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PepsiCo back in the firing line over all-natural claims as new class action targets Frito-Lay

By Elaine WATSON , 24-Sep-2012

PepsiCo has been targeted by the latest in a string of class action lawsuits alleging big brands are misleading consumers by labelling products as ‘all-natural’ when they contain genetically modified organisms (GMOs).

While there is no legal definition of ‘natural’ and US food manufacturers are not legally required to label GMOs on pack, the use of the term ‘all-natural’ on Frito-Lay’s  Bean Dip “is deceptive” and “violates the consumer’s right to know what is being introduced into his or her body/internal system”, claims a new lawsuit filed in Florida.

Labeling is likely to mislead the public

According to a complaint filed by Kelli Altman under the Florida Unfair and Deceptive Practices Trade Act on the same day, Frito-Lay Bean Dips “contain soy, among other ingredients, which are known to be derived from GMOs”.

Altman, who is represented by the Eggnatz law firm, contends that “products containing GMOs should not be labeled ‘all natural’ without also disclosing the fact the products contain GMOs, and that defendant’s advertising and labeling is deceptive and likely to mislead the public as a result”.

Very few of these cases ever go to trial

The suit is the latest in a series of proposed class actions filed against top food and beverage brands over ‘all natural’ claims. But are these cases getting anywhere, and are any trends emerging?

One thing that is clear, Colorado-based attorney Justin Prochnow told FoodNavigator-USA, is that more of these cases are being filed every week, and GMOs are featuring more and more prominently, perhaps because of heightened awareness as the GMO-labeling issue is debated in California (Prop 37).

They started off being about the use of ‘artificial’ preservatives and sweeteners, but now we are seeing GMOs cited much more frequently,” added Prochnow.

Several high profile ‘all-natural’ cases have yet to be resolved (Bates v Kashi; Anderson v Jamba Juice, Janney & McKendrick v Gen Mills), while others have been voluntarily dismissed by the plaintiff, which could mean that the parties have settled, or that the legal firms mounting the case have failed to assemble a credible class, he said.

“Very few of these cases ever go to trial. I don’t have any stats, but I suspect a lot settle. Companies conduct a cost benefit analysis and think is it worth spending one to two years, hundreds of thousands if not millions of dollars fighting these cases - when you still might lose?”

Mixed messages?

So what can we learn from cases where judges have issued rulings?

The picture is mixed, said William Dance, LA-based attorney at law firm Tucker Ellis LLP.

For example, PepsiCo recently persuaded a judge in California to dismiss a class action lawsuit (Hairston v Gen Mills) alleging it misled consumers of its SoBe beverages by describing as ‘all-natural’ beverages that contained vitamin C, B12, B6, B3 and B5 that were produced using a “chemical manufacturing process”.

In a ruling dated May 18, US district judge John F Walter said: “No reasonable consumer would read the ‘all natural’ language as modifying the ‘with vitamins’ language and believe that the added vitamins are supposed to be ‘all natural vitamins’.”

“To the extent there is any ambiguity, it is clarified by the detailed information contained in the ingredient list, which explains the exact contents of Lifewater.”

However, in another recent ruling (Annie Lam v General Mills) - which found partly against General Mills and its Fruit Roll-ups - US district judge Samuel Conti made it clear that if claims made on the front of pack are misleading, labeling ingredients accurately on the back of the pack does not get firms off the hook.

He added: "The court cannot conclude that a reasonable consumer should be expected to look beyond 'made with real fruit' in order to discover the truth in the small print [ie. on the ingredients list].”

Conti also quoted from a ninth circuit opinion (Williams v Gerber Products) stating that: “We do not think that the FDA requires an ingredients list so that manufacturers can mislead consumers and then rely on the ingredients list to correct those misinterpretations.”

I'm surprised more suits have not been brought over GMO ingredients, but that trend is coming

Scores of suits alleging deceptive ‘all natural’ food labeling have been filed in California recently, most typically alleging violation of three consumer protection statutes: The Unfair Competition Law, False Advertising Law and Consumers Legal Remedies Act.

Because there is no legal definition of ‘natural’, these complaints are not susceptible to dismissal based on pre-emption, making them harder to defend, noted Dance.

Liability under the three statutes is determined in part by considering whether a ‘reasonable consumer’ would be misled by the claims on pack.

He added: “I'm surprised that more suits have not been brought over GMO ingredients but I think that trend is coming.”

A PepsiCo spokesman said: “We are confident that the labeling on our packaging complies with all regulatory requirements.  Unfortunately since this is an ongoing lawsuit, this is the only information I can provide at this time.”

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