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California Prop. 65 Regulation Exempts Certain Coffee Chemicals From Cancer Warning; Stay in Coffee Case Lifted

California’s Office of Environmental Health Hazard Assessment (“OEHHA”) has finalized a highly anticipated Proposition 65 regulation relating to coffee. The regulation, California Code of Regulations Section 25704, takes effect October 1, 2019. Section 25704 provides: “Exposures to chemicals in coffee, listed on or before March 15, 2019 as known to the state to cause cancer, that are created by and inherent in the processes of roasting coffee beans or brewing coffee do not pose a significant risk of cancer.”

As we previously reported, OEHHA issued a notice of proposed rulemaking concerning the regulation in June 2018. The Office of Administrative Law approved adoption of the regulation on June 3, 2019, and OEHHA issued a Final Statement of Reasons on June 7.

OEHHA’s Final Statement of Reasons concludes that “the weight of the evidence from the very large number of studies in the scientific literature does not support an association between the complex mixture of chemicals that is coffee and a significant risk of cancer. … Therefore, providing warnings for such exposures would not be ‘clear and reasonable’ or consistent with the purpose of Proposition 65.”

The regulation’s immediate impact, however, is still uncertain pending further proceedings anticipated in a highly publicized Prop. 65 case against coffee roasters and retailers. Prior to the proposed regulation, in Council for Education and Research on Toxics v. Starbucks Corp., Los Angeles Superior Court Judge Elihu Berle had found that defendants failed to demonstrate that coffee does not pose a significant risk of cancer.  However, just before trial was to start on civil penalties and an injunction, in October 2018, the California Court of Appeal granted the defendants’ request for a temporary stay of the case until the proposed regulation could be finalized.

Although the proposed regulation would have seemed to put an end to the longstanding question as to whether or not a Prop. 65 cancer warning is required for coffee, in September 2018, the plaintiff in the coffee case filed a separate action directly against OEHHA seeking to have the regulation deemed invalid. The case against OEHHA was initially stayed by Judge Carolyn Kuhl until the regulation could be finalized, and has now been further stayed in deference to letting Judge Berle determine the validity of the regulation in the original case against the coffee roasters and retailers.  On June 5, OEHHA filed a writ petition seeking an order from the Court of Appeal for Judge Kuhl to lift the stay and determine the validity of the regulation.  On June 20, the writ petition was denied.

On June 24, the Court of Appeal lifted the stay in the coffee roaster/retailer action. Judge Berle may now consider how best to proceed given the finalization of the regulation and Judge Kuhl’s continued stay of the OEHHA action.  A status conference is set in the OEHHA action for July 3.  A status conference is set in the coffee roaster/retailer action for July 11.

For questions or more information, contact our California Proposition 65 team.

Coffee Defendants Likely To Seek Stay of Prop. 65 Action Following OEHHA’s Proposal to Exempt Coffee From Cancer Warning Requirement

Defendants in the Proposition 65 case against Starbucks and numerous other coffee manufacturers and retailers have indicated that they intend to file a motion to stay that action following a proposal by the California agency that administers Prop. 65 to exempt coffee from the cancer warning requirement for certain types of exposures.

Judge Elihu Berle has issued an order in Council for Education and Research on Toxics v. Starbucks, et al., Los Angeles Superior Court Case No. BC435759, setting a hearing date on defendants’ contemplated request for a stay of the action for July 31 – the same day as the hearing on the plaintiff’s motion seeking a permanent injunction which could potentially result in defendants being required to sell their coffee products with a Prop. 65 warning in California.

On June 15, California’s Office of Environmental Health Hazard Assessment (OEHHA) issued a notice of proposed rulemaking to exempt coffee from the warning requirement when the Prop. 65 chemicals are created “as part of an inherent in the processes of roasting coffee beans and brewing coffee.”  The notice further states that “[c]offee, a unique and complex chemical mixture made from the roasted seeds of the coffee plant, contains many different compounds, including carcinogens listed under Proposition 65, and anticarcinogens.”

According to OEHHA, the proposed regulation is based on extensive scientific evidence that drinking coffee has not been shown to increase the risk of cancer, and may reduce the risk of some types of cancer.

OEHHA notes that in a review of more than 1,000 studies, the World Health Organization’s International Agency for Research on Cancer (IARC) concluded that there is “inadequate evidence” that drinking coffee causes cancer. IARC found that coffee is associated with reduced risk for cancers of the liver and uterus, and does not cause cancers of the breast, pancreas and prostate. IARC also found that coffee drinking exhibits strong antioxidant effects related to reduced cancer risk.

While the proposed regulation would largely exempt coffee from Prop. 65 cancer warnings, it does not address exposures to listed chemicals that may be created in some way other than the process of roasting and brewing.

OEHHA’s proposed rulemaking follows a recent ruling by Judge Berle in the Starbucks case that the defendants did not establish that acrylamide in coffee was exempt from Prop. 65’s warning requirement under an exception for chemicals created “by cooking necessary to render the food palatable” or safe for consumption.

A public hearing on the proposed rulemaking is scheduled for August 16, and public comment will close on August 30.  OEHHA encourages submission of comments through its website, at this link.

For questions or more information, contact a member of our Prop. 65 team.

 

 

Unicorn-Themed Drinks Spawn Trademark Dispute Between Coffee Retailers

While the mythical unicorn is a rare creature, it has recently become a marketing phenomenon, with the unicorn’s rainbow-laden powers being harnessed to sell unicorn-themed products that can cover you from literally head to toe, i.e., from makeup (such as “Unicorn Snot®”, a glitter gel) to slippers and even a toilet spray made with “unicorn farts” (Squatty Potty’s “Unicorn Gold®”). Perhaps inevitably, brand owners have begun to battle over who can lay claim to a unicorn trademark. And this includes drinks that sound like coffee (but largely are not).

In April, caffeine aficionados found it was nearly impossible to avoid Starbucks’ limited-time promotion of its Unicorn Frappuccino. Purple and turquoise, and made of créme frappuccino syrup, milk, ice, mango syrup and “whipped cream-sprinkled pink and blue fairy powders,” the reportedly coffee-less drink was heavily promoted. One Brooklyn-based coffee and juice bar, however, was not enchanted by Starbucks’ frappe.

The End and its owner, Montauk Juice Factory, Inc., filed a trademark-infringement suit against Starbucks on May 3, 2017. According to the complaint, The End started selling a “Unicorn Latte™” in December 2016, before Starbucks launched its Unicorn Frappuccino. According to its complaint, The End’s “Unicorn Latte™” spawned its own social media following due to its colorful appearance and “magical” qualities of its super-food ingredients. Montauk Juice’s federal trademark application pre-dated Starbucks’ Unicorn Frappuccino launch by several months.

The complaint further alleges that once Starbucks launched its Unicorn Frappuccino in April, confused customers both (1) began calling it a “Unicorn Latte,” and (2) remarked that the “Unicorn Latte™” must have been inspired by Starbucks’ Unicorn Frappuccino.

The singular issue in this case stands out like a jutting horn: were consumers likely to be confused by these dueling unicorn brands? But this one dilemma subsumes several questions, such as the scope of The End’s common law trademark rights. While a federal trademark registration would have conferred presumptive national trademark rights, common law rights may be more limited to where the product was sold and/or marketed. (As of this publication, Montauk Juice’s federal trademark application remains pending at U.S. App. Ser. No. 87/308,906.) And, while the complaint alleges that the Unicorn Latte™ became nationally famous due to its social media presence, social media’s impact on the trademark rights landscape is an emerging question.

A related issue is the strength, if any, of The End’s “Unicorn Latte™” mark. Generally, a trademark’s strength is determined by placing it on spectrum of relative “distinctiveness.” “Fanciful” marks (neologisms having no meaning before use as a trademark, such as “Kodak®”) are the strongest types of marks, while “generic” terms (common names for products or services, such as “cereal”) are afforded no protection. Within the spectrum also lie “descriptive” marks (those that describe the product or service, such as “multigrain” bagels), and relatively stronger “suggestive” marks (which indirectly suggest a quality of the product or service; such as “Greyhound” for buses, suggesting their speed and/or color). Courts often describe “suggestive” marks as those that require consumers to use some “imagination” to associate the mark with the product or service.

Does using an imaginary creature as a trademark necessitate a finding that the mark is, at least, “suggestive”? Or, given the plethora of unicorn-themed products to hit the market in recent years, many of which invoke the colors (if not power) of the rainbow, is the term “unicorn” descriptive, in that it describes a rainbow-colored product? If this case continues towards trial, that question may be answered on its facts. This issue will likely retain contemporary importance given the recent “unicorn” and “rainbow” trend in the food-and-beverage industry cited in the complaint and further evidenced by products such as the rainbow bagel (also based in Brooklyn).

If you would like to discuss how these issues may affect your business, please contact a member of Bryan Cave’s Intellectual Property Client Service Group or Retail Group.

California Chamber of Commerce Challenges Prop. 65 Warning for Acrylamide in Food and Beverage Products

The California Chamber of Commerce has filed a lawsuit seeking to prevent the state from “enforcing a requirement to provide a false, misleading, and highly controversial cancer warning for food and beverage [] products that contain the chemical acrylamide.” Cal. Chamber of Commerce v. Becerra, No. 19-0962 (E.D. Cal., October 7, 2019).

The complaint argues that although “certain governmental and scientific entities” have identified acrylamide as a carcinogen in laboratory animals, “[s]cientific studies in humans, however, have found no reliable evidence that exposure to acrylamide in food products is associated with an increased risk of developing any type of cancer. In fact, epidemiologic evidence suggests that dietary acrylamide—i.e., acrylamide that forms naturally in normal cooking of many food products—does not cause cancer in humans or pose an increased risk of cancer in humans. Indeed, some food products that contain acrylamide (e.g., whole grains and coffee) have been shown to reduce the risk of certain diseases, including cancer.”

The Chamber argues that California’s Office of Environmental Health Hazard Assessment (OEHHA) requires businesses to warn consumers about potential exposure to acrylamide under the state’s Safe Drinking Water and Toxic Enforcement Act (Prop. 65) despite the fact that “neither OEHHA nor any other governmental entity has determined that acrylamide is a known human carcinogen, and in fact OEHHA has acknowledged that the agency does not know that acrylamide increases the risk of cancer in humans.” Therefore, the Chamber argues, the acrylamide warning requirement violates the First Amendment “by compelling Plaintiff’s members and other entities that produce, distribute, or sell acrylamide-containing food products to make false, misleading, and highly controversial statements about their products.”

The complaint asserts that “[a]crylamide is not intentionally added to food products,” but is “formed naturally in many types of foods when cooked at high temperatures or otherwise processed with heat,” and that common sources include breakfast cereals, crackers, bread crusts, coffee, grilled or roasted asparagus, French fries, potato chips and other fried and baked snack foods, canned sweet potatoes, canned black olives, prune juice roasted nuts, and toast. More than 580 Prop. 65 60-day notices have been served alleging exposure without warning to acrylamide.

The Chamber further argues that the Prop. 65 warning requirement for acrylamide “harms both businesses and the public.” Businesses “must either take action to provide false, misleading, and highly controversial warnings to California consumers about the safety of their food products, or face potential costly enforcement actions initiated by Defendant or private enforcers for failing to do so.”  Members of the public “will be misled about the risks posed by food products containing acrylamide, potentially frightening them away from a variety of foods – including whole grains, peanuts, almonds, nut butters, olives, and coffee – that are part of a well-balanced diet and may actually reduce the risk of cancer.”

The complaint seeks a declaration that the Prop. 65 warning requirement for cancer violates the First Amendment, on its face or as applied to any exposures to acrylamide in food products, and preliminary and permanent injunctions prohibiting the Attorney General and/or private enforcers from enforcing or threatening to enforce the Prop. 65 warning requirement for cancer with respect to acrylamide in human food products.

For questions or more information, contact a member of our California Proposition 65 team.

Seattle Ban on Plastic Straws and Utensils Takes Effect

Seattle’s ban on plastic straws and utensils took effect on July 1, after the expiration of an exemption in a 2008 law requiring one-time-use food-service items to be compostable or recyclable.  The ban applies to food service businesses, including restaurants, delis, coffee shops, food trucks, cafeterias, and grocery stores.

Instead of providing plastic straws and utensils, on request, businesses may provide approved compostable alternatives for dine-in service, and compostable or recyclable take-out packaging. Though compostable plastic straws are allowed, environmental groups advocate using compostable paper-based straws. Flexible plastic straws can be provided to customers who need a straw because of medical reasons.

The law imposes fines of $250 on businesses that fail to comply. Other U.S. cities have considered similar bans on plastic straws. A similar ban in San Francisco passed a committee vote on Monday, and goes before the full board next week.

Seattle banned the use of Styrofoam packaging in food service in 2009. Food service businesses were required to use compostable or recyclable food serviceware in 2010, provide recycling and compost bins, and sign up for collection service. Seattle Public Utilities exempted plastic utensils and straws due to a lack of compostable alternatives. That exemption expired at the end of June.

Beware the Empty Space: No Slack in Slack Fill Cases, Which Continue to Flood Courts

As we previously reported, slack fill litigation remains on the rise.  Plaintiffs continue to file consumer lawsuits – typically putative class actions – alleging food packaging is deceptive because it contains empty space, or nonfunctional slack fill, and disguises the amount of product in the package.

This roundup of recent decisions demonstrates that more plaintiffs are getting past early pleading challenges but likely will face significant barriers to success at summary judgment and class certification.

On February 16, 2018, a Missouri federal district court denied Nestlé’s motion to dismiss in Hawkins v. Nestlé USA, Inc., No. 4:17CV205 -HEA, 2018 WL 926130 (W.D. Mo. Feb. 16, 2018) challenging allegations that boxes of Raisinets candy contain 45 percent nonfunctional slack fill. In its motion to dismiss, Nestlé argued that a reasonable consumer would instantly realize the package was half-empty because of its “maraca-like rattle.”  The court rejected this argument because Nestlé relied on matters outside of the complaint and held that plaintiff had pleaded sufficient facts to state claims for violation of the Missouri Merchandising Practices Act and unjust enrichment.

Though relying on a different state’s consumer deception statute, a California federal district court reached a similar result last summer in Escobar v. Just Born Inc., No. CV 17-01826 BRO (PJWx), 2017 WL 5125740 (C.D. Cal. Jun. 12, 2017).  The court denied a motion to dismiss and rejected the defendant’s argument that by shaking the package and reading the label, the plaintiff could have determined that the package was half empty:

“[T]he Court cannot find as a matter of law that a reasonable consumer of Mike & Ike® or Hot Tamales® understands that the weight displayed on the Products’ packaging will measure a significantly smaller amount of Products held within a larger outer packaging. Furthermore, the fact that a consumer may be able to hear ‘the familiar rustling sound created by the empty space and feel the candy pieces moving from side to side within the box’ does not mean that the packaging did not deceive the consumer into purchasing the item. Common sense dictates not only that candy may make audible noise upon shaking the Products’ box, but also that consumers do not necessarily have a reasonable opportunity prior to purchase to shake or otherwise manipulate a box of candy on the shelf or behind glass to ascertain whether the box is filled to the brim with Product. Thus, consumers may reasonably rely on the size of the packaging and believe that it accurately reflects the amount she is purchasing.”

A decision on class certification, the briefing for which is due this spring, should shed much light on how viable courts will view slack fill class claims.

In another case that advanced past the pleading stage, a Missouri federal court granted summary judgment against plaintiffs who alleged that empty space—or “slack-fill” —in 4-ounce boxes of Reese’s Pieces® and 5-ounce boxes of Whoppers® was misleading. Bratton v. The Hershey Company, No. 2:16–cv–4322–C–NKL, 2018 WL 934899 (Feb. 16, 2018).  After denying Hershey’s motion to dismiss last year, the court determined the plaintiff “was not misled by the packaging.” In reaching that conclusion, the court relied on the plaintiff’s admission that he was aware of approximately how much candy and how much empty space was in each box of Whoppers and Reese’s Pieces, and nonetheless continued to purchase the boxes. “Therefore,” the court reasoned, “he cannot demonstrate that he was injured by any purportedly deceptive practice by Hershey.”

Finally, a recent California decision went even further by allowing a plaintiff to challenge the slack fill in a product that she did not even purchase.  In Gordon v. Tootsie Roll Industries, Inc., No. CV 17–2664 DSF (MRWx), 2017 WL 4786090 (C.D. Cal. Oct. 4, 2017), the plaintiff bought a 3.5–ounce box of Junior Mints at a movie theater, allegedly relying on the opaque packaging and the size of the box as an indication of the amount of candy inside. The plaintiff asserts that had she known the box was just over half filled with candy and contained 45 percent “nonfunctional slack-fill,” she would not have purchased the Junior Mints.  She seeks to represent a class of consumers who purchased Junior Mints, Sugar Babies 6–ounce boxes, and all other “substantially similar” products manufactured by Defendant “which are packaged and sold in opaque boxes.”

The Central District of California’s decision focused on whether the plaintiff had standing to sue for products she did not purchase. The court ultimately held that the “standing requirement is met when named plaintiffs demonstrate substantial similarity between the products actually purchased and the non-purchased products, and any material differences between or among the products is best addressed at class certification.”  Because the plaintiff alleged sufficient similarity between the Junior Mints that she had purchased and another candy product, Sugar Babies, such as the products’ similar density, weight, volume, size, and shape, and the fact that they were made in the same facility and contained many of the same ingredients, the court found she had standing to assert these claims, but she could not pursue claims relating to other unspecified candy manufactured by the defendant.

In another related case alleging under-filled lattes, Starbucks recently prevailed on summary judgment.  Strumlauf v. Starbucks Corporation, No. 16-01306, 2018 WL 306715 (N. D. Cal. Jan. 5, 2018).  While falling outside the regulations governing slack fill cases, the theories are similar. The gravamen of plaintiff’s claim was that the coffee chain systematically under-filled its beverages, and milk foam added to lattes and mochas should not count toward advertised volume. The court found that the plaintiff could not establish a violation of New York, California or Florida’s consumer protection statutes where reasonable customers expect foam to take up some volume, and the plaintiff conceded that foam is an essential ingredient in the drink. This type of challenge is not new to Starbucks; it fought off unsuccessful class actions in 2016 alleging ice should not count towards the advertised volume of iced coffee drinks. See, e.g., Galanis v. Starbucks Corporation., No. 16 C4705, WL 6037962 (N.D. Ill. Oct. 14, 2016).

Despite the mixed results, consumers continue to attack more products for alleged slack fill.  One firm recently filed two putative class actions regarding slack fill against manufacturers of Werther’s caramel candy and Takis Rolled Tortilla Chips in the Southern District of New York.  It will be interesting to see whether New York courts allow these cases to advance past the pleading stage, and whether the pending California and Missouri cases will survive summary judgment and class certification.

For questions or additional information, contact the authors or any member of the Retail Team.

California Proposition 65 Actions Expected to Target Furfuryl Alcohol in Food and Beverages

The next wave of lawsuits involving California Proposition 65 and food products may allege exposure to furfuryl alcohol, a chemical commonly found in a wide variety of thermally processed foods and listed as a carcinogen under Proposition 65. The warning requirement for furfuryl alcohol took effect on September 30, 2017.  As of the date of this post, there have been no 60-day notices alleging exposure without a warning. Given the prevalence of this chemical, however, future enforcement actions seem likely.

Furfuryl alcohol forms when amino acids react with sugar in a process known as the “Maillard reaction” that gives many foods a golden brown color.  Much like acrylamide, which has been the subject of numerous 60-day notices and lawsuits, furfuryl alcohol can be found in a wide variety of foods, including:

  • baked goods
  • coffee
  • pasteurized milk
  • alcoholic beverages such as wine and beer
  • ice cream
  • juice beverages
  • toasted nuts

It remains to be seen whether furfuryl alcohol is created in other foods commonly associated with acrylamide, such as French fries and vegetable chips.

No safe harbor level: Proposition 65 requires businesses to provide a warning before exposing consumers to a chemical known to California to cause cancer or reproductive harm. For some of the listed chemicals, California’s Office of Health Hazard Assessment (OEHHA) has established safe harbor levels, in the form of No Significant Risk Levels (NSRLs) for carcinogens and Maximum Allowable Dose Levels (MADLs) for chemicals causing reproductive harm. Exposure below these levels does not require a warning.  No NSRL has been established for furfuryl alcohol.

What can retailers and manufacturers do to assess and reduce their risk? Dr. Rachel Novick, a toxicologist and supervising health scientist with Cardno ChemRisk, recommends that, even in the absence of an NSRL, businesses can still perform a risk assessment. To conduct the analysis a toxicologist will use guidance documents and risk assessment principles provided by OEHHA to derive a daily exposure level that poses no significant risk of cancer.  Businesses could then test their products to determine whether consumer exposure exceeds that level based on consumption data.

It is important to note, however, that these industry-derived exposure levels are not an automatic bar to enforcement, because they are not official NSRLs or MADLs promulgated by OEHHA. For  increased protection from lawsuits, manufacturers, retailers and in particular trade associations should request that OEHHA approve a chemical limit for particular products through a Safe Use Determination (SUD).

Potential defense: Typically a NSRL is based on the level of exposure that would cause no more than one in 100,000 instances of cancer over a lifetime of exposure. However, there may be an alternative level where “chemicals in food are produced by cooking necessary to render the food palatable or to avoid microbiological contamination.”  27 Cal. Code Regs. § 25703(b)(1).

This defense was raised recently in the Proposition 65 trial against Starbucks and more than 70 other defendants alleging exposure to acrylamide in coffee. The court’s ruling is expected within the next few months.  The same defense is likely to be raised in a trial next year involving acrylamide in vegetable chips and other products.

Next steps: There has been extensive litigation related to acrylamide in food and beverage products, and furfuryl alcohol poses a similar risk. Food and beverage companies should consider taking steps to assess their exposure and reduce their risk.  Bryan Cave has extensive experience counseling and defending businesses in Proposition 65 matters.

For questions or more information, or to schedule a free Proposition 65 presentation or webinar, contact the authors: Merrit Jones at Merrit.Jones@bryancave.com or (415) 675-3435, and Tom Lee at Tom.Lee@bryancave.com or (415) 675-3447. You can also contact Rachel Novick at Rachel.Novick@cardno.com or (415) 618-3202.

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