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Michelle Gillette is a partner in Crowell & Moring's San Francisco office, head of the firm's Food & Beverage Industry Practice, and a member of the firm's Advertising & Product Risk Management Group. She is an accomplished trial lawyer whose practice is focused on representing emerging and established companies in litigation in federal and California state courts, with an emphasis on defending food, cosmetics, and retail companies in lawsuits involving false or misleading advertising, product liability, unfair competition, unfair business practices, trade secrets, torts, breach of contract, and patent infringement.

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Ninth Circuit Blocks Sweet Drink Warning Labels Pending Free Speech Lawsuit

The Ninth Circuit dealt a blow to the war on sugar last month, calling the warning labels a San Francisco ordinance would require on sweet drinks “deceptive” and blocking the mandate on free speech grounds. As we have discussed before, cities and counties across the nation have been launching an offensive against sugar for years. Favorite methods of attack include bans on large sugary drinks, taxes on sugar in drinks by volume, and now, warning labels.

While the USDA, FDA, and American Heart Association all have backed policies aimed at limiting sugar consumption, these policies have received mixed reviews from consumers and courts. A state judge knocked down the New York City ban on large sodas in 2013, calling it “arbitrary and capricious.” More recently, sugar taxes have been protested by unions in Philadelphia, sparked class-action litigation in Illinois, and were outright repealed in Cook County after only three months of implementation because residents began crossing state and county lines to avoid them.

Continue Reading Soda Stays Safe in San Francisco

The last few years have seen a war waged on sugar. In addition to increased media attention, USDA and the Department of Health and Human Services have set recommended sugar consumption limits. In the latest Dietary Guidelines For Americans 2015-2020, one of the five “guidelines” is to limit calories from added sugars. FDA also has new recommendations on consumption of sugar, reflected in draft guidance issued January 2017.

In addition to USDA and FDA’s guidance, other groups, such as the American Heart Association, are supporting policies that help lower the intake of sugar-sweetened beverages by the American public. One such policy is to tax drinks and food sweetened with sugar. In November 2014, 75% of voters in Berkeley, California approved a tax of 1 cent per ounce on sugar-sweetened beverages, which is said to have generated more than $2.5 million for use in community nutrition and health efforts. Consumption of sugar-sweetened beverages is also reported to be down by 20%.

Continue Reading How Sweet It Isn’t

Photo Credit: Mike Mozart (Flickr)

Late last month, Target announced a new strategy to remove certain chemicals from consumer products sold in its many stores.  The approach focuses on increased transparency, proactive chemical management across the supply chain, and innovation of safer alternatives.  As a part of this new chemicals strategy, touted by many as the most comprehensive of its kind for a retailer, Target has pledged in its first set of announced goals to:

  • list all ingredients in all owned and national brand products by 2020;
  • formulate beauty, baby care, personal care, and household products without phthalates, propylparaben, butyl-paraben, formaldehyde, formaldehyde-donors, and Nonylphenol Ethoxylates (NPEs) by 2020;
  • remove added Perfluorinated Chemicals (PFCs) and added flame retardants from textile products by 2022; and
  • invest up to $5 million in green chemistry innovation by 2022.

Continue Reading Target Takes Aim at Chemicals in Consumer Goods; Announces New Strategy to Promote Safer Products

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. Continue Reading Would “Juice” by Any Other Name Taste as Sweet? Court Cites FDA Guidance in Resuscitating “ECJ” Class Action

On July 26, 2016, FDA issued an updated warning on beauty products, warning consumers to avoid certain “skin creams, beauty and antiseptic soaps, and lotions,” particularly those boasting “anti-aging” or “skin lightening” benefits, as potentially containing mercury.  While the dangers of mercury exposure are well-known, mercury’s ubiquity in certain beauty products is not.  Products that claim to “remove age spots, freckles, blemishes, and wrinkles,” including products targeting teenagers enduring acne, may contain mercury.  Checking the label can help—look out for words like “mercurous chloride,” “calomel,” “mercuric,” “mercurio,” or of course, “mercury”, but it’s not fool-proof.  As FDA points out, many of these beauty products are often made abroad and can be sold illegally in the U.S., without any labels. FDA continually monitors products like these, but is unable to catch all of them, especially due to their dubious channels of trade.  For those that FDA does catch, FDA sets up an import alert to prevent future influxes of such products.  Check here for all Consumer Updates from FDA.  Thus, retailers should do their due diligence to know what the chemical content is of the products they sell beyond the labels.

In its warning, FDA again mentioned one of its growing complaints levied against cosmetics – that the product may actually be an unapproved new drug under the law. Continue Reading Beauty with a Side of Mercury?

One week before the Vermont GMO labeling law will take effect, a bipartisan bill requiring mandatory labeling for products containing genetically modified ingredients has been agreed to by Senate AG committee ranking member Debbie Stabenow (D-MI) and Committee Chairman Pat Roberts (R-KS).  The bill, which would require the Secretary of Agriculture to establish a national disclosure standard for bioengineered foods, will need to be passed in the Senate and the House of Representatives, and would go into effect two years after passed.  If successful, the new law would specifically preempt all state GMO labeling laws and would prevent the feared patchwork of conflicting state labeling laws.

The bill has a narrow definition of genetic engineering — traits developed through in vitro recombinant DNA techniques, which could not be obtained through conventional breeding or found in nature.  It excludes food served in a restaurant and food derived from animals that consumed genetically modified feed.  The Secretary would be responsible for establishing a specific regulation setting forth the amount of a genetically modified substance that would require labeling. Continue Reading A New Federal GMO Labeling Standard in the Works?

In Spokeo, Inc. v. Robins, the U.S. Supreme Court has issued yet another narrow decision—apparently designed to avoid a 4-4 deadlock—in another hard-fought, potentially divisive case on its docket this term. On May 16, 2016, the Court held 6-2 that the Ninth Circuit had erred in not asking whether plaintiff Robins had alleged that he suffered a “concrete” harm—actual, rather than hypothetical, damage—as a result of statutory violations by defendant Spokeo.

In reaching this decision, the Court reaffirmed that plaintiffs bringing class actions in federal court must do more than allege a “mere technical violation” of a statute or regulation. In order to demonstrate that they have a real stake in the case—or “standing”—as required in federal court by Article III of the Constitution, they must also explain how the violation in question caused them real harm. At the same time, however, the majority was careful to point out that, “in some circumstances,” plaintiffs could base standing on procedural or technical violations if coupled with a “real risk of harm.” And the Court remanded the specific question of whether Robins himself had alleged that he suffered real harm as a result of Spokeo’s technical violations.

In sending the case back to the Ninth Circuit, then, the Court left the deeper issues in the case unresolved—inviting further litigation over what its holding means in specific cases.

Continue Reading Keeping It “Real”: Supreme Court Holds That Consumers Must Allege Real Harm

Companies from Procter & Gamble and Unilever to Mars and Starbucks have recently been hit with class actions slightly different from the false advertising claims we have gotten used to seeing. Now, instead of just alleging that companies are deceiving consumers through the language used in their advertising claims, consumer plaintiffs are expanding their allegations to target visual impressions created by product packaging.

These suits typically raise one—or both—of two theories. First, they often allege that defendants have violated federal and state regulations by including too much nonfunctional empty space—or “slack fill”—in their packages. Second, even if the defendants’ practices do not violate such regulations, their packages are still deceptive and unlawful because they run afoul of the “reasonable consumer” standard. Put differently, the defendants have intentionally manipulated their packaging, the theory goes, in order to dupe ordinary consumers into believing they are getting more product than they actually are—whether that means consistently underfilling lattes, dumping too much ice into iced coffees, or housing small amounts of product in oversized containers. These two distinct theories, often raised together, belong to a common genre of litigation that is relatively new but growing: the “slack fill-inspired” class action.

These cases have had a mixed track record so far, and the pace of new filings continues unabated. But recently, on March 17, 2016, the Ninth Circuit issued a decision that could give companies a potent tool in combatting these suits. That decision, Ebner v. Fresh, Inc., confirmed that the district court had properly dismissed with prejudice the plaintiff’s complaint, which alleged both that (1) Fresh had used deceptively large packaging that was misleading to “the reasonable consumer,” and (2) its packaging violated California’s slack fill rules.

The Ninth Circuit in Ebner rejected both of these commonly-used theories, making the Court’s reasoning instructive for companies facing similar slack fill-inspired class actions going forward. But it is worth noting that this decision is no get-out-of-litigation-free card: as we will explain, companies must still pay close attention to the specific slack fill rules applicable to their products in order to minimize their exposure to these opportunistic class actions.

Continue Reading Ninth Circuit Refuses to Cut Plaintiff Slack in Ebner v. Fresh, Inc.

Green Tea

Federal judges often find themselves confronting a familiar conundrum in consumer class actions that challenge misleading practices. The typical plaintiff will file a suit after somehow discovering that one of the defendant’s advertisements, product labels, or other representations is “false” or “misleading.” The self-nominated “representative” asks the court to certify a class of all consumers “similarly situated”—that is, other consumers who bought the product or were exposed to the misleading message. The plaintiff then seeks not only compensation for the class, but also an injunction or ban prohibiting the defendant from making the challenged claims going forward.

Since an injunction is to stop the likelihood of irreparable future harm, the deceptively tricky question that judges face is whether the named plaintiff can seek an injunction prohibiting the misleading claims when she herself is no longer at risk of being deceived by something she now knows is false. In other words, if the named plaintiff won’t get fooled again, does she have standing to obtain injunctive relief on the class’s behalf? One California Federal court’s take: fool the plaintiff twice, shame on him.

Continue Reading Won’t Get Fooled Again: Recent Bigelow Decision Raises Roadblock to Consumer Plaintiffs Seeking Injunctions in False Advertising Class Actions

Door Slam

Handed down January 20, 2016, the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez was a major blow to what class action practitioners call the pick-off strategy: using a Rule 68 offer of complete relief to “pick off” a putative class representative, thereby mooting the class action suit. In Campbell-Ewald the Court rejected this tactic by a 6-3 vote, holding that an unaccepted offer of judgment under Rule 68 does not moot a class action, even where the offer provides everything the named plaintiff has asked for—that is, where the plaintiff “won’t take ‘yes’ for an answer.”

In reaching this decision, though, the Court left open the important question of “whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.” This was a wrinkle that had plainly intrigued several of the justices.

Writing in dissent, for example, Chief Justice John Roberts pointedly noted that the “good news” was that “the majority’s analysis may have come out differently if [the defendant] had deposited the offered funds with the District Court.” Justice Samuel Alito likewise noted in dissent that the majority’s decision “does not prevent a defendant who actually pays complete relief—either directly to the plaintiff or to a trusted intermediary—from seeking dismissal on mootness grounds.” And at oral argument, even Justices Anthony Kennedy and Stephen Breyer—who ultimately voted with the majority—mused whether “the case is over” if the defendant not only makes an offer of complete relief but deposits a certified check in the full amount of the judgment with the court or in an independent account.

The ink has barely dried on the Campbell-Ewald opinion, but already at least one court, the Ninth Circuit, has answered the door left open by the decision. Its response: slamming it shut.

Continue Reading Heading Off the Pick-Off: Ninth Circuit Slams Door on Use of Rule 68 “Deposits” to Moot Class Actions