Posts Tagged ‘procedure’
There is big news out of a federal court in San Diego. On Friday, the judge in two of the Tito’s labeling cases said it, loud and clear. Words matter — on labels. This is important because it was starting to get very confusing, what with all the label cases floating around, and many dismissals. There are at least eight separate Tito’s cases scattered around the country, and a couple dozen alcohol beverage litigations pending in recent months. Along the way, Judge Miller made it clear he is not too impressed with the rigor of TTB’s label review system, or the fact that the Tito’s “Handmade” Vodka labels have been approved on many occasions.
On Friday, November 20, 2015, in the U.S. District Court for the Southern District of California, Judge Jeffrey Miller issued two very similar Orders in two separate cases against Tito’s Vodka. The cases are:
– Hofmann v. Fifth Generation
– Cabrera v. Fifth Generation
In hindsight, Judge Miller’s November 20th Orders seem obvious. If the claim meant little to nothing, why would Tito spend zillions of dollars to make sure everyone knows his vodka is “handmade”? Why else would it be the main word on the main label, and throughout his marketing? Why else would it work so well, to shoot this brand to the top of a tall and slippery pole? In recent months Tito has argued that the term is mere puff. But I can’t think of any puff term that has a prayer of moving the bottles as well as a term, such as the one at issue, with a little more grit and traction. I don’t see the terms “premium,” “finest,” “smooth,” or any other agreed-upon puff terms getting anyone far, as compared to a term that is much more likely to actually mean something.
In a 17 page Order, Judge Miller denied Tito’s motion for summary judgment in Hofmann v. Fifth Generation, the first of many such cases. The Judge did likewise in a 14 page Order, in the Cabrera case. This means both cases have much greater odds of ending up at trial someday, even though most such cases are settled well before that. This also means the odds are much higher, that a judge or jury might actually tell us, someday in our lifetimes, what this inscrutable term actually means, and whether Tito’s is made thusly. Without having a strong opinion on whether Tito should win or lose, I do have a strong opinion that it is a huge copout to say, the term is simply too hard to define, or, as so many people on the internet like to say about it, “who cares.” For better or worse, my job is more or less about what words do, don’t, should, or shouldn’t mean, hence my deep interest in this case. A term like “bourbon” or “straight” means a lot, and that is good.
The Orders tend to say that TTB approval of the label and term at issue are determinative only to the extent TTB conducted a rigorous review. It is hard to say TTB’s review is other than non-rigorous, inasmuch as TTB quite clearly said they don’t even have any standards or rules around such a term. The plaintiffs argued, and the Judge agreed (in the Hofmann and Cabrera Orders), that “a federal regulator’s actions create a safe harbor only … where the agency’s actions ‘were the result of a formal, deliberative process akin to notice and comment rulemaking or an adjudicative enforcement action,’ and are therefore sufficiently formal to merit Chevron deference.” I have been interacting with TTB’s label review system on a daily basis for more than 25 years now. It would be preposterous to claim that the system has been anything close to formal, deliberative, or similar to an adjudication. Most of the time, no lawyers or neutrals are involved. Most of the time there is no evidence, and there are no evidentiary rules. Many times the system has all the rigor of a bouncer, at the trendiest nightclub, deciding whether you are cool enough to enter the club. Far less often, the system involves knowledgeable people, on opposing sides of an issue, with a plausibly neutral decisionmaker.
It is quite easy to illustrate this. Take a competing vodka; let’s call it Pedro’s. Pretend Pedro’s Vodka is demonstrably distilled in a humongous vodka plant, outside Texas, and shipped to Dallas in railroad …
Here is a good and recent Warning Letter from FDA. I say good because it certainly appears to be well written, and to explain the law in a way that is sometimes hard to glean from the boring old regulations. Also, it seems to be a good thing, that we have a government whose first response is to send a firm letter, instead of, for example, some jackbooted thugs. FDA seems to put out a handful of such Warning Letters per month, on food and food labeling.
I am looking at this today because I often wonder why TTB does not get into the Warning Letter business. I think it could be a good way to explain some of the arcane rules so the people who want to comply, have a better chance to do so. Of course, like in so many other areas where TIWWCHNT, another lawyer explained how such letters can badly backfire. He explained that such letters, especially when they are good and clear, tend to serve as a template, for rapacious plaintiff class action lawyers to feast upon.
Here are some useful lessons, from this snapshot/letter, roughly in order of appearance in the letter:
- FDA really does conduct food inspections in far away places such as Japan.
- It is weird to see a US agency going after a foreign producer, because I am so accustomed to other agencies, such as TTB, doing so almost elusively through their licensed importer.
- There is such a thing as Hello Kitty Milk Flavored Chewy Candy.
- FDA likes to bandy about the term “misbranded,” and mentions it 6 times in this 3 page letter. I am getting the impression it is not a good thing.
- Good old wheat is a “major food allergen.”
- The food is misbranded because “it contains information in a second language, Japanese; therefore, all required information must be in both languages (i.e., the English language as well as the foreign language). For example, the Nutrition Facts panel and ingredient statement must be declared in both the foreign language and English.” I have explained this scores of times over the years, to skeptical clients. I have wondered myself, because I see so many labels that don’t seem to bother with this.
- Even on an ingredient as common as sweetened condensed milk, you need to list all the sub-ingredients. That is, “products are misbranded [when they] are fabricated from two or more ingredients and the common or usual name of each ingredient is not declared on the label, as required. …”
- At 4., the letter says you can’t make up your own serving sizes.
- Surprise, surprise, the little kitties don’t meet any known standard to substantiate the “healthy” claim.
Now, for the denouement, what the heck is FDA going to do about it, other than use up some paper? FDA says:
- “We may take further action” if the kitty people blow off the warning, and, for example, tell Customs not to let the candy into the country.
- The company has 15 days to respond.
But compared to 1 and 2, the big hammer, at least potentially, is pushing the company, or its US Agent, to pay for the cost of FDA’s inspection. The letter wraps up by saying:
[The law] authorizes FDA to assess and collect fees to cover FDA’s costs for certain activities, including reinspection-related costs. A reinspection is one or more inspections conducted subsequent to an inspection that identified noncompliance materially related to a food safety requirement of the Act, specifically to determine whether compliance has been achieved. Reinspection-related costs means all expenses, including administrative expenses, incurred in connection with FDA’s arranging, conducting, and evaluating the results of the reinspection and assessing and collecting the reinspection fees. … For a foreign facility, FDA will assess and collect fees for reinspection-related costs from the U.S. Agent for the foreign facility. The inspection noted in this letter identified noncompliance materially related to a food safety requirement of the Act. Accordingly, FDA may assess fees to cover any reinspection-related costs. Please consider providing a copy of this letter to your U.S. Agent.
In a future post, I would like to see how often, and under what circumstances, FDA drops this hammer. From what I can see in the letter, and in my opinion, the tone seems about right. Not too harsh, not too lax. It would be a foolish kitty purveyor that would ignore such a warning.
Wow! TTB’s list of Allowable Revisions to Approved Labels (ARTAL) is getting powerful. It is getting long and complicated — but it also provides a lot of good opportunities to avoid or cause a problem.
On September 29, 2014 TTB announced about six new changes to the ARTAL list. They are:
- Change promotional sponsorship-themed material (festivals and sports references)
- Change ratings (#1 vodka according to Vodka Quarterly)
- Delete organic references
- Change the spelling on sulfites
- Change information about the amount produced
- Add serving suggestions (shake well)
Also, TTB provided a reminder that it’s ok to make certain small changes to labels for Argentinian wine as here. The first part of “Your New Friend, ARTAL, Part 1” is below. The rest of Part 1 is here. And here is the whole list (less Argentina) in one place.
Maybe it will help if TTB makes the ARTAL list much more visible, for example, like the words in red, on this hypothetical form.
In early July TTB announced a massive and important change to the COLA system. TTB greatly expanded the “Allowable Revisions to Approved Labels” (hereinafter “ARTAL,” as on page 3 of the new 4-page COLA form).
TTB began laying the groundwork for big “streamlining” changes in early 2012, as summarized here. Although some of the ideas seemed very modest as of then, the streamlining train clearly picked up momentum in the next few months. It seems entirely possible that some of the new changes could or should cut a very large percentage of the more than 10,000 labels submitted to TTB every month. Compared to a few years ago, it is quite amazing that the lighthouse label on the left (above) could change to something as different-looking as the striped label on the right — without any need for a new COLA.
The TTB ID number on this label, for example, shows that TTB received at least 671 label applications on just one day in April 2012 — to say nothing about the labels submitted via paper. That should not happen anymore. Instead, applicants should get familiar with ARTAL. It can eliminate lots of waiting, expense, frustration, inconsistent determinations, TTB work and applicant work.
In this blog, every now and then, we talk about how the label and formula system at TTB can be quite slow, despite various TTB efforts to streamline things. Some top examples are here: 101 Days (to get a spirits label approved); Streamlining; Sen. Schumer Says Labels Take Too Long; more streamlining. It is not a pleasure to observe that it can take more than five months to get an ordinary French Vodka approved (30 or so days at the TTB Lab, then 60 or so days to write up the formula approval, then 60 or so days for label approval — to say nothing about potholes and glitches along the way). Add a few weeks if you’d like to add a flavor.
For a change, today let’s give TTB a break and talk about what the submitters can do, to help speed things up. We will also cover what applicants should not do. Many of the same principles apply to both labels and formulas.
- Start early. TTB and others do a pretty good job of showing the updated average processing times (APTs), for labels and formulas, so it should come as a surprise to nobody that both processes can take a very long time. Why not start early? This can help the system because it leads to fewer panicked status checks. It also should mean fewer expedite requests. Such requests can put a lot of stress on the system, tie up a lot of resources, and they can also mean other applications are jumping in front of and slowing down yours.
- Put in solid applications. It’s not so hard to put in a good application, especially if you are only handling one commodity (such as only domestic wine or only imported beer). An example would be knowing what kinds of products need formula approval prior to label approval, then attaching the formula approval to the label. TTB calls such applications, without errors or omissions, “perfected applications.” More than 43% of all label applications go back to the applicant as “needs correction” (see page 3 of the PowerPoint here). When all such labels are counted — submissions and resubmissions — TTB gets about 250,000 label submissions per year. TTB only has about one beer reviewer and 1-2 spirits reviewers — so this can sometimes be a very heavy load. If you think it’s easy, you are not paying attention; you can submit any old thing but the government has the burden to give a thumbs up or a thumbs down (and not just a maybe) to every one, under hundreds of pages of rules.
- Read the rules. In the days before the internet maybe you had a good excuse not to skim the rules. But with the rules essentially at your fingertips, free, you should probably do your part to peruse the rules before complaining that TTB is too slow. If you don’t want to read the rules you should probably hire a lawyer or consultant.
- Get familiar with ARTAL. This is the Allowable Revisions to Approved Labels. It can save you and TTB a lot of time. There is no reason to wait 6 weeks for a label approval, and inflict the extra work on TTB, when all you are doing is changing the alcohol content. On the formula side, when you have small changes that don’t impact labeling, you can save yourself and TTB a lot of time if you supersede rather than start anew. Otherwise, submitting a new formula usually, in turn, would trigger a new label approval.
Applicants should not:
- Submit for products they have no real intention of selling. Only a small percentage of all the products that go through TTB ever end up on store shelves. TTB has said it’s research tends to show that the number is as low as 10%, which would mean that the label and formula division is using more than 80% of its bandwidth on things that never go to market. In many ways the online systems have made it too easy and too inexpensive for applicants to dump work on TTB. In the olden days, the applicant at least had to pay for a stamp or FedEx, and now the system is free (if you ignore the time it takes to load the data and wait).
- Cry wolf. If you want to use up TTB’s time telling them it’s urgent, you should have a very good reason, and it should be a whole lot better than:
- we can’t sell without the approvals (too obvious, and applies to everyone in front of you in line as well)
- we can’t pay tax until we get the approvals (I am pretty sure TTB is not excited about the prospect of collecting a few hundred dollars in tax from you, especially when the same tax dollars are otherwise likely to get put in the till by another guy who planned ahead a bit more)
- an exaggeration
- Jam up the system with status checks or vague inquiries. There is rarely any advantage in contacting TTB about the status of a pending item, unless it’s well past the published norms. To the contrary, such requests (even when clear, polite, and when they include the ID numbers) mostly tie up the phone lines and scarce TTB resources. An especially detrimental variation is the vague status request. A good status request would be a few days after the APT, with the ID number, such as “Why is label ID 14018001000065 taking so long?” A bad status request would be, “We put in a chardonnay label a few days ago, can you check on it, it should be easy because only a few words changed, and you can find it under Jones Winery, in Napa. No I don’t have the ID number or permit number handy.” With the old, paper-based system there was at least a small chance your paperwork was stuck at the bottom of a forlorn tower of paper; in the current age there is almost no chance that the computer lost track of your application.
With this as a starting point I hope others (Ann, Deb, Marc, Teresa, Fred?) will jump in with ideas about what the industry can do to help push the wait times lower, for the benefit of all.
There is some big news from TTB, via dcbrewlaw. TTB has recently decided to ease up on the formula requirements for malt beverages made with common ingredients and processes such as some barrel aging, as well as various fruits and spices. This should help considerably with TTB’s overwhelming workload, and the related delays.
At dcbrewlaw, Dan reports:
There is good news for brewers who are tired of waiting for formula approvals from TTB (currently 74 days): you may not need it. On June 5, 2014, TTB issued a fairly significant ruling, Ingredients and Processes Used in the Production of Beer Not Subject to Formula Requirements. The ruling clearly spells out which Exempt Ingredients and Processes are now deemed “traditional” and, therefore, do not require a TTB formula approval.
The new ruling expands upon the rules as of 2013. Here are two good examples of products that needed formula approval under the old rules, before this week, and will continue to need a formula approval prior to label approval: Bud Light Lime; Joose. By contrast, here are two products that would no longer need formula approval: Bourbon County, Harlem. On each, the formula is highlighted in yellow. Read more about TTB Ruling 2014-4 at dcbrewlaw and TTB’s site.