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TheStreet Open House

Food Industry Faces Labeling Challenges

Stocks in this article: MON DD K CMP UNLV

NEW YORK ( TheStreet) -- Companies in the food sector ranging from the planters Monsanto (MON - Get Report), to the protectors DuPont (DD - Get Report), to the producers Kellogg (K), have all increased efforts to influence food labeling legislation, both at the federal and state levels.

While it may seem harmless to mandate that there be accurate and full disclosure, the potential legal liability from such rules and regulations is staggering. Already companies in the sector such as Campbell's (CMP) and Unilever (UNLV) have suffered from lawsuits, raising the specter of a massive legal offensive rivaling that endured by the tobacco industry for decades at a cost in the hundreds of billions, with no end in sight.

Over 100 lawsuits have already been filed in the past two years challenging the claims of food companies for products being labeled as "natural." Defendants have included Kellogg's, Unilever, Campbell's, Ben & Jerry's, and others. Some lawsuits have ended up in multi-million-dollar settlements, much like those filed against the tobacco industry. Also eerie is that those filed by the tort bar seeking class-action status for those consumers who purchased the products.

At present, Campbell's is being sued in Florida for misrepresenting soup as being natural when it had used genetically modified ingredients. The lawsuit alleges that Campbell knowingly used genetically modified seeds, yet still labeled the ingredients as "natural."

Campbell's attempted to have the lawsuit thrown out, but U.S. District Court Judge William P. Dimitrouleas refused, denying that jurisdiction rested with the Food and Drug Administration or that the United States Department of Agriculture even knew that the soup contained genetically modified ingredients.

A major problem here is that there is no clear, precise legal definition of "natural" for food products.

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