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Year in Review: 2019 Food and Beverage Litigation and Regulatory Roundup

2019 was another active year for new regulatory activity and litigation targeting the food, beverage, and supplement industries.

In this roundup, Bryan Cave Leighton Paisner LLP presents a collection of regulatory developments, key court decisions, and notable settlements that were reached in 2019 and early 2020.

The highlights of this 2019 roundup include:

  • New federal legislation governing food labeling.
  • New regulations and a burst of litigation regarding CBD-based products.
  • An update on slack fill litigation.
  • Notable rulings, trials, and settlements.
  • Prop 65 and food safety update.
  • A preview of areas to watch in 2020.

We will continue our commitment to monitoring and analyzing industry trends in these areas and advising clients on legal and regulatory developments.

 

Pepper Purchasers Reach $2.5 Million Class Settlement Over Underfilled Containers

In a multidistrict litigation accusing McCormick & Co. of deceptively underfilling the pepper it sells in grinders and tins, a D.C. federal judge preliminarily approved a $2.5 million class settlement last week.

Consumers first sued McCormick in 2015, challenging the spice manufacturer’s response to economic pressures in the black pepper marketplace.  Facing rising wholesale prices and a decreased market share, McCormick reduced the weight of ground pepper in its tins and peppercorns in its pepper grinders by 25% and 19%, respectively, but did not reduce the container size or change the price.   Retailers sold the containers with reduced amounts between March 2015 and June 2016.  The plaintiffs’ original complaint alleged that McCormick and other brands it supplied misled consumers by constructing the packages to hide the reduction of product with “nonfunctional slack-fill,” or empty space.

Within months of the first case against McCormick, additional copycat consumer suits followed. In late

California Amends Slack Fill Law to Provide Additional Exemptions

Governor Jerry Brown recently signed into law Assembly Bill 2632, which amended California’s slack fill statute to create several exemptions. This amendment will be an additional hurdle to the plaintiff bar, which has been flooding the courts with slack fill related lawsuits in recent years. These lawsuits, typically filed as class actions, allege that product packaging is misleading to the extent it contains nonfunctional empty space, known as slack fill, which causes consumers to believe they are receiving more of the product than they actually are.

The new law, which will amend California Business and Professions Code Sections 12606 and 12606.2, includes the following key changes:

  • The amended law exempts packaging sold in a mode of commerce that “does not allow the consumer to view or handle the physical container or product.” It could be argued that this exempts online sales.
  • The amended law exempts product packaging that clearly

End of the Road for Mike and Ike Slack Fill Case

In another victory for a candy manufacturer, a federal court in Missouri denied class certification earlier this month, effectively ending the plaintiff’s attempt to seek damages on a class-wide basis for all consumers of Hot Tamales and Mike and Ike candies.

The lawsuit, White v. Just Born, alleged that boxes of the candy were underfilled, leaving unusable empty space, known as “slack fill,” that deceived the consumer into thinking he was receiving more candy than was actually in the package. The plaintiff sought certification of a Missouri class, and two multi-state unjust enrichment classes, on the theory that the actual value of the candy was less than the consumers paid for it.

The court declined to certify all three classes, ruling that proving class-wide violation of Missouri’s Merchandising Practices Act “will involve predominantly individual inquiries as to whether each class member purchased the candy.” Because most consumers purchase this type

New York Court Takes Critical View of Slack Fill Claims

As we have previously reported, slack fill litigation remains on the rise, with plaintiffs continuing to file consumer lawsuits – typically putative class actions – alleging food packaging is deceptive because it contains empty space, or nonfunctional slack fill, thereby disguising the amount of product in the package.

While some federal courts in Missouri and California have allowed these claims to advance past the pleading stage, one federal court in New York recently took a harsher stance and granted the defendant’s motion to dismiss.

The lawsuit, Daniel v. Tootsie Roll Industries, LLC, claimed that the manufacturer of Junior Mints tricked consumers into overpaying for the candy by leaving more than one-third of its boxes full of empty space, known as “slack fill.”

In a 44-page decision, U.S. District Judge Naomi Reice Buchwald of the Southern District of New York found plaintiffs did not allege a viable claim for consumer fraud

California’s Cage-Free Eggs Law Faces Supreme Court Challenge By Other States

Briefing is now complete in a lawsuit filed by more than a dozen states asking the United States Supreme Court to block a California law requiring any eggs sold within the state to come from chickens that have sufficient space to stretch out in their cages.

In the lawsuit, filed directly with the high court in December, Missouri, Iowa and 11 other states allege that “California has single-handedly increased the costs of egg production nationwide by hundreds of millions of dollars each year” due to its stringent regulations prohibiting confinement of egg-laying hens. The complaint contends that California’s requirements violate the Constitution’s interstate commerce clause. The lawsuit also alleges that California’s regulations are preempted by the Egg Products Inspection Act (EPIA), a federal law requiring uniformity of labeling, standards, and other provisions allowing for free movement of eggs and egg products in interstate commerce. To support their claims, plaintiffs rely

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

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