FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations.

Numerous state-law class actions involving trans fat have been filed over the past five years with mixed results. The industry leader in such suits, The Weston Firm, has filed 18 strikingly similar complaints against food makers whose products contained trans fat (here is the most recent complaint against Nissin Foods). The complaints accuse trans fat of causing a litany of diseases and of physically and economically injuring plaintiffs. Some suits have claimed labeling-related violations, while others have simply argued that trans fats render the pertinent food product “unfair” or “unlawful” under California law.

The Federal District Court for the Southern District of California opinion dismissing Simpson v. California Pizza Kitchen, reveals the many flaws of these “unfair” or “unlawful” consumer protection suits. The court found that Simpson (no relation to Homer), who claimed to have consumed five “trans fat pizzas” over a year, could not show that she faced a substantially increased risk of harm, nor could Simpson claim she suffered a “loss of benefit of the bargain” economic injury because she did eat the pizzas. It also ruled that the defendant’s use of trans fat was not “unfair” under California law because Simpson could have avoided harm by reading the Nutrition Facts label or choosing another brand. It further held that the defendant’s conduct was not “unlawful” because contrary to Simpson’s claim that trans fats are “poison” rendering the pizza “adulterated,” federal law designates the source of trans fats, PHOs, as “generally recognized as safe” (GRAS).

An FDA-Inspired Feeding Frenzy? By this June (or, reportedly, as early as May), FDA is expected to issue a final decision on PHOs. In its 2013 initial determination, FDA explained that a sufficiently severe conflict in the science regarding PHOs’ health risks existed, and therefore the substance was no longer GRAS in any amount in any food product. If FDA affirms that decision in June, PHOs will then be considered “additives” subject to FDA approval. Absent such approval, any food product on the market containing PHOs would be considered unlawfully “adulterated.” Even though, technically speaking, “not GRAS” is not the equivalent of “unsafe,” professional food nannies and their acolytes in the media will demonize any food that has, or has ever had, PHOs.

The circling sharks in the plaintiffs’ bar will move in soon after FDA’s final decision. They won’t be deterred by food industry statements that companies are working overtime to reformulate their products. Plaintiffs’ lawyers will first flood the courts with suits similar to those previously filed, which will include FDA-bolstered arguments that the trans fat-containing products are adulterated and thus “unlawful” under state law.

The second wave of lawsuits might target not only products on the market at that time that contain PHOs, but also product makers whose foods utilized PHOs in the past. Those suits may assert product liability claims, public nuisance claims, and claims for medical monitoring. Given the number and severity of health maladies some studies have associated with PHOs, demands for damages to pay for medical monitoring could be in the billions.

As the potential damage amounts grow, more sophisticated and deep-pocketed plaintiffs’ lawyers will enter the litigation. Those lawyers could bring with them, or foment the involvement of, public plaintiffs—cities, counties, and states. City attorneys and state attorneys general may sue for reimbursement of public health care expenditures for the costs of treating cardiovascular disease, Type-II diabetes, and other conditions PHOs have been accused of causing.

FDA Has a Chance to Act Responsibly. If FDA implements what amounts to a veritable PHO “ban,” it can and should mitigate these unnecessary litigation risks and costs. A February 24, 2015 letter addressed to FDA’s Office of Food Additive Safety from a group of trade associations suggests several actions the agency should seriously consider.

First, FDA must clearly explain that its withdrawal of GRAS status for PHOs does not render them “unsafe.” Second, rather than making the GRAS determination effective immediately, FDA should set a reasonable phase-in period and dictate that food products with PHOs introduced into commerce during that time will not be deemed adulterated and can be lawfully marketed. Third, FDA should clarify that when the GRAS status removal takes effect, that determination will apply only prospectively, and that the agency’s GRAS imprimatur will still cover all products marketed prior to any status change.

These statements and clarifications may not be a panacea, given some federal judges’ demonstrated preference for “regulation by litigation.” But FDA inaction would be profoundly inequitable and imprudent—and it would certainly decrease the food industry’s cooperation with any GRAS status changes proposed in the future. A PHO litigation explosion would benefit only plaintiffs’ lawyers and ambitious politicians, while needlessly fomenting consumer fear and increasing food costs.

WLF will be closely monitoring FDA’s actions as it moves toward an anticipated June final decision, and carefully evaluating the mechanisms available to us if the agency ultimately disserves the public interest.

Also published by Forbes.com at WLF’s contributor page.

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