Not 'All Natural': Modernizing Privity to Allow Breach of Contract Claims for Mislabeled Food Products

Not “All Natural”: Modernizing Privity to Allow Breach of Contract Claims for Mislabeled Food Products Cecelia MacDonald * ABSTRACT: Unknown to most consumers, the U.S. Food & Drug Administration does not regulate “all natural” food labels. Manufacturers commonly abuse this loophole by placing the “all natural” label on products that are clearly not “all natural.” In doing so, some manufacturers intentionally deprive consumers of a free choice regarding what they put into their bodies. This deception leads consumers to ingest artificial chemicals under the guise of “all natural.” In one particular case, consumers allegedly ate a substance derived from woodchips when the manufacturer had labeled the product as “100%” Parmesan cheese. To the benefit of manufacturers, plaintiffs’ available legal remedies have proved to be insufficient and have failed to significantly deter manufacturers from continuing the mislabeling practices. Plaintiffs have tried to bring breach of contract claims against the manufacturers, but courts across the nation have consistently found the claims fail for lack of privity. Privity is an outdated requirement that has been relaxed in other areas of the law. Since privity fails to achieve a fair result, the privity requirement should be relaxed in the food-label litigation context. The privity requirement should either be extended between the consumer and manufacturer or abandoned entirely. Modernizing the privity requirement to fit the realities of modern society will produce the fairest result by providing an adequate remedy for consumers and preventing future mislabeling practices. I. INTRODUCTION ............................................................................. 786 II. FOOD LABEL LITIGATION HISTORY ............................................... 787 * J.D. Candidate, The University of Iowa College of Law, 2018; B.A., Saint Francis University, 2015. Thank you to Adam and my parents for their love, support, and patience as I rambled about food labels and privity; to Professor Christopher Drahozal for providing guidance and thoughtful feedback as I navigated the complexities of contract law; and to the Iowa Law Review Editorial Board for its unwavering commitment to the student writer experience, especially Tessa Register, Logan Eliasen, and Brandon Pakkebier. 786 IOWA LAW REVIEW [Vol. 103:785 III. THE UNNECESSARY PRIVITY OBSTACLE ......................................... 793 A. T HE P RIVITY R EQUIREMENT ................................................... 794 B. T HE F ALL OF P RIVITY .............................................................. 795 C. P RIVITY : A N O UTDATED R EQUIREMENT .................................... 801 IV. THE PRIVITY REQUIREMENT SHOULD BE MODERNIZED ............... 805 A. E XTENDING P RIVITY FROM THE C ONSUMER TO THE M ANUFACTURER ..................................................................... 805 B. A BANDONING P RIVITY IN F OOD L ABEL L ITIGATION ................... 807 C. T HE C ONSUMER P ROTECTION A CT O PTION .............................. 808 V. CONTRACT FORMATION AND FOOD LABELS AS A TERM OF THE CONTRACT ............................................................................. 810 VI. CONCLUSION ................................................................................ 815 I. INTRODUCTION More than half of Americans purchase foods with “all natural” food labels, 1 yet the FDA has no definition of “all natural” foods. In fact, manufacturers are free to place the label on any of their products, even when the food is anything but “all natural.” Although the FDA has opened the question of an “all natural” definition up to the public, a regulation seems far away. 2 In the meantime, consumers are limited to breach of warranty claims against manufacturers who falsely label foods “all natural.” However, the fact that consumers can bring breach of warranty claims has not deterred manufacturers from falsely labeling foods. This is likely due to the fact that so far, consumers’ attempts to sue for breach of contract have failed because courts consistently hold that there is no privity between the parties. With more Americans focusing on nutritional habits, manufacturers need to be held accountable for the accuracy of the labels they place on products. Without regulation of “all natural” labels, consumers are at a disadvantage. At a minimum, consumers could accidentally ingest unhealthy doses of artificial sugar when they think they are consuming 100% natural ingredients. 3 In more drastic scenarios, consumers believe they are eating “all natural” food, when what they are ingesting is not food at all. This allegedly happened to consumers who purchased a certain type of Parmesan cheese, 1. This Note focuses on products bearing an “all natural” label. There are several variations of this label that manufacturers use. A reference to “all natural” can be used interchangeably with any of these variations, including “natural,” “all natural ingredients,” and “100% natural.” 2 . See infra note 14. 3. Carina Storrs, ‘Natural’ and Other Food Labels that Sound Legitimate but May Not Be , CNN (May 18, 2015, 2:16 PM), http://www.cnn.com/2015/05/18/health/natural-food-labels (discussing the possible inaccuracy of the “100% juice” labels on Juicy Juice products). 2018] NOT “ALL NATURAL” 787 which the manufacturer had labeled as “100%” Parmesan cheese; in reality, the suit alleged that it contained cellulose, a substance derived from wood pulp. 4 This Note argues that consumers should be able to sue manufacturers for breach of contract claims when manufacturers falsely promote their products as “all natural.” 5 At the moment, courts do not even reach the question of whether purchasing a food product forms a contract because all claims would fail for lack of privity even if a contract were formed. Privity is the “[l]egal connection or relationship between two parties” and traditionally was required to ensure that the parties shared an interest in a transaction. 6 However, privity should be extended to the consumer when the consumer purchases the product from a middleman (such as the grocery store) or, alternatively, the outdated privity requirement should fall away, like the privity requirements in other areas of the law have. The result of privity falling away will be contract formation because each party in the distribution chain agrees to buy and/or sell the packaged food. To understand the pitfalls of the current claim options available to consumers, Part II of this Note details the history of food label litigation arising in the absence of regulation by the U.S. Food & Drug Administration. Part III explains the privity requirement in traditional contract law and the subsequent fall of privity in certain areas of the law. Part IV argues that the privity requirement should be extended through the chain of contracts from manufacturers to consumers. In the alternative, if the court is unwilling to extend the reach of privity, then the privity requirement should be abandoned in food-label litigation. Also, legislatures could enact consumer protection acts to extend or eliminate privity. Finally, Part V demonstrates how all elements of a contract have been satisfied in this food label litigation context. Once a contract has been formed between the consumer and manufacturer, the food label becomes a term of the contract. The injured consumers can then sue the manufacturers for a breach of contract. II. FOOD LABEL LITIGATION HISTORY To better understand the failure of current claims available to consumers, Part II tracks the history of food-label litigation combined with the absence of regulation by the U.S. Food & Drug Administration. The “all natural” label entices more than half of consumers to select those foods, 7 yet 4. Complaint at ¶ 2, Sims v. Albertsons, LLC, 1:16-cv-06169 (N.D. Ill. Mar. 21, 2016) (emphasis omitted). 5. While the focus of this Note is on the “all natural” label, the privity and contract concepts could extend to all mislabeling scenarios. 6 . Privity , BOUVIER LAW DICTIONARY (2012). The privity requirement is discussed in depth infra Part III. 7. Andrea Rock, Peeling Back the ‘Natural’ Food Label , CONSUMER REP. (Jan. 29, 2016), http://www.consumerreports.org/food-safety/peeling-back-the-natural-food-label (citing CONSUMER 788 IOWA LAW REVIEW [Vol. 103:785 the FDA does not formally regulate this type of labeling practice. 8 As a result, this loophole has permitted manufacturers to deceptively label products as “all natural” when they in fact are not “all natural.” In 2014, 87% of Americans reported that they were “making an effort to eat healthy.” 9 Mislabeling foods as “all natural” deprives consumers of free and informed choices about what they put into their bodies: Consumers think they have chosen a healthier option but actually have not. 10 Unfortunately, only half of consumers realize that the “all natural” label is not verified. 11 Those consumers who have realized that “all natural” labels are not regulated have urged the FDA to define or ban “all natural” labels. 12 As a result of these efforts, the FDA opened the question of an “all natural” definition up to the public for comment. 13 Despite opening up the question for comment and receiving 7,690 responses, the FDA declined to create a REPORTS NAT’L RESEARCH CTR., NATURAL FOOD LABELS SURVEY 2 (2015), http://www.consumer reports.org/content/dam/cro/magazine-articles/2016/March/Consumer_Reports_Natural_Food_ Labels_Survey_2015.pdf.). The survey was conducted with a sample of 1,005 randomly selected adults within the United States. CONSUMER REPORTS NAT’L RESEARCH CTR., supra . For more information on the increase in consumer practices to purchase “all natural” food products and the confusing marketplace that false labels create, see Hadley Malcolm, More Shoppers Buying ‘Natural’ Food, yet Most Don’t Know What It Means , USA TODAY (Jan. 27, 2016, 3:01 PM)...