Wednesday, November 18, 2020
Product labels abound. For just about any product, the product label tells the consumer where that product was manufactured. Food products also carry labels with lots of information. The purpose is to give the consumer information about the product so that an informed buying decision can be made – including distinguishing products among various competitors.
A contentious issue for a number of years in the livestock industry has involved the product label for beef. When the label on a beef meat product in the grocery store says, for example, “Product of the U.S.A.” what message does that convey to the consumer? What does it mean to you? The answer is obvious. But is the answer correct?
Labels on beef products – it’s the topic of today’s post.
If time permitted today, I would dig through the background on meat product labeling a bit more. The legislative, statutory and regulatory history is quite interesting. But, time does not permit that excursion today. So, I will unravel the matter by discussing a recent case.
In Thornton v. Tyson Foods, Inc. et al., No. 1:20-CV-105-KWR-SMV, 2020 U.S. Dist. LEXIS 156059 (D. N.M. Aug. 27, 2020), the plaintiffs are beef producers and consumers that filed suit against the defendant, a producer and seller of beef products to retailers of beef products. The plaintiffs claimed that the defendant misleads retailers and consumers by labeling their beef “Product of the USA” when, in fact, the cattle are raised in foreign countries and imported into the United States as live cattle that are then slaughtered and processed in the United States.
The consumer plaintiff asserted a supposed class action of consumers that were allegedly deceived into paying higher prices for what the consumer believed to be American beef when it was allegedly foreign beef. The cattle producer plaintiff asserted a supposed class action of cattlemen who receive less for their cattle because of the influx of imported cattle that are then sold as a product of the United States. The consumer plaintiff alleged violations of the New Mexico Unfair Practices Act (NMUPA); breach of express warranty; and unjust enrichment. The cattle producer plaintiff also alleged a violation of the NMUPA as well as unjust enrichment, but later sought to amend the complaint to replace the NMUPA claim with a claim for violation of the New Mexico Antitrust Act.
The court noted that federal law via the Federal Meat Inspection Act (FMIA) bars meat from being sold “under any …labeling which is false or misleading, but labeling and containers which are not false or misleading and which are approved by the Secretary are permitted.” The USDA regulates beef labels through the Food Safety Inspection Service (FSIS). The court noted that the FSIS administers a label approval program “ensuring” that no meat products are falsely labeled. The court noted that the label at issue was approved by FSIS and found not to be misleading or false. The court also noted that the phrase “Product of the U.S.A.” to actually mean that the product is derived only from animals that were born, raised, slaughtered, and prepared in the United States. Instead, the phrase “Product of the U.S.A.” only means that the product was slaughtered in the United States. Also, the court noted that the FMIA treats imported beef products as a “domestic” product upon entry into the United States.
Thus, the court concluded, the law and related regulations were clear that cattle born and raised in a foreign country but slaughtered int the United States can be properly labeled as “Product of the U.S.A.” The court determined that the plaintiff’s state law claims were preempted by federal law. In addition, the court held that if the NMUPA claims were not preempted they would fail as a matter of law because the cattleman plaintiff is a competitor of the defendant under New Mexico law and because the defendant’s conduct is permissible under federal law. The unjust enrichment claims also failed as a matter of law because there is nothing unjust about the defendant’s use of a label that has been approved by the federal government. The breach of warranty claim also failed due to lack of pre-suit notice being given to the defendant in accordance with state law. The court also rejected the cattleman plaintiff’s attempt to amend the complaint to asset a violation of the New Mexico Antitrust Act on the basis of preemption by the FMIA, lack of standing and no anti-competitive injury. Consequently, all of the plaintiffs’ claims were either preempted or failed as a matter of law for failure to state a claim for which relief could be granted. The case was dismissed with prejudice.
There you have it – the phrase, “Product of the U.S.A.” doesn’t mean that the animal from which the labeled meat came from was born and raised in the United States on a domestic cattle ranching operation. It only means that the animal was slaughtered in the United States. Words and phrases don’t necessarily mean what they say that they mean.
The black-robed word peddlers will straighten it all out.