The Twisted Case of the ‘Deceptive’ Pretzels

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Rold Gold pretzels don’t have much fat, and their label used to say so. But a plaintiff sued the company, alleging the “low fat” label was deceptive because the pretzels are . . . salty. The Rold Gold label depicts a pretzel with glistening salt crystals, but the plaintiff demanded a statement on the packaging: “See nutrition facts for sodium information.”

The lawsuit was dismissed in 2014, but how did it get anywhere in the first place? Blame the Food and Drug Administration. The plaintiff’s attorney relied on a warning letter in which the FDA accused a different company of a similar “deception.”

Warning letters are a form of informal guidance. They lack the input of key stakeholders and are open to varying interpretations. In sending them out, the FDA acts like the opposite of a regulatory agency, which is supposed to issue rules to ensure that commerce remains regular and predictable.

But at least they aren’t supposed to affect anyone other than the recipient. Yet attorneys have used them in recent years to file hundreds of class actions against food and beverage companies. These cases often cite the FDA’s nonbinding guidance as evidence that a company has violated state consumer-protection laws.

In one recent flurry of suits, plaintiffs have taken companies to task for using the term “natural” to challenge products that contain genetically modified ingredients or are distantly touched by genetic modification. One suit against Dannon challenged its claim that its yogurt was “all natural.” The plaintiff did not allege that any ingredient in the yogurt was artificial. The claim was that the yogurt was not natural because cows that produced the milk ate genetically modified feed.

This meritless suit was made possible in part because of the FDA’s informal statements on the term “natural.” The agency has no official position as to what constitutes “natural” products. But the agency has an unofficial—if tautological—view that “natural” means nothing artificial or synthetic has been included in, or added to, a food that would not normally be expected to be in that food.

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The FDA has refused to weigh in on whether genetically modified ingredients are natural, but it has issued warning letters to companies claiming that their product’s “natural” label is misleading because the product contains various ingredients that may or may not be synthetic depending on how the ingredient is processed.

There’s more. One lawsuit alleged that a coffee company defrauded customers by advertising that its iced drinks contain more liquid than they actually do, even though a reasonable consumer would understand that ice displaces liquid. The FDA had issued informal guidance that consumers may be misled as to the amount of liquid in a container that is not entirely transparent—even if the container is transparent enough that you can see ice in it.

Given the uncertainty surrounding the FDA guidance documents, these cases seldom proceed to trial. Instead, companies settle for millions, the vast majority of which goes to the lawyers. Consumers often get vouchers to buy more of the product that allegedly misled them.

FDA Commissioner

Scott Gottlieb

has a chance to stop many of these abusive lawsuits by returning to administrative-law basics. Agencies should regulate industry by issuing a proposed rule, seeking comments, and then promulgating a final rule that reflects stakeholders’ input and applies clearly and across the board. At the very least, the FDA should make clear that courts should no longer rely on subregulatory guidance in evaluating whether consumer class actions should proceed.

If Dr. Gottlieb takes these actions, he will go a long way to advancing the rule of law and common sense. He will also ensure that companies have the guidance they need to ensure their actions are lawful and that consumers, not lawyers, are the real beneficiaries of the FDA’s actions.

Mr. Bradshaw is a partner and Ms. Maleck a senior associate with King & Spalding LLP. He was chief counsel to the FDA, 2005-07. She has represented defendants in some of the cases cited in this article.



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