Presented by Lee N. Smith and Melissa Jones 500 Capitol Mall Suite 1600 Sacrament

1. FSMA and Proposition 65 Litigation Issues Presented by Lee N. Smith and Melissa Jones 500 Capitol Mall Suite 1600 Sacramento, California 95814 916-447-0700 2012 GMA Food Claims and Litigation Conference

2. Overview of Presentation • FSMA Background • Potential Areas of Litigation • Prop 65 Background • Prop 65 Updates: Preemption, Listing, Food Regulations • Q & A

3. Food Safety Modernization Act (H.R. 2751) • Most expansive changes in food safety since the 1938 Act, Relevant Portions Effective as of 1/1/2011 • Sweeping new enforcement authorities • New Import Export requirements • Major new program activities for FDA New potential areas for litigation.

4. Significant FSMA Provisions that were immediately effective • Stronger Records Access Authority (FSMA § 101) • Mandatory Recall Authority (FSMA § 206) • Increased Frequency of Inspections (FSMA § 201) • Whistleblower Protection (FSMA § 402) • Foreign Facilities and Refusal of Inspection • (FSMA § 306) • Changes to Administrative Detention Standard (FSMA § 207)

5. Additional Significant Sections • Amendments to the Reportable Food Registry (FSMA § 211) • Suspension of Registration (FSMA § 102) • Preventative Controls (FSMA § 103) • FDA Lab Accreditation (FSMA § 202) • Traceability (FSMA § 204) • Major Changes to Regulation of Imports (FSMA §§ 301,302)

6. Section of Interest for Future Litigation/Standards of Review • Several of the new or revised sections have standards of review that are similar and that are likely to lead to legal issues. • Suspension of Registration • Mandatory Recall • Administrative Detention • Stronger Record Access • Reportable Food Registry

7. Suspension of Registration (FSMA § 102) • If FDA determines that there is a “reasonable probability” of food causing “serious adverse health consequences,” it may suspend registration • Facilities that are “responsible” and those that knew or had reason to know are in jeopardy • Informal hearing within two days • FDA to consider corrective plans within 14 days

8. Mandatory Recall Authority (FSMA § 206) • Mandatory recall ordered if “reasonable probability that an article of food is: • adulterated under section 402 or misbranded under section 403(w) and; • The use of or exposure to such article will cause serious adverse health consequences or death to humans or animals. • Opportunity for voluntary recall within FDA appropriate timing • Hearing within two days of the order’s issuance 

9. Stronger Records Access Authority (FSMA § 101) • When “reasonable probability” of “serious adverse health consequences” • Now, Includes broader scope of records of all records relating to that article of food required to determine whether it is adulterated. Includes other food affected in similar manner

10. Reportable Food Registry (RFR) (FSMA § 211) • Reportable Food” • “Reasonable probability” of “serious adverse health consequences to humans or animals” • “Responsible Party” • FDA-registered facility where product is “manufactured, processed, packed, or held” • “Requirement” • Report to FDA portal within 24 hours

11. Broader Authority to Detain Foods (FSMA § 207) • Administratively detain foods • Effective as of July 3, 2011 • Regulations being promulgated • Lowers standard for FDA to detain foods • FDA only needs “A reason to believe” food is “adulterated or misbranded.” • Class I recall situation not required

12. Reasonable Probability/ Reason to Believe • What do they mean ? • Reasonable Probability • More likely than not? • Great then 50 % Reason to Believe- Some evidence ? • Recent Detention cases.

13. Conclusion/FSMA Litigation concerning these standards. Other areas that might be ripe?

14. What is Proposition 65? • A California statute enacted in 1986 by voter initiative • Penalties ($2,500 per violation) against businesses that knowingly expose consumers without warning to chemicals known to the State to cause cancer or reproductive harm • Applies to businesses with 10 or more employees

15. What You Need To Know About Proposition 65 • The List • The Warning Requirement • Regulation By Litigation • Defenses

16. What You Need To Know About Proposition 65 • The List – a broad range of chemicals; over 850 currently listed. • One strategy for affected industry is to keep a chemical from being listed. • Four ways for a chemical to get listed.

17. Examples of Listed Chemicals • Acrylamide- french fries, coffee, popcorn, cereals • PhiP- cooked or grilled chicken • Phthalates- handbags, shoes, exercise equipment, crafts, tools • Cadmium- jewelry, fertilizer, artist paint • Lead- handbags, shoes, jewelry, tools, juice, honey, supplements, photo albums, paints • Arsenic- water filter systems, supplements

18. Listing by Two Committees • A chemical can be listed if either of two independent committees of scientists and health professionals finds that the chemical has been clearly shown to cause cancer or birth defects or other reproductive harm. • These two committees, the Carcinogen Identification Committee (CIC) and the Developmental and Reproductive Toxicant (DART) Identification Committee, are part of OEHHA's Science Advisory Board.

19. Listing by an Authoritative Body • A second way for a chemical to be listed is if an “authoritative body” finds it is a carcinogen or reproductive toxin • These are designated as authoritative bodies: • U.S. Environmental Protection Agency (“EPA”) • U.S. Food and Drug Administration (“FDA”) • National Institute for Occupational Safety and Health (“NIOSH”) • International Agency for Research on Cancer (“IARC”)

20. State or Federal Labeling or Identified as Causing Cancer/Birth Defects • A third way for a chemical to be listed is if an agency of the state or federal government requires that it be labeled or identified as causing cancer or birth defects or other reproductive harm. • Most chemicals listed in this manner are prescription drugs that are required by the U.S. FDA to contain warnings relating to cancer or birth defects or other reproductive harm.

21. Labor Code Listings • A fourth way requires the listing of chemicals meeting certain scientific criteria and identified in the California Labor Code as causing cancer or birth defects or other reproductive harm. • This method established the initial chemical list following voter approval in 1986 and continues to be used as a basis for listing.

22. Recent Listing Decisions • California Chamber of Commerce v. Schwarzenegger et al., 196 Cal. App 4th, 233 (2011)

23. 4-MEI • 4-MEIThe chemical 4-MEI is a fermentation byproduct in certain food products including caramel coloring, soy sauce, Worcestershire sauce, wine and ammoniated molasses, as well as ammoniated livestock feed. The chemical is used in the manufacture of pharmaceuticals, photographic chemicals, dyes and pigments, cleaning and agricultural chemicals, and rubber. • First Sixty Notice to grocers in Feb 2012 as to carbonated soft drinks with caramel coloring

24. Sulphur Dioxide • (SO2) is a colorless, nonflammable gas with a pungent odor.  As a component of ambient air pollution, SO2 is found in combination with sulfuric acid, sulfur trioxide, ozone, nitrogen dioxide, and particulates, and its presence in ambient air occurs primarily as a result of fossil fuel consumption at power generation and other industrial facilities • Used in many food products as a preservative including on Cherries and Raisins. • Should have been listed as an inhalant hazard

25. What You Need To Know About Proposition 65 • The List √ • The Warning Requirement

26. The Warning Requirement WARNING: This product contains a chemical known to the State of California to cause cancer, or birth defects or other reproductive harm. Safe-Harbor Product Warning

27. The List √ The Warning Requirement √ Regulation by Litigation What You Need To Know About Proposition 65

28. Regulation by Litigation: 60 Day Notice

29. Regulation By Litigation

30. The List √ The Warning Requirement √ Regulation by Litigation What You Need To Know About Proposition 65

31. What You Need To Know About Proposition 65 • The List √ • The Warning Requirement √ • Regulation by Litigation √ • Defenses

32. What You Need To Know About Proposition 65 • The List √ • The Warning Requirement √ • Regulation by Litigation √ • Defenses - Preemption - Safe Harbor Levels - Naturally Occurring (food only)

33. Recent Preemption Decision Physicians Comm. for Responsible Med. v. McDonald’s Corp., 187 Cal. App. 4th 554 (2010) (federal Poultry Products Inspection Act did not preempt Prop 65 warnings).

34. Defenses: Safe Harbor Intake Levels • Acrylamide: 20 µg / day • Cadmium: 4.1 µg / day • Lead: 0.5 µg / day • Ethylene oxide: 2 µg / day • Formaldehyde: 40 µg / day • 4-Methylimidazole (4-MEI): 29 µg / day [effective Feb. 8, 2012] • More: http://oehha.ca.gov/prop65/getNSRLs.html

35. Defenses: Naturally Occurring People ex rel. Edmund G. Brown Jr. v. Tri-Union Seafoods, LLC, 171 Cal. App. 4th 1549 (2009)

36. Defenses: Naturally Occurring • No duty relative to the exposure if caused by chemicals that naturally occur in the food product. • Is a defense only to the extent you can prove that the chemical is naturally occurring by expert testimony- there can no man-made component. • Requires extensive research going back to the place where it is grown. • Expensive and difficult to prove.

37. What You Need To Know About Proposition 65 • The List √ • The Warning Requirement √ • Regulation by Litigation √ • Defenses √

38. Update: Proposed new food regulations for Proposition 65

39. Questions?

41. Contact Information Melissa Ann Jones Stoel Rives, LLP 500 Capitol Mall, Suite 1600 Sacramento, California 95814 (916) 319-4649 majones@stoel.com Lee N. Smith Stoel Rives, LLP 500 Capitol Mall, Suite 1600 Sacramento, California 95814 (916) 319-4651 lsmith@stoel.com