Law & Policy: California Soda Tax Battle Continues

California Soda Saga Continues

The battle over sugary drink taxes in California is beginning to look like a war of attrition.

Campaigners on both sides of the issue have claimed small victories in a series of legislative decisions this summer, but the broader issue of how the nation’s most populous state will approach taxes on sugar sweetened beverages remains anything but clear.

For the soda industry, the recent news has been mostly positive. In late June, Gov. Jerry Brown signed Assembly Bill 1838, which bans the imposition of any new local taxes on grocery items, including sodas and all soft drinks, until 2031. Existing taxes on sugar sweetened beverages in cities, such as Berkeley, will remain in place.

While public health and small business growth are often at the crux of debates on soda taxes, Assembly Bill 1838 was instead the product of a bitter compromise between state legislators and business leaders. The bill was signed as an alternative to a ballot measure supported by beverage industry leaders that would prevent cities and counties from raising taxes of any kind without a supermajority, or two-thirds, vote by citizens. According to the Los Angeles Times, soda lobbying group the American Beverage Association contributed 85 percent of the initial $8.3 million raised to support the measure.

Although he would sign it into law, the approval of Bill 1838 was condemned by Brown, as well as by many of the legislators who voted to support it. Sen. Scott Weiner (D-San Francisco) reportedly said the beverage “industry is aiming basically a nuclear weapon at governing in California and saying if you don’t do what we want, we’re going to pull the trigger and you are not going to be able to fund basic government services.”

Meanwhile, a bill calling for a warning label to be affixed to all sugar-sweetened drinks sold in California was all but defeated after it was placed on suspense file following an appropriations committee vote earlier this month.

However, anti-soda advocates, including Brown, have taken the fight to a new arena this month. Brown is expected to a sign a measure that requires restaurants to offer water or milk as the “default beverage” on kids menus rather than soda or fruit juice.

Baltimore passed a similar law in July, making it the largest U.S. city to enact such a measure.

Elsewhere, better-than-expected returns from a 2 cent-per-ounce tax on sugar sweetened beverages in Boulder, Colo. have posed another question to residents, who will be asked on the November ballot whether or not to allow the city to keep extra money raised from the tariff. City accountants had yearly revenues estimated at around $3.8 million, but the measure it on track to bring in $5.2 million. The law calls for funds to go towards supporting public health programs.

Jamba Juice Facing Class Action Suit

Juice and smoothie bar chain Jamba Juice is facing questions over the accuracy of its marketing claim that its products are “whole fruit and vegetable smoothies.”

A complaint filed on August 23 in the U.S. District Court for the Northern District of California alleges Jamba Juice deceived customers by implying its smoothies were made with whole fruits and vegetables, rather than juice blends from concentrate and other additives.

The complaint cites the company’s Caribbean Passion smoothie as an example of alleged deceptive advertising by Jamba Juice. According to plaintiffs’ attorneys, Jamba Juice locations advertise the smoothie as having “five whole fruit ingredients: mango, strawberry, peach, orange, and passion fruit.”

Instead, the complaint states that Caribbean Passion contains a passion fruit and mango juice blend, which in itself consists “mostly of pear juice from concentrate and white grape juice from concentrate.” It also contains orange sherbet, which contains additives.

The suit also claims Jamba Juice made other misleading advertising statements related to sugar content, nutritional value and the addition of “super ingredients,” such as kale.

The plaintiffs, Teri Turner and David Lundquist, are represented by litigation director Maia Kats and litigation associate Matthew Simon of public health non-profit group the Center for Science in the Public Interest (CSPI). Michael R. Reese and George Granade of New York-based Reese LLP are also acting as plaintiffs’ counsel.

Red Bull Wins Trademark Suit

A U.S. District Court judge ruled in favor of Red Bull in a trademark infringement lawsuit against Washington, D.C.-based wholesaler Capitol Cash and Carry.

According to a press release from Red Bull, Capitol Cash and Carry sold Red Bull products that were authorized for sale only in South Africa. The products used Red Bull trademarks and “did not travel in authorized supply chains, did not contain the adequate UPC code to track the product in case of recall, failed to present nutritional information in a manner that compiled with FDA requirements, and were missing beverage container deposit information.”

The court barred Capitol Cash and Carry from importing, dealing, marketing, selling and distributing any “gray market” Red Bull products in the U.S. The distributor was also ordered to account for and pay Red Bull all profits from sale of such items, in addition to expenses and attorneys’ fees.

Red Bull North America CEO Stefan Kozak said the suit “demonstrates our unwavering commitment to stop all unlicensed Red Bull products from entering the U.S. marketplace.”

Coke Refreshments Settles Complaint

Coca Cola Refreshments USA has agreed to a $2.25 million settlement with the Equal Employment Opportunity Commission (EEOC) on bias charges filed by nine employees.

The Atlanta-based bottler will make payments totaling $2.25 million to nine individuals who alleged it failed to properly accommodate employees with disabilities. The funds will also go towards selected “non-profit entities dedicated to helping individuals with disabilities find and keep employment,” according to a press release.

Coca Cola Refreshments USA will make changes to its leave policies and procedures to improve accommodations for employees returning to work after disability-related absences, include the creation of a “dedicated accommodation and leave management team.”

“One of our guiding principles as an organization is to treat everyone with respect and fairness and create an inclusive work environment that values the contributions of everyone,” said Brian Sasadu, Senior Vice President of Human Resources for Coca-Cola Refreshments USA, in a statement. “We are pleased that we have been able to work collaboratively with the EEOC to strengthen our disability leave policies to reflect best practices from inside and outside our business system.”