Collateral Damage: Prop 37 Threatens Natural Foods Immediately
If passed, California's Proposition 37 may have a major impact on any food processor that labels their product as natural. Learn what's at stake.
By Michael Steel, Morrison & Foerster LLP | 10/26/2012
California's Proposition 37 targets genetically modified foods, but the collateral damage may be any processed food marketed as "natural." The initiative says that a "processed food:"
"may not in California, on its label, accompanying signage in a retail establishment, or in any advertising or promotional materials, state or imply that the food is 'natural' 'naturally made,' 'naturally grown,' 'all natural' or any words of similar import that would have any tendency to mislead any consumer."
The initiative defines "processed foods" without any reference to genetic engineering. It says:
|"'Processed food' means any food other than a raw agricultural commodity and includes any food produced from a raw agricultural commodity that has been subject to processing such as canning, smoking, pressing, cooking, freezing, dehydration, fermentation or milling.
Clearly, plaintiffs will argue the plain meaning of the statute (if adopted) is that any processed food, whether it contains or is made with genetic engineering, cannot be called "natural." This would make dried fruit, canned vegetables, cooked carrots—and the list goes on—subject to litigation if they are labeled as natural, even though no genetic engineering has occurred.
Even the drafters of Prop 37 know that voters would reject this provision of the law if it were clear to them. This summer the drafters tried to get a court to order the California Attorney General and the State's Legislative Analyst to describe the prohibition as applying only to genetically modified foods, but the court refused finding it reasonable to conclude that the ban applies to all processed foods, whether they are genetically modified or not.
Adding to the burden imposed on processors of natural foods, the initiative prohibition on the use of "natural" in products labels and marketing appears to apply immediately upon passage.
While the requirement to label genetically modified foods clearly does not take effect until July 1, 2014, the initiative does not specify an effective date for the "natural" prohibition. This lack of an effective date appears to be yet another example of the poor drafting of the initiative, but it leaves the courts to determine how the law should be applied.
Companies should not simply assume that the 20-month compliance period applies to the restriction on labeling foods as "natural." Prop 37 in its entirety becomes effective immediately upon enactment pursuant to Article 2, section 10(a) of the California Constitution:
|"An initiative statute or referendum approved by a majority of votes thereon takes effect the day after the election unless the measure provides otherwise."
If this constitutional provision is applied, the restriction on labeling foods as "natural" could take effect as early as November 7, 2012.
Companies should be prepared for plaintiffs to embrace this reading of Prop 37 and attempt to bring lawsuits soon after November 6 if the initiative passes. While such a timetable is completely unrealistic with respect to the needs of businesses to plan for and implement new marketing and labeling practices, the poorly drafted text of Prop 37 seems to offer little solace.