Is Counting Calories a Cost or a Benefit?

This month, food industry trade groups called on the Food & Drug Administration to halt its new food labeling law requiring food establishments to publish the calorie content of menu items.

Organizations like the National Grocers Association (NGA) and the National Association of Convenience Stores (NACS) continue to argue against the law. The major reason: costs. Not only the costs they’ll incur to implement it, but the long-term costs to remain compliant may be even higher. And research continues to show that menu labeling does not change consumer behavior.

Background on the Law
Seven years ago, the menu labeling law was passed as part of the Affordable Care Act (ACA), and the FDA has been working on the details ever since. It’s been a rocky road. While the requirements were set to go into effect last fall, after food organizations lobbied against the bill, the FDA agreed to delay the requirements until May 2017.

Now, these organizations want to delay the implementation of the law with hopes that the FDA will reconsider. Their latest petition against the law cites four reasons the FDA should delay implementing the law – or even reconsider it:

  1. The FDA hasn’t provided enough information for businesses to comply.
  2. The final rule is more expansive than the original ACA requirement.
  3. The rule violates the First Amendment by requiring restaurants to publish calorie information.
  4. Implementation costs are enormous, and grossly underestimated by the law.

High Costs
There’s a dispute about how much it will cost food establishments to implement the law. The FDA estimates that the law will cost $1 billion over 10 years, but trade organizations argue that $1 billion will be spent on the initial implementation alone. These implementation costs include analyzing the nutritional information for each menu item, and rewriting all restaurant menus.

Food establishments also have additional reasons to reject the law because the initial implementation costs are only a fraction of what they might spend on continued compliance. Publishing the calorie information on menus requires several expensive steps.

Restaurants must standardize their menu items and ingredients: A burger cannot be eight ounces one day and 10 ounces the next. For the published calorie information to remain accurate, serving size must be standardized.

Food establishments must determine the calorie information: Once food establishments standardize their menus, they must have a nutritional analysis for each menu item. Then, if a restaurant wants to add a new appetizer or make a seasonal menu change, it will be forced to repeat the process.

Food establishments will need consistent products from suppliers: A new salad dressing or ketchup supplier might change the posted calorie information for menu items. This could force a restaurant to start the process all over again, and potentially pay for new menus nationwide.

High costs aren’t the only reason for food establishments to oppose the menu labeling law. They have other data to question its benefits.

Are the Added Costs Worth It?
The purpose of the law was “to assist consumers in maintaining healthy dietary practices.” Has it worked?

Studies continue to show that consumers don’t eat healthier foods based on posted calorie content. States like New York and cities like Seattle have already passed similar menu labeling laws, providing microcosms of what might happen at the national level. The results were not impressive: In New York and Seattle, people’s purchasing habits changed only slightly after menu labeling became mandatory, and the effect wore off after a few months.

This result shouldn’t be surprising. For almost three decades, grocery items have had calorie content listed on labels based on the requirements of the Nutrition Labeling and Education Act of 1990. That act requires that all packaged food must bear a standard nutrition label, which includes calorie content.

Despite this law, Americans eat more today than ever before. Recent research estimates that Americans consume 23 percent more calories a day than they did in the 1970s – before labels were required to include nutritional information.

The NGA and NACS have voiced several concerns about the menu labeling requirements, but there are additional reasons for the FDA to reconsider how it implements the law. The costs for food establishments are significant, and who is likely to ultimately bear those costs? The consumer who is unlikely to change behavior based on the labels.

Chipotle Gets a (Nearly) Clean Bill of Health

As Chipotle continues the fight to restore its reputation, there are a few signs it’s moving in the right direction since our July 2016 post.

First, in February 2017, Chipotle’s sales rose for the first time in five quarters. And it reclaimed its place as the top Mexican food restaurant according to Market Force Information’s annual quick-service restaurant study. It further earned top marks for food quality and cleanliness. Continue Reading

It’s Not Personal: Companies Can’t Be Sued Everywhere

The highest courts in two states have made it more difficult for plaintiffs to sue companies in state courts of their choosing. The Oregon and Missouri Supreme Courts recently dismissed claims against companies for lack of jurisdiction where the companies were not incorporated or headquartered in the forum state, or were not sued because of their activity in the state.

These decisions come before the U.S. Supreme Court decides Bristol-Meyers Squibb v. Superior Court of California (BMS) this spring. BMS will further define the boundaries of personal jurisdiction over companies because the Supreme Court will decide whether jurisdiction attaches to a company because of its activities in a state even if the company’s specific in-state activities did not cause the plaintiffs’ injuries.

BMS will be the second time the Supreme Court has recently looked at personal jurisdiction; in Daimler AG v. Bauman, the Supreme Court held that a company’s substantial operations in a state did not establish jurisdiction because the company’s particular in-state operations made up a small portion of its nationwide and global business. Continue Reading

Where Does Your Smartphone End and Your Car Begin?

Consider the world today: Smartphone manufacturers have already introduced vehicle infotainment systems in automobiles. Vehicle safety technology may be next.

A recent safety proposal by the National Highway Traffic Safety Agency (NHTSA) raises intriguing questions about how our smartphones and automobiles may interface. The proposal may encourage smartphone manufacturers to add vehicle safety technology to their infotainment system applications. That may start to blur the lines between your vehicle and your smartphone.

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What Does Made in the USA Actually Mean?

Consumer products companies may be eager to use Made in the USA labels to advertise, particularly given the political climate and increased publicity around domestic manufacturing. But they must pay close attention to the state and federal laws that regulate what Made in the USA actually means.

Continue Reading

The Troubling Increase in CPSC Penalties

In an updated statistical analysis, Schiff Hardin’s Jonathan Judge examines how penalties handed down by the Consumer Product Safety Commission (CPSC) have abruptly veered upward over the last two years following the threat of CPSC’s then-Chairman Elliot Kaye, to do just that. These findings support our post last fall signaling higher civil penalties to come. Continue Reading

Monsanto Uses the Constitution to Challenge Warning Labels for Herbicide

Monsanto has, at least temporarily, lost its fight to avoid a Prop 65 warning label on its products containing glyphosate, a chemical used in the popular herbicide Roundup. On January 27, 2017, a California judge tentatively dismissed Monsanto’s claims that the State of California unconstitutionally turned to an unelected, European organization to decide whether glyphosate posed a cancer risk. Continue Reading

Hotel California: Supreme Court Will Review Whether Plaintiffs Can Check in to California Courts from Afar

On January 9, 2017, the United States Supreme Court granted review over a case from the California Supreme Court that could affect whether plaintiffs can bring product liability and mass tort claims in states where they don’t live and didn’t suffer an injury.

In Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, No. 16-466, the Court will decide whether the California courts properly asserted jurisdiction over Bristol-Meyers Squibb (BMS). It will consider where companies that operate nationwide businesses can be sued, and how their activities in a state—including marketing or sales—could expose them to a lawsuit there.

If the Court decides that California courts have jurisdiction over BMS in this case, then companies could face more nonresident plaintiff lawsuits, particularly in California. For companies, these lawsuits could mean facing potentially plaintiff-friendly laws and courts and the inconvenience of defending a case in another part of the country. Continue Reading

Food Fight: More Labeling Litigation in 2017

Food labeling litigation increased significantly last year, with many consumer groups alleging that products were misleadingly labeled and violated U.S. Food and Drug Administration labeling requirements. Consumers targeted phrases like “all natural,” “preservative-free,” or having “no preservatives.”

But FDA rules are unclear as to what these terms mean, which will likely spur more labeling litigation in 2017. Here we look at three main reasons for the anticipated increase in litigation. Continue Reading

Truly Exonerated? NHTSA’s Tesla Autopilot Investigation

When the fatal car crash involving a Tesla Model S sedan made headlines last fall, we posted about the accident and predicted that government authorities would classify the crash as being caused by driver error rather than an issue with the “Autopilot” system.

Our prediction turned out to be correct.  The National Highway Traffic Safety Administration (NHTSA) was still investigating the incident when we first posted about it, but on January 19, NHTSA closed its preliminary evaluation, which found that driver error was responsible.

Still, the performance of Automated Driver Assistance Systems, or ADAS, is an area of intense regulatory interest, and it was therefore not surprising to see NHTSA’s Office of Defect Investigation deploy a special crash investigations team to reconstruct the accident.

Several news reports have characterized NHTSA as having “exonerated” or “cleared” Tesla of any wrongdoing in connection with the crash. Officially, NHTSA merely closed the investigation, noting that it reached no conclusion about whether a defect existed and retained its right to reopen the investigation later.

That said, NHTSA was clearly satisfied with the performance of Tesla’s ADAS system during the crash, which allowed the agency to close its investigation. Continue Reading

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