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More ARTAL

I was fully prepared to do a whole bunch of client work on this quiet day after Easter, but then Jaycee showed me a new Industry Circular. It is 2018-2, entitled Expansion of Allowable Changes to Approved Alcohol Beverage Labels. It adds some interesting new allowances, beyond the many set out here and here and here, etc. At first, the Circular looked pretty text-y and so it was hard to gauge the significance. To make it more visual, I prepared the above. It is easier to comprehend if you click on it, to expand it into its full glory (with all due apologies to Four Roses for monkeying with their back label). TTB seems to be on a roll, to expand the allowable revisions. It is quite a departure from the agency of a decade or two ago, not especially enamored of such changes. I wonder to what extent these allowable revisions are having a marked impact on the number of labels submitted.

To understand the image, the green lines show allowable revisions, and the red lines show revisions that would not be allowable without a new COLA. The lines go in order and roughly correspond to the order in the Circular:

    1. I made the label a bit bigger to accommodate the new text, and this line is just showing it’s ok to change the shape and size of an approved label, based on an earlier announcement (item 3, here).
    2. It’s ok to add, delete or swap among the TTB-approved instructional statements. This one is on the list so it’s ok.
    3. Similarly, it’s ok to add, delete or swap among the TTB-approved responsibility statements. This one is ok to add, on this back label, because it’s on the list.
    4. Once again, ok to add, delete or swap among the TTB-approved environmental statements.
    5. I have added a food pairing recommendation and it’s ok because it’s pretty in line with those allowed on the list.

 

  1. Even though this one is very similar to 1., it’s not ok because it’s not on the approved list.
  2. This one is quite similar to 2., but not ok because it’s not on the list.
  3. Similar to 3., but not on the list so not ok.
  4. Similar to 4., not not ok because not on the list.
  5. This one is a bit trickier. This indicates a change from a glass bottle to a bag-in-box. The Circular says:  “TTB wishes to caution industry members about using this allowable revision when changing between different types of containers, for example, when changing from a keg label to a bottle label, or from a bottle label to a bag-in-a-box label.  Labels for different types of containers usually look very different and may contain label information specific to the container type (e.g., instructions for serving from a bag-in-a-box container) or different graphics. … These restrictions make it unlikely that you will be able to use a label approved for one type of container for a different type of container without submitting the new label to TTB for approval.” Here, the front v. back probably changed, and it’s arguable that the spigot side would be the brand label, so it’s not an especially good idea to assume ARTAL alone would save anyone.

If you have any great ideas for how to expand the list still further, let us know.

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TTB Got Fast!

apt

Just when it seemed like TTB labels and formulas would be slow, and get slower every year — all of a sudden things look pretty fast. The above table shows that normal formulas take two weeks or less. It’s been a really long time since the processing times have been less than a month. This is a huge benefit for producers everywhere. Over on the label side, things are also getting better. This scary looking table shows that beer, wine and spirits labels were flirting with 40 and more days of processing time, toward late 2014, until the trends started to improve (things got particularly ugly here).

aptlabels

As of today, TTB says the processing time for labels is right around 21 days.

ap

I reached out to TTB to see why things seem so much better. TTB said:

Although workloads have continued to increase since FY 2015, we have recently been able to improve our processing times in part through cross-training and because new staff hired last year are reaching full proficiency.  However, the improvements you are seeing right now are also due in large part to increased use of overtime and the temporary reassignment of staff from other mission areas, which are short term fixes until we are able to fully implement the long term solutions (such as additional personnel and IT improvements) made possible by the additional funding we received for FY 2016.

There are already millions of labels approved in the past 20 years or so, and this should be great news for everyone who wants just a few more choices.

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Judge Miller Not Too Impressed With TTB System or Tito Approvals

not

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.

tIn 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 …

Continued here

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FDA Warning Letters

kittyHere 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:

  1. FDA really does conduct food inspections in far away places such as Japan.
  2. 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.
  3. There is such a thing as Hello Kitty Milk Flavored Chewy Candy.
  4. 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.
  5. Good old wheat is a “major food allergen.”
  6. 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.
  7. 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. …”
  8. At 4., the letter says you can’t make up your own serving sizes.
  9. 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:

  1. “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.
  2. 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.

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Your New Friend, ARTAL, Part 2

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.

artal-on-formOn September 29, 2014 TTB announced about six new changes to the ARTAL list. They are:

  1. Change promotional sponsorship-themed material (festivals and sports references)
  2. Change ratings (#1 vodka according to Vodka Quarterly)
  3. Delete organic references
  4. Change the spelling on sulfites
  5. Change information about the amount produced
  6. 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.

 

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