitson v. Trader Joe’s, for instance, the courts cited the agency’s guidance in holding that the plaintiffs had at least raised a factual question of whether consumers could be misled by the term “ECJ.” But in many other cases—including Kane v. Chobani, Avoy v. Turtle Mountain, Thomas v. Costco Wholesale, and Pratt v. Whole Foods Market—judges rejected these claims as a matter of law, holding that no “reasonable consumer” would interpret “cane juice” as anything other than “sugar” or sweetener.

The FDA’s latest Guidance, then, is unlikely to put this ongoing divide to rest.