Litigation Now Driving the Non-GMO Labeling Discussion

The executives at Barbaras Bakery likely didnt see it coming. After all, the brand has been a stalwart of the natural products industry for many, many years. But when a plaintiff decided to pursue damages against the company, claiming the "all-natural" designation on Barbaras product labels was deceiving because the products contained ingredients sourced from genetically modified organisms (GMOs), the battle over GMO labeling got personal.

Never mind that "natural" hasn't been legally defined. Never mind that FDA has chosen, so far, to not address whether natural products can legally contain GMOs. Never mind that more than 80 percent of all commodity corn, soy and sugar beet crops grown in the United States are GMO-based.

Barbaras, owned by Weetabix, settled out of court for USD $4 million in June rather than going through what would have likely been lengthy, expensive and brand-damaging litigation. It has also changed its packaging to remove the phrase all-natural and is moving quickly to remove GMO ingredients from its products, in addition to achieving certification from the Non-GMO Project Verified label.

From a legal perspective, we werent doing anything wrong," noted Frederico Meade, vice president of marketing  at Barbaras.

This is not an isolated incident. Naked Juice, owned by PepsiCo, settled a similar lawsuit for $9 million in July; Cargills Truvia stevia-based sweetener in September settled a deceptive marketing" lawsuit for $5 million. At the time of this writing, other companies fighting all-natural lawsuits over GMO ingredients include Smuckers for its Crisco vegetable oil, PepsiCo for its Frito-Lay chips, and Gruma Corp. for its Mission corn chips.

GMOs aren't the only legal threat. Californias Proposition 65, enacted in 1986, requires specific labeling requirements on products sold in the state if the product contains chemicals listed by the state as carcinogens or reproductive toxicants, including lead, above specified limits. Failure to provide such warnings can result in action by the California attorney general or by any person in the public interest."

Since 2010, around 300 Prop 65 notices on lead were filed, and settlement costs in 2012 totaled nearly $1 million by midyear, according to the American Herbal Products Association (AHPA). The average cost of each settlement amounted to about $48,000not including legal expenses incurred by the companies receiving these notices.

Sadly, the settlement amounts for companies targeted with lawsuits over GMO ingredients and all-natural claims, as referenced above, already makes previous Prop. 65 actions look like childs play. It is likely that continued litigation, especially in California, which has a more lenient environment for plaintiffs, would make these actions the largest and most expensive legal challenges in the history of the food industry.

In the immediate future, producers of consumer products have several ways to defend themselves and mitigate against such lawsuits, including:

In todays highly dynamic GMO labeling debate, its not lost on mainstream food producers and agribusiness that the continued threat of expensive litigation is a grave threat to their brand equity and bottom lines. According to our sources on Capitol Hill, this perceived threat, as well as the costs of attempting to defeat state GMO labeling laws, will likely lead to the introduction in 2014 of mainstream food industry-backed federal legislation that would propose voluntary labeling, limit liabilities and preempt states from proposing their own GMO labeling laws. In essence, any likely federal bill will be unsatisfying to the non-GMO community and will not make this issue go away.

While we lament the increasingly litigious nature of our society and dont believe that plaintiff and class action lawsuits are the way to resolve important public policy, such as the one over GMO labeling, as an industry that has benefitted from public trust and confidence, were faced with an unprecedented challenge that adds urgency to what we believe is the best avenue: a market-driven approach to the GMO labeling issue.

The specter of aggressive litigation and contentious federal legislation are the two main reasons why the United Natural Products Alliance (UNPA) favors a market-driven approach. The priorities should be addressing the fundamental issues within the distribution system, such as supply-and-demand ratios for non-GMO ingredients; expanding retail distribution; and developing analytical competence to test for GMO ingredients.

To be clear, UNPA supports state-based labeling initiativesincluding Washington states I522, because it will spur an interest in and advancement of a commercial process to create a labeling protocol that is acceptable to the impacted industries. This, in turn, will engage all of the stakeholders in this conversation toward an understanding that solutions can be attained via a marketplace-based model.

Loren Israelsen is president of the United Natural Products Alliance (UNPA, unpa.com); Frank Lampe is vice president of communications and industry relations for UNPA. Proceedings from the associations May symposium on GMOs is now available at the associations website, unpa.com/products.