Canadian Lawyer InHouse

17 CANADIANLAWYERMAG.COM/INHOUSE MAY 2015 17 The Quebec Superior Court concluded that there was no prima facie case of decep- tion. B.C. Supreme Court Justice Frits Ver- hoeven, without ruling on the merits of the marketing allegations, found that there was no common issue and a class action was not the appropriate procedure for such a claim. "Whether the labelling and marketing of the product has actually misled a consumer is an inherently individualistic and fact based question," wrote Verhoeven, in Clark v. Energy Brands Inc. A notice of appeal has been fi led in the B.C. proceeding. What still remains unclear though is whether the wave of food product litigation in the U.S., especially in the areas of labels and marketing that involve health claims, will come to Canada. Litigation is so common in jurisdictions with strong consumer protection statutes, that the Northern District of California court, based in San Francisco, has been nicknamed "the food court." It is a jurisdic- tion "where lawyers never go hungry," joked the headline of a 2013 article in a Bloomberg Business publication. There have been dozens of actions fi led in just that jurisdiction since 2010, since Dannon Co. Inc. paid out more than US$20 million to settle a class action and consumer statutes such as Ontario's Local Food Act. In some cases, such as whether a food product is genetically modifi ed, there is no mandatory requirement for including this information on a label (in the U.S., the only state to enact a genetically modifi ed organism labelling law is Vermont and it is already facing an ongoing court challenge). On a national level, the Safe Food for Canadians Act is supposed to streamline the regulatory framework when it is scheduled to take effect later this year. It was introduced in 2012 and its implementation has been delayed over the drafting of regulations. For food companies "I think it is fair to say it is confusing," says Craig Lockwood, a partner at Osler Hoskin & Harcourt LLP in Toronto and a lawyer in its food prod- ucts group. Health Canada has "been more proactive," on the regulatory front than in the U.S., which also means there are more regulations that must be complied with, says Lockwood. In Canada, the provincial consumer pro- tection statutes may also determine where a class action is fi led, says Robin Reinertson, a partner at Blake Cassels & Graydon LLP in Vancouver, and co-counsel for Vitaminwa- ter in the B.C. proceeding. "There is a whole patchwork of regulations," she says. Quebec and B.C. are considered to have more con- sumer friendly statutes, which may be why the Vitaminwater and Danone actions were fi led in those provinces. The provisions in the B.C. Business Practices and Consumer Protection Act might be best described as "sellers beware," says Reinertson, rather than the more commonly known principle of caveat emptor or buyer beware. In the attempt to certify the Vitaminwater class action in B.C., the plaintiff's allegation was that consumers would mistakenly conclude that it was a healthy beverage with a minimal amount of sugar. The court The regulatory scheme here is very different. You can't simply Canadianize labels at the last minute. The statements made on labels are higher risk than advertising. ROBIN REINERTSON, Blake Cassels & Graydon LLP '' '' protection claims brought forward by a number of state governments, over the health benefi ts it attributed to its yogurt and a dairy drink product (In 2013, it settled a similar class action proceeding in Quebec, where it is known as Danone Inc., for an estimated $1.7 million, without admitting any wrongdoing). The Vitaminwater and Danone class action proceedings are the most high profi le to date in Canada. But even if the appetite for litigation turns out to be not as great, it is still a complex task for corporate counsel in this area. Consumers are increas- ingly more health conscious and likely to read labels, putting more of an onus on companies to back up the benefi cial claims. There is also increased media coverage in this area. A few months ago, the CBC con- sumer program Marketplace had a show about labels and the accuracy of what manu- facturers advertised, in a segment it called "food fi ction." There are numerous statutes and regu- lations that food companies must comply with and multiple agencies to oversee these rules. On the label side, not only must they be in French and English and include ingre- dients, allergens, and many other details, there are also defi nitions for terms such as "natural" or "local." The Canadian Food Inspection Agency defi nition of when a product can be classifi ed as "natural" for example is more than 550 words long. It also distinguishes between natural products and natural fl avours. Until 2013, the agency defi ned "local" as food produced within 50 kilometres of where it was sold. An interim policy, which is still in place, expanded the term "local" to food produced within the same province as it is sold, harmonizing the rules with provincial D ES organic of

• Cover