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Year In Review: 2020 Food, Beverage & Supplement Litigation Round-Up

February 12, 2021

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The global pandemic, stay at home orders, and government issued lockdowns did not stop 2020 from being yet another active year for new regulatory activity and litigation targeting the food, beverage and supplement industries.

In this round-up, Bryan Cave Leighton Paisner LLP presents a collection of regulatory developments, key court decisions, and notable settlements that were reached in 2020.

The highlights of this 2020 round-up include:

  • New federal and state legislation governing food labeling, packaging, and taxation
  • Litigation trends within the food industry
  • COVID-19 related litigation and regulation
  • An update on regulations and litigation regarding CBD-based products
  • Slack fill litigation update
  • Plant-based product litigation update
  • Prop 65 and food safety update
  • Notable rulings and settlements
  • A preview of areas to watch in 2021

CPRA Digest – New Consumer Rights under CPRA and What That Means for Your Business

On November 3, 2020, Californians voted to pass Proposition 24, expanding and modifying the California Consumer Privacy Act (“CCPA”), which came into force on January 1, 2020. The new California Privacy Rights Act (“CPRA”) supersedes the CCPA and will be fully operative on January 1, 2023 (with a look-back period starting January 1, 2022). Until that time, the CCPA as written and amended generally remains in effect.  As we learned during the lead up to the CCPA, the time period to prepare for this type of comprehensive and complex legislation passes quickly, and businesses should begin their CPRA preparations sooner rather than later.  In this installment of the CPRA Digest, we discuss the expanded and new consumer rights under the CPRA, and the implications for organizations anticipating the CPRA.

Expanded Consumer Rights

The CPRA expands the following existing consumer rights:

  • In addition to having the right to request the categories of personal information about a consumer that a business sells, a consumer now also has to the right to know when their personal information is “shared” with a third party, and when information is otherwise disclosed for  a business purposes, including disclosures to a service provider.1

Under the CPRA, the concept of “sharing” personal information is novel and significant because it is aimed directly at cookies and similar technologies used for online advertising. “Sharing” is defined as renting, releasing, disclosing, disseminating, making available, transferring, or otherwise communicating orally, in writing, or by electronic or other means, a consumer’s personal Information

California Proposes Changes to Short-Form Prop. 65 Warning

February 10, 2021

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The short form of the California Proposition 65 warning that appears on numerous consumer products may look different in the future.  California’s Office of Environmental Health Hazard Assessment (OEHHA) has proposed several significant changes to the language and permitted uses of the short-form warning.

Use Limited to Small Packages

When OEHHA issued the warning regulations that took effect in August 2018, it provided an option for a short form warning, intending that it be used on products too small to accommodate the longer warning.  However, the final regulatory language did not specify that the warning could only be used on small packages, resulting in its use on everything from pens to refrigerator boxes.

In response, on January 8, 2021, OEHHA proposed a regulation that provides that the warning can only be used where the following three conditions are met:

  • The total surface area of the packaging is five square inches or less;
  • The package shape or size cannot accommodate the full-length warning; and
  • The warning is printed in a type size no smaller than the largest type size used for other consumer information, but in no case smaller than 6-point type.

Use Permitted on Food Products

The proposed regulation clarifies a point of debate by confirming that the short form can be used on food products – so long as it’s set apart in a box just like the long form warning.

Use Prohibited for Internet and Catalog Warnings

OEHHA is also proposing to eliminate the option to use

U.S. COVID-19: OSHA Issues Guidance Addressing Mitigation and Prevention of COVID-19 in the Workplace

February 3, 2021

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Partner and Practice Group Leader, Energy, Environment and Infrastructure, Bryan Keyt; Partner Brandon Neuschafer; and Associate David Brankin wrote an article on OSHA’s new guidance to help employers better identify risks of being exposed to and/or contracting COVID-19 and to ascertain appropriate control measures employers can implement to address those risks.

Click here to read the full article.

California Prop. 65 Warning Requirement for THC Makes CBD, Hemp and Cannabis Products a Target

The California Proposition 65 warning requirement for THC took effect on January 3, making cannabis, hemp and CBD products a likely target for private enforcement actions.

Although under federal law CBD products are allowed to contain up to 0.3 percent THC, or Δ9-Tetrahydrocannabinol, no safe harbor level of exposure to THC has been established under Prop. 65.  That means private enforcers can argue that any detectable amount can subject a product to the Prop. 65 warning requirement.  Companies can work with consultants to develop a safe use determination for THC, but until it is established and accepted, enforcement actions will be a material risk.  Notably, the Prop. 65 listing applies to Δ9-THC, although the Prop. 65 requirements may still be triggered by residual Δ9-THC present in other THC products, like Δ8-THC distillates.

At the same time that THC was added to the Prop. 65 list, California’s Office of Environmental Health Hazard Assessment added a reproductive harm endpoint for cannabis (marijuana) smoke, which was already identified as a carcinogen under Prop. 65.  That means that although cannabis products intended to be smoked may already bear a Prop. 65 warning related to cancer, the reproductive harm warning should also be included.

As for THC, the listing raises Prop. 65 considerations for a much broader range of cannabis, hemp and CBD products, such as oils, edibles, beverages, and vape cartridges.  Plaintiff groups are expected to aggressively target these products, expanding on a multi-year trend of pursuing marijuana-based businesses for Prop. 65 violations.

For

Biometric and Facial Recognition Lawsuits and Regulation “Face” National Expansion

October 27, 2020

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The federal government is looking to put its finger on the pulse of biometric privacy with the proposed National Biometric Information Privacy Act of 2020 (S. 4400) “to regulate the collection, retention, disclosure, and destruction of biometric information.” Class action litigation over biometric privacy has already exploded across the country, so far centering on the alleged use of facial recognition and employee timekeeping technologies. In the last few years alone, cases have been brought on behalf of hundreds of thousands of claimants. If enacted, the National Biometric Information Privacy Act will all but ensure this number increases exponentially. This client alert provides a comprehensive overview of the proposed National Biometric Information Privacy Act and a comparison to other privacy statutes.

Click here to read the article in full.

California Extends Employee and B2B Exemptions under the CCPA

October 13, 2020

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Governor Gavin Newson signed into law AB 1281 on September 29, 2020. The bill amends Section 1798.145 of the California Consumer Privacy Act (CCPA), but it only becomes operational if voters do not approve a ballot initiative that amends the CCPA on the November 3rd election—namely, the California Privacy Rights Act (CPRA).

Click here to read the Alert in full.

September 24, 2020 If a business that operates a loyalty program provides a “notice of financial incentive,” is it required to disclose a numeric valuation of the value of a consumer’s data?

September 24, 2020

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Not necessarily.

If a loyalty program constitutes a “financial incentive,” the regulations implementing the CCPA require that a business provide a “notice of financial incentives” which, among other things, should include an explanation of how the financial incentive is “reasonably related” to the value of the consumer’s data.1  As part of that explanation, the business is purportedly required to provide a “good-faith estimate of the value of the consumer’s data that forms the basis” for the financial incentive and provide a “description of the method” used to calculate that value.2

The regulations implementing the CCPA indicate that a business may use any “reasonable and good faith method for calculating the value of the consumer’s data” to the business, but instructs the business to at least “consider” the following eight enumerated valuation methodologies:3

  • The marginal value to the business of the sale, collection, or deletion of a consumer’s data;
  • The average value to the business of the sale, collection, or deletion of a consumer’s data;
  • The aggregate value to the business of the sale, collection, or deletion of consumers’  data divided by the total number of consumers;
  • Revenue generated by the business from sale, collection, or retention of consumers’  personal information;
  • Expenses related to the sale, collection, or retention of consumers’ personal information;
  • Expenses related to the offer, provision, or imposition of any financial incentive or price or service difference;
  • Profit generated by the business from sale, collection, or retention of consumers’  personal information; and
  • Any other practical and reasonably reliable
  • Does the CCPA require that the benefits conferred by a loyalty program be “reasonably related” to the value of a consumer’s data to the business?

    September 18, 2020

    Categories

    Arguably no.

    The CCPA makes clear that a business can offer different prices or rates to consumers as part of a financial incentive program if those different prices or rates are “directly related to the value provided to the business by the consumer’s data.”1  The CCPA does not, however, directly prohibit the offering of a financial incentive if the value provided to the business by the consumer’s data is not “directly related” to the value of the financial incentive.

    The CCPA also states that a business may not, through a financial incentive program (or any other activity), discriminate against a consumer because the consumer “exercised any of [their] rights” under the CCPA (e.g., access, deletion, or opt-out of sale), unless the difference in price, rate, or quality that forms the basis of the discrimination is “reasonably related to the value provided to the business by the consumer’s data.”2

    In commentary published with the issuance of the regulations implementing the CCPA, the California Attorney General informally suggested that the Act might be interpreted as requiring that the benefit provided by all loyalty programs should be “reasonably related to the value of the consumer’s data to the business.”3  The California Attorney General did not explain, however, the basis for his assertion, and such a position would directly conflict with the text of the CCPA (described above) which applies the “reasonable relationship” test only to situations in which “discriminat[ion]” is prompted by the “exercise[] . . . of the consumer’s rights.”4 Furthermore, in other statements made

    California Passes COVID-19 Supplemental Paid Sick Leave Law

    September 17, 2020

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    On September 9, California Governor Newsom signed a bill that establishes COVID-19 supplemental paid sick leave (“COVID-19 PSL”) for California workers generally not covered by the federal Families First Coronavirus Response Act (“FFCRA”).

    Important Dates

    Employers are required to begin providing COVID-19 PSL by September 19.

    Employers must also post a notice in their workplace by September 19.  If employees are not physically present in the workplace, the employer may disseminate the notice electronically.

    Starting in the first pay period after September 9, employers must provide notice in a wage statement (or a separate writing provided on pay day) of an employee’s available COVID-19 PSL each pay period.

    The requirement to provide COVID-19 PSL expires on December 31, 2020 or upon the expiration of any federal extension of the Emergency Paid Sick Leave Act established by the FFCRA.

    Covered Employers & Employees

    California’s new law applies to private employers with 500 or more employees in the United States.  It also applies to any public or private entity that employs health care providers or emergency responders and that has elected to exclude such employees from emergency paid sick leave under the FFCRA.

    Workers are entitled to COVID-19 PSL only if they are (1) employed by a covered employer AND (2) leave home to perform work for their employer.

    Reasons for Leave

    Employees are entitled to COVID-19 PSL when they are unable to work because they:

    • are subject to a federal, state, or local quarantine or isolation order related to COVID 19;
    • are advised

    Has the retail industry adopted the “Do Not Sell My Personal Information” link?

    September 2, 2020

    Categories

    Yes and no.

    While the majority of retailers include a “Do Not Sell My Personal Information” link on their homepage or in their privacy notice, 38.89% do not.1

    For more information and resources about the CCPA visit http://www.CCPA-info.com.

    This article is part of a multi-part series published by BCLP to help companies understand and implement the General Data Protection Regulation, the California Consumer Privacy Act and other privacy statutes.  You can find more information on the CCPA in BCLP’s California Consumer Privacy Act Practical Guide, and more information about the GDPR in the American Bar Association’s The EU GDPR: Answers to the Most Frequently Asked Questions

    1. BCLP, January 2020: Survey of the Retail Industry’s Privacy Practices.

    Virtual DC Summit: 10 Need-to-Know Insights for Uncertain Times

    August 31, 2020

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    BCLP’s professionals from our DC office and beyond will explore how the COVID-19 crisis and the upcoming election are impacting key regulatory and administrative areas of law. This virtual meeting will deliver “quick hit” presentations ranging from key election issues to potential changes in trade guidelines to consumer protection policy updates and more.

    During this dynamic virtual event, attendees will have the opportunity to select topics in real time after hearing from our Washington Office Managing Partner, Susan Kovarovics, and Washington-based Senior Policy Advisor Dave Russell on widespread matters of importance. A full list of breakout sessions available through the program is below.

    • Accessibility Issues – presented by Heather Goldman and Merrit Jones
    • Antitrust Compliance and Litigation – presented by Phil Bartz and Jake Kramer
    • DC Emergency Act and Consumer Protection In Financial Services – presented by Ben Saul
    • Employment and Labor – presented by Lily Kurland and Marilyn Fish
    • Federal Enforcement Actions During COVID-19 – presented by Mark Srere, Jennifer Mammen and Terry Pritchard
    • Force Majeure – presented by Alec Farr
    • International Trade – presented by Susan Kovarovics and Megan Barnhill
    • M&A and Corporate Finance – presented by Jonathan Nesher
    • PPP Compliance and Loan Forgiveness – presented by Ashley Ebersole and Rob Klinger
    • Public Policy – presented by Dave Russell

    Date Wednesday, September 16, 2020 Time 9 a.m. to 10:45 a.m. PDT 10 a.m. to 11:45 a.m. MDT 11 a.m. to 12:45 p.m. CDT 12 p.m. to 1:45 p.m. EDT

    Register >

    Do most retailers use third party behavioral advertising cookies?

    August 14, 2020

    Categories

    Yes.

    As the following chart indicates, there is a wide disparity between the quantity of third party behavioral advertising cookies used by retailers:1

    Greatest Quantity Smallest Quantity Average Quantity 44 2 22.4

     

    When compared against other industries, the retail sector ranks 1st in their average deployment of advertising cookies.

    For more information and resources about the CCPA visit http://www.CCPA-info.com.

    This article is part of a multi-part series published by BCLP to help companies understand and implement the General Data Protection Regulation, the California Consumer Privacy Act and other privacy statutes.  You can find more information on the CCPA in BCLP’s California Consumer Privacy Act Practical Guide, and more information about the GDPR in the American Bar Association’s The EU GDPR: Answers to the Most Frequently Asked Questions.

    1. BCLP, January 2020: Survey of the Retail Industry’s Privacy Practices.

    FDA Reaches Voluntary Agreement with Manufacturers to Phase Out Certain Short-Chain PFAS in Food Packaging

    The U.S. Food and Drug Administration has announced that manufacturers of certain per- and polyfluoroalkyl substances (PFAS) used for grease proofing in paper and paperboard for food packaging (for example, as coatings on some fast food wrappers, to-go boxes, and pizza boxes) have voluntarily agreed to phase out sales of these substances for use as food contact substances in the United States, following new analyses of data raising questions about potential human health risks from chronic dietary exposure.

    Starting in January 2021, three manufacturers will begin a three-year phase out of their sales of certain substances that contain 6:2 FTOH for use as food contact substances in the U.S. marketplace.  It may take up to 18 months after the phase-out period to exhaust existing stocks of paper and paperboard products containing these food contact substances from the market. A fourth manufacturer informed the FDA in 2019 that they have stopped sales of their short-chain PFAS products in the U.S. market.

    According to the FDA, this phase out balances uncertainty about the potential for public health risks with minimizing potential market disruptions to food packaging supply chains during the COVID-19 public health emergency.  Earlier this year, FDA scientists published their analyses of studies on certain PFAS used in food packaging. Their analyses of data from rodent studies raised questions about a subset of short-chain PFAS that contain 6:2 fluorotelomer alcohol (6:2 FTOH)

    Have retailers updated their privacy notices for the CCPA?

    August 11, 2020

    Categories

    Yes.

    The vast majority of retailers updated their privacy notices to account for the CCPA.1 Note that while most institutions updated their privacy notices in relation to the CCPA, many failed to account for all of the substantive requirements of the act.

    For more information and resources about the CCPA visit http://www.CCPA-info.com.

    This article is part of a multi-part series published by BCLP to help companies understand and implement the General Data Protection Regulation, the California Consumer Privacy Act and other privacy statutes.  You can find more information on the CCPA in BCLP’s California Consumer Privacy Act Practical Guide, and more information about the GDPR in the American Bar Association’s The EU GDPR: Answers to the Most Frequently Asked Questions.

    1. BCLP, January 2020: Survey of the Retail Industry’s Privacy Practices.

    Proposition 65 – OEHHA Proposes Safe Harbor Concentrations and Blanket Protections for Exposures to Acrylamide and Other Listed Chemicals in Cooked or Heat Processed Foods

    On August 4, 2020, the Office of Environmental Health Hazard Assessment (OEHHA), the lead agency that implements Proposition 65 and has the authority to promulgate and amend regulations, released a proposed regulation providing that intake of listed chemicals formed by cooking or heat processing foods would not represent an exposure for the purposes of Proposition 65 if the concentrations are reduced to the lowest level currently feasible. The proposed regulation would also establish maximum concentration levels for acrylamide in specific foods that are deemed by OEHHA to be the lowest levels currently feasible. Concentrations of acrylamide at or below the level identified for the specified products would not require a warning. Public comments concerning this proposed action must be received by OEHHA by October 6, 2020.

    Proposition 65 prohibits a person in the course of doing business from knowingly and intentionally exposing any individual to a chemical that has been listed as known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual. An exemption from the warning requirement is provided when the exposure is below established safe harbor levels.

    Currently, there are regulatory exceptions from the warning requirement for exposures to naturally occurring chemicals in foods, specific concentrations of naturally occurring arsenic in rice, and for certain exposures to listed chemicals in water or air. The proposed regulation would create an additional exception from the warning requirement for listed chemicals that are unavoidably created in foods during cooking or heat processing and that

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