Archive for the ‘Menu Labeling’ Category

Happy Meal Lawsuit Threatened Against McDonald’s: Is the Happy Meal Really Like “Joe Camel,” and Does It Really Violate Consumer Protection Laws?

Friday, June 25th, 2010

Chris Vrountas offers the following post:

The Center for Science in the Public Interest has threatened to file consumer protection lawsuits in a number of jurisdictions against McDonald’s unless the fast food chain stops its practice of offering toys to children who order the Happy Meal, which typically includes a cheeseburger and “fries.” The Group claims that McDonald’s marketing “unfairly and deceptively” targets children by enticing them with toys to “nag” their parents to have them buy allegedly unhealthy or high fat meals. “McDonald’s “couldn’t disagree more” and asserts that the chain offers a great variety of foods that include low fat and healthier options.”

While McDonald’s may have its own legal defenses, there is another perhaps larger potential defect in the group’s theory against the chain. “Ultimately, it is one of causation.” Or in other words, as some skeptics have argued, it’s called “parenting,” and perhaps those concerned with what their children eat should “just do it.”  It is one thing if the concern” was about children old enough, to have their own purchasing power and about advertising that in fact deceives them “into purchasing a harmful product.” Think, for example, of Joe Camel, a marketing program allegedly targeted to children who were not legally permitted to use the product but who nevertheless could purchase it with their own money. “Here, however, the customers are parents who presumably can read labels and the nutrition content offered by the chain to anyone who asks.” While toys may entice children to ask their parents for something that is not good for them, parents with access to full information make the final call. In that context, the defense argument goes, how can the real customer genuinely argue that the chain has been “deceptive” in its marketing?

The Group, however, insists that the targeting of children, who are “really the ultimate customers, is calculated to mislead them so that they may press their parents into purchasing allegedly unhealthy products for them.” And, if the chain’s marketing is not actually “deceptive,” then perhaps it is “unfair” to market in such a fashion as to mislead children into becoming “an unpaid army drone army of work-of- mouth marketers, causing them to nag their parents to bring them to McDonald’s.”

The Group is not the only critic of the Happy Meal practice. “Santa Clara County in California this year” enacted a ban in restaurants on toy give-aways associated with high calorie meals aimed at children. “There are a number of ways a restaurant could arguably comply with this ban while nevertheless continuing to offer loss leader toys to children.” For example, one could offer an alternative series of meal packages, including both “healthy” and “high calorie” options, that would all include the toy give-away. “There” really is no reason why kiddie toys should only be associated with the “lunch box of death.”

The Group has served its demand letter upon McDonald’s, giving the chain 30 days to respond with a reasonable offer of settlement. “What McDonald’s may do remains to be seen.” “While it is a free country, hopefully McDonald’s and the nutrition activists can bring freedom of choice and health to a workable compromise and settle this alleged consumer protection claim, as there is no reason why a Happy Meal cannot also be a healthy meal.

LEAN and Mean: The New Healthcare Reform Law To Authorize Uniform Standards for Menu Labeling

Wednesday, March 24th, 2010

Although it may appear to be yet another act by the federal government to control daily life, this is one intrusion that has been supported by the hospitality industry for some time. Local communities, such as New York, Philadelphia, and states such as Massachusetts, have begun to enact menu labeling laws requiring certain restaurant chains to post various kinds of nutritional information prominently on their menus. Some require only calorie counts while others require information regarding trans-fats, sodium, carbohydrates and so on. Other states, such as Connecticut, have rejected such laws altogether, although in that case only by a recent governor’s veto. Faced with a patchwork of varying and complicated regulations, the industry supported federal regulation in this area so that businesses can deal with a single, consistent set of rules throughout the country.

And the rules are fairly straight forward, for now. The new healthcare reform law calls upon the FDA to develop new regulations that will set forth national standards for restaurants to post the calories of the various food items offered on the menu. The anticipated regulations will govern all restaurants with 20 or more locations. Once issued, these regulations will preempt local and state laws in the field and create an environment less likely to ensnare an operator by surprise.

That said, the industry still needs to deal with those plaintiffs lawyers. Class actions have been brought against restaurants who have sought to market “healthier options” on the grounds that such marketing campaigns and associated menu explanations fail to disclose the full nutritional story on the plate. Whether the federal labeling law will protect restuarants the way the surgeon general’s warning protected tobacco companies for years remains to be seen, but the Supreme Court has ruled that labeling laws do not necessarily preempt false advertising and fraud claims.

What does all this mean? It means restaurants will need to follow the FDA process closely these next several months and, in the meantime, continue to watch for what local law requires. In all cases, menus and other marketing materials must not serve to mislead, and any representations should first be vetted and confirmed before they are circulated to the public.

NKMS has presented on the patchwork of regulations concerning menu labeling across the country as well as on the class actions that have been brought asserting these claims these last two years. Be sure to watch this page and catch one of our upcoming webinars to keep up with this developing trend.

First Circuit Rules Massachusetts Law Limiting Direct Wine Shipments to Consumers is Unconstitutional

Friday, February 5th, 2010

Stephen Coppolo, a member of the firm???s Employment Counseling and Litigation Practice Group, reports the following:

In January, the Boston-based First Circuit Court of Appeals ruled unconstitutional a Massachusetts statute severely limiting the ability of what the law defines as ???large??? wine producers, all of whom were outside of Massachusetts, to ship wine directly to state consumers. The First Circuit decision is a victory for winemakers across the country, as the Massachusetts??? law was the first in a wave of state laws passed in reaction to the Supreme Court???s 2005 Granholm v. Heald decision, which held unconstitutional New York and Michigan schemes that permitted in-state wineries to ship directly to consumers, while prohibiting out-of-state wineries from doing the same.

The Massachusetts statute, Mass. Gen. Laws ch. 138, ?? 19F (2006), defines ???small??? wineries are as those that produce less than 30,000 gallons of grape wine per year, while ???large??? wineries are those that produce more than 30,000 gallons of grape wine per year. Under ?? 19F, ???small??? wineries may sell wine both through traditional beverage distributors and through direct to consumer shipments. ???Large??? wineries must choose to either their sell products through distributors or through direct shipments to consumers. Key to the First Circuit???s ruling was the fact that all wineries in Massachusetts qualified as small wineries, entitled to the competitive advantage against large wineries, each of which was based out-of-state.

Specifically, the First Circuit held ?? 19F violated the Commerce Clause because it had both the purpose and effect of favoring in-state wine producers and the Commonwealth had not demonstrated ?? 19F achieved a legitimate local purpose that cannot be furthered by a non-discriminatory alternative.

The court found that the effect of ?? 19F was discriminatory against out-of-state wine producers since ???large??? winemakers are not offered the ability to benefit from the synergy provided with dual-marketing through direct-to-consumer shipments and through traditional beverage distributors who procure placement of wines in retail outlets. The court also rejected the Commonwealth???s argument that small wineries both inside and outside of Massachusetts benefited, noting that 27 of Massachusetts??? 31 wineries have obtained small winery licenses (allowing them to enjoy the benefits of the law), while only 26 of the 2,933 out-of-state ???small??? wineries have done so.

The court also found ?? 19F???s discriminatory purpose was clear from the statements of the bill???s sponsor that ???[w]ith the limitations that we are suggesting ??? we are really still giving an inherent advantage indirectly to the local wineries.??? Further, a state senator whose district included Massachusetts??? then largest winery, which was planning to expand above the 30,000 gallon limitation, voiced concern about the legislation???s effect on that winery. Soon after, language was added to the bill exempting non-grape wine from the calculation, allowing the winery in question to safely avoid the 30,000 gallon cap. Lastly, the court found no correlation between the 30,000 gallon number chosen and any other state or federal system of classifying wine producers: the only correlation found was with the Massachusetts wine industry.

The Court further rejected Massachusetts??? argument that no non-discriminatory method was available to meet the purported purposed behind ?? 19F, noting that the National Conference of State Legislatures adopted a Model Direct Shipment Bill in 1997, which does not regulate winery access to direct shipments based on winery size. Lastly, the Court rejected an unrelated argument that the 21st Amendment to the United States Constitution, which repealed Prohibition, overrides the Commerce Clause in this area and gives states the power to enact laws that discriminate against out-of-state producers.

Massachusetts could seek Supreme Court rule of the First Circuit decision, although the soundness of the First Circuit???s reasoning leaves Massachusetts with a steep hill to climb in successfully having the decision overturned. More likely, the First Circuit decision will serve as a model for other federal trial and appeals courts to rule on the constitutionality of similar laws enacted in other states.

Hold the Salt?

Wednesday, January 13th, 2010

Laurie R. Bishop, a member of the Firm???s Employment Counseling and Litigation Practice Group, reported the following:

The mayor of New York City announced on Monday that he plans to take steps to limit the salt intake of the city???s residents. Mayor Bloomberg, who is well-known for his healthy-living initiatives concerning smoking and trans fat, says that his plan would set a goal of reducing the amount of salt in packaged and restaurant food by 25 percent over the next five years. According to Bloomberg, the plan is supported by health agencies in other cities and states. An article on the front page of the New York Times on January 12, 2010, noted doubts as to the success of the plan, explaining that it would require participation on a national scale and that some medical researchers have questioned the scientific basis for the initiative, saying insufficient research had been done on possible effects. Before you take the salt shakers off the tables though, note that the plan is voluntary only and involves no legislation. It is also meant to allow companies to cut salt gradually so that consumers will not notice a big change and can become accustomed over time to the ???healthier??? taste of their food.