davidwallacehsfcomLGSMKellyGuest Commentary

by David L. Wallace and Michael R. Kelly, Herbert Smith Freehills LLP*

Since the 1950s, partially hydrogenated vegetable oils (PHOs) have been used to produce all sorts of packaged foods. These ingredients increase food shelf life and flavor stability. They also contain artificial trans fats, which have been linked to various health risks, including cardiovascular disease. Despite these risks, PHOs were until recently “generally recognized as safe” (GRAS) for use as a food ingredient. The tide began to swing two years ago, though, when the Food and Drug Administration (FDA) tentatively proposed to withdraw GRAS status for PHOs “based on current scientific information” about the health risks of trans-fat consumption. It finalized this determination in a June 2015 order, declaring “that there is no longer a consensus among qualified experts that partially hydrogenated oils … are generally recognized as safe for any use in human food.”

Lawyers Running With Regulations

This regulatory action makes PHOs a “food additive” subject to pre-market approval by the FDA. Without FDA approval, foods containing PHOs would be deemed “adulterated” under both federal and state laws. The agency left industry breathing room, however, giving it until June 2018 either to comply or to obtain approval for certain uses of PHOs. But, like time, regulation-chasing plaintiffs’ lawyers wait for no one, and pounced on the agency’s new stance in the name of “consumer protection.” Before the FDA had even finalized its decision on PHOs, they had already installed trans fats as the latest bogeyman on supermarket shelves and the food-litigation landscape—alongside such hated fighting words as “natural,” “healthy,” “freshly baked,” and “handcrafted.”

Following announcement of the FDA’s tentative determination to ban trans fats in 2013, a San Diego lawyer began filing class actions charging manufacturers with consumer deception based on the presence of trans fats in foods labeled “0g Trans Fats,” even though FDA regulations require such labeling for foods containing less than 0.5g trans fats per serving. See, e.g., Guttman v. Nissin Foods (U.S.A.) Co., No. 15-00567-WHA (N.D. Cal.). Hedging his “labeling claim” bets, and trading off the FDA’s final PHO order, the attorney eventually added “use claims” to his class-action portfolio in cases seeking damages for physical injuries allegedly caused by the consumption of PHOs (because trans fat consumption “inflames and damages vital organs”) as well as economic injuries predicated on the purchase of “adulterated” products (because trans fat is a “deleterious substance”). See, e.g., Backus v. General Mills, Inc., No. 15-CV-01964-THE (N. D. Cal.).

Lost in this mad dash to the courthouse, naturally, is that the FDA has not actually declared PHOs unsafe—only that they should be removed from the GRAS list due to “a lack of consensus among qualified experts,” whatever that means, over their safety. No matter to the plaintiffs’ class-action bar. Conflating “unhealthy” with “unsafe,” they have persuaded idiosyncratically “health-conscious” people (folks who must spend an awful lot of time in supermarkets) to lend their names to proposed class actions against the makers of foods containing trans fats. Those suits are concentrated primarily in California’s federal “food court” (i.e. the Northern District of California) Class-action claims of this sort face many of the same obstacles common to food litigation generally, such as standing doctrine, patently implausible allegations, failure to state a claim, lack of ascertainability, the predominance of individual issues, and the inability to calculate damages under the Supreme Court’s Comcast v. Behrend decision.

The Obstacle of Primary Jurisdiction

A fairly recent decision suggests that trans-fat claims may face another obstacle as well, which could give the plaintiffs’ bar pause if it gains traction—prompting them to take a “wait and see” approach. It is the prudential doctrine of primary jurisdiction, which allows judges to stay or dismiss a case pending resolution of an issue of first impression, or a particularly complicated one, that Congress has committed to the special expertise of a regulatory agency. Food companies used this defense in the early days of the “natural” labeling-claim litigation without success, owing to the FDA’s lack of interest in adopting a legally binding definition of that term. But as with its recent willingness to consider “evaporated cane juice” claims, the FDA has similarly taken an interest in the use of trans fats in the food supply—by announcing its intention to evaluate petitions for approval to use PHOs as a “food additive” in certain ways and amounts by June 18, 2018. And active regulatory interest in a subject typically augurs well for primary-jurisdiction arguments.

Enter a California federal court. In Backus v. General Mills, Inc., the court applied the doctrine of primary jurisdiction to stay a proposed class action alleging that the use of PHOs in baking mixes was unlawful and unfair under California’s consumer-protection law. In reaching this conclusion, it reasoned that the FDA had “explicitly encouraged the food industry to submit petitions for review of trans fats as a food additive,” that defendant’s trade association had done so, and that “the question of whether the amounts of trans fats” in the food at issue “pose a significant safety risk to society is both an important question of first impression, and a complicated issue that has been committed to the FDA.” Unlike its position on “natural” labeling claims, in other words, the FDA is not “silent” on the use of trans fats. To the contrary, it has committed itself to resolving the issue and set a deadline of June 2018 to review petitions for permission to use certain amounts of trans fats.

Plaintiff did himself no favors in this regard by larding his complaint with dozens of paragraphs discussing medical studies and statistical results—hoisted with his own petard, you might say. Citing the need for “specialized expertise” in answering food-safety questions, and the risk of conflicting judicial decisions on that score in light of other pending trans-fat cases, the court observed: “Whether a body of evidence sufficiently demonstrates that a particular amount of a chemical substance poses a serious public health risk is precisely the kind of expert question that agencies are better suited to answer than courts or juries.” With that, the court stayed further litigation of the case “pending the FDA’s determination of the food additive status of PHOs.” And since then, another California federal judge handling a similar case (brought by the same plaintiff and attorney) claiming that Nestle hoodwinked people into believing its coffee creamers do not contain trans fats has strongly hinted that she too thinks the issue belongs before the FDA in the first instance. See Backus v. Nestle USA, Inc., No. 3:15-CV-01963 (N.D. Cal.). The same issue is also at play in Walker v. ConAgra Foods, Inc., No. 4:15-cv-02424 (N.D. Cal.).

Other Petards

In another interesting “food court” twist, it turns out that primary jurisdiction is not the only obstacle plaintiffs face in trying to get trans-fat class actions off the ground. With apparently nothing better to do than “roving the aisles of supermarkets” as self-appointed “food police,” a surprising number of the consumers willing to lend their names to plaintiffs’ lawyers for purposes of filing class-action lawsuits against food companies are serial litigants.

In a ruling last month (in the “food court” no less), one of these plaintiffs and his lawyer were hoisted by the petard of their own litigious history—in a decision that calls to mind the saying “fool me twice, shame on me.” See Guttmann v. Nissin Foods (U.S.A.) Co. Guttmann claimed to have assumed that all of Nissin’s noodle products were “safe to consume” because they were labeled “Trans Fat: 0g” (in compliance with FDA regulations), leading him to believe (incorrectly) that they contained no trans fats whatsoever. One problem with this allegation was that he had filed at least five prior lawsuits (all for the same lawyer) making similar claims.

The court relied on Guttmann’s “five-year litigation campaign,” among other things, to dismiss what remained of his case after a preemption ruling, using it to find that “Guttmann was keenly aware of the alleged injury he might suffer by eating Nissin’s noodles” and could avoid his alleged injury “by reading the nutrition-facts panel and deciding not to purchase or consume them based on the presence of partially-hydrogenated oil.” Tossing his case, the court held that Guttmann’s “apparent refusal to inspect Nissin’s noodles for an alleged defect despite his extensive knowledge of and concern for this particular ingredient” was “fatal.”

Something to Think About

Decisions like Backus and Guttmann, both from the federal system’s “food court”, signal bumps in the road for suits challenging PHOs. While defenses like primary jurisdiction turn ultimately on the discretion of individual judges, prospective defendants in the budding trans-fat litigation have compelling arguments that the FDA, and not the courts or juries, should be charged with deciding in the first instance whether food ingredients are lawful or unlawful.

*Mr. Wallace, who is a Partner, and Mr. Kelly, who is a Senior Associate, help clients in the food and beverage industry protect and defend their products, brands, operations, strategic goals, and revenue from liability on a national and transnational basis.