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TABLE OF CONTENTS I. INTRODUCTION......................................................2 II. BACKGROUND ON OLIVE OIL..........................................3 A.

OLIVE OIL HAS UNIQUE PHYSICAL CHARACTERISTICS THAT MAKE IT HIGHLY PRIZED AMONG CONSUMERS...................................3 B. OLIVE OIL DEFINED BY NATIONAL AND INTERNATIONAL STANDARDS....5 III. OLIVE OIL HAS A LONG HISTORY OF FRAUD IN THE UNITED STATES......7 A. EARLY YEARS OF OLIVE OIL FRAUD...............................8 B. THE SALAD OIL CASES.........................................11 C. OLIVE OIL ADULTERATION POST PURE FOOD AND DRUG ACT OF 1906..15 D. THE SQUALENE RACKET.........................................18 E. OLIVE OIL ADULTERATION AFTER THE FEDERAL FOOD, DRUG AND COSMETIC ACT OF 1938...........................................19 F. THE UC DAVIS REPORT.........................................24 III. OPTIONS FOR RESPONDING TO OLIVE OIL ADULTERATION...............28 A. GAME THEORY.................................................29 B. INCREASING THE RISK OF DETECTION............................30 C. INCREASING THE RISK OF ENFORCEMENT..........................33 IV. CONCLUSION......................................................35

I. INTRODUCTION I have been tasting olive oils all of my life. As a teenager I

would organize blind tasting parties every year for my large family; everyone would sip the extra virgin olive oil and rank its sensory and gustatory qualities. I always selected olive oils from different We found that quality was not

countries for sample diversity.

strictly correlated with price, and collectively the family agreed that the extra virgin olive oils with a fruity, spicy balance and a delicate mouth feel were our favorites. olive oils we tasted were quite unique. So this is what I was looking for on a recent excursion to a new neighborhood Persian grocery in west Los Angeles: a unique, flavorful extra virgin olive oil. This store had a nice long rack of unique Like fine wines, all of the

brands of olive oil, half of which proclaimed their extra virginity. I chose one that had a well-designed, colorful label and cost slightly more than the other brands, hoping that this selection strategy would lead me to a tasty new brand. When I opened the bottle at home, and

sipped the straw-colored oil from my spoon, I was immediately disappointed. The oil was bland, not fruity nor spicy, and it left a

stale aftertaste in my mouth. This is the saga of olive oil in countless markets across the United States; it is a glass half-empty, glass half-full tale. On the

one hand, olive oil quality has come a long way from the days where a significant number of high quality olive oils on the market were diluted with cheap vegetable and seed oils. Today, high quality olive

oil is diluted with lower grade olive oils, or chemically similar hazelnut oil, to evade detection. Nonetheless, consumers like me have

continued to suffer from a lack of strong detection and policing in the market, and this also harms honest merchants with fancy labels and high quality extra virgin olive oil. This paper traces the legal

developments of olive oil regulation in the United States; i.e., the regulation of a food product that is but a part of a larger constellation of consumer food products that have faced fraudulent adulteration and misbranding in order to make a quick buck. II. BACKGROUND ON OLIVE OIL A. OLIVE OIL HAS UNIQUE PHYSICAL CHARACTERISTICS THAT MAKE IT HIGHLY PRIZED AMONG CONSUMERS Virgin and extra virgin olive oil (VOO and EVOO respectively) are unique among edible oils because they are a "fresh squeezed" juice1. Virgin and extra virgin olive oil extraction from the olive fruit is a simple process. After a short rinse, the olives are crushed into a

paste, gently heated and mixed, and then the oil is either pressed and decanted or simply decanted by centrifugation2. If the paste is heated

and extracted below 27 C (80.6 F), it is known as cold pressed or cold extracted3. This cool, gentle extraction of virgin and extra virgin olive oils is critical for saving hundreds of salubrious micronutrients,
See Prez-Jimnez F, Ruano J, Perez-Martinez P, Lopez-Segura F, LopezMiranda J. (2007). The influence of olive oil on human health: not a question of fat alone. Mol Nutr Food Res. 51:1199-1208.
2 1

See The Olive Oil Source, http://www.oliveoilsource.com/page/extractionprocess


3

See Commission Regulation (EC) No 1019/2002 of 13 June 2002 on marketing standards for olive oil; Articles 5(a) and (b), http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002R1019:EN:HTML

subtle aromas and delicate flavors from oxidation and enzymatic degradation4. These micronutrients, like polyphenols and

phytochemicals, are thought to be responsible for the health promoting effects associated with the consumption of virgin and extra virgin olive oil5. Lower grades of olive oil are often extracted at higher temperatures, require neutralization of chemical defects, and may have used solvents in the extraction process6. Despite their inferiority to

VOO and EVOO, lower grades of olive oil are still perceived to be healthier than other edible oils because of the high percentage of monounsaturated fat, as oleic acid, that comprises all olive oils7. The qualitative superiority of olive oils has attracted discerning consumers for millennia. liquid gold in the Odyssey8. Homer extolled olive oil as

For millennia, the Greeks and Romans

have used the highest quality olive oils to enhance the palatability of their breads, stews, salads and vegetables9. Demand for olive oil

has surged in the United States as health conscious Americans have

See Aturki Z, Fanali S, DOrazio G et al. (2008). Analysis of phenolic compounds in extra virgin olive oil by using reversed-phase capillary electrochromatography. Electrophoresis 29:1644.
5

See Prez-Jimnez, supra note 1, at 1200.

6 See Dimitrios Boskou, Olive oil: minor constituents and health (CRC Press 2008). 7 8

See Id.; See also Prez-Jimnez, supra note 1, at 1200.

See The Odyssey of Homer: Volume 1, available at http://books.google.com/books?id=c20qAAAAYAAJ&pg=PA147&dq=%22liquid+gold%22+h omer&hl=en&ei=XFzcTO6EHomusAOIkezkAw&sa=X&oi=book_result&ct=result&resnum=2&v ed=0CDQQ6AEwAQ#v=onepage&q&f=false

9 See Jos Mataix and Javier Barbancho. Olive Oil And Health (CAB International 2006).

tried to model their diet on the healthier Mediterranean diet10.

While

per capita consumption of olive oil has doubled to 0.7 kg per year in the United States from 1991-2003, per capita consumption in Greece and Italy has remained high at 13-15 kg per year11. Olive oil typically

sells for about 5 times the price of other vegetable and seed oils12. B. OLIVE OIL DEFINED BY NATIONAL AND INTERNATIONAL STANDARDS The International Olive Council (IOC) and the Codex Alimentarius (Codex) recognize seven categories of edible13 olive oils, all of which are defined by highly specific chemical and organoleptic (i.e. odor and taste) characteristics14. Of the chemical

properties, the free acidity, expressed as percent oleic acid, is the most significant because it is directly attributable to the quality and storage of the extracted oil. The highest quality oils are Extra

virgin, Virgin, and Ordinary virgin, with free acidity levels of <0.8%, <2.0%, and <3.3% respectively. All of these virgin oils are

obtained solely by mechanical or other physical means and under thermal conditions that do not alter the oil, and where no other

10 11

See Prez-Jimnez, supra note 1, at 1199.

See Paul Vossen. California and World Olive Oil Statistics (UC Davis (2004); See also Zeev Wiesman, Desert olive oil cultivation: advanced biotechnologies (Academic Press 2009).
12

See Firestone, D. (2001). Assuring the Integrity of Olive Oil Products. Wiley Award Address: Journal of AOAC International Vol. 84, No. 1.
13

Note There are non-edible grades as well, referred to as lampante virgin olive oil and crude olive-pomace oil.
14

See International Olive Council COI/T.15/NC No 3/Rev. (2009). Trade Standards Applying to Olive Oils and Olive-Pomace Oils; See also Codex Standard For Olive Oils and Olive Pomace Oils, CODEX STAN 33-1981, Amendment in 2009.

treatment besides washing, decantation, centrifugation and filtration has occurred15. In addition to these three high quality olive oils, the IOC and Codex also recognize Refined olive oil, which is obtained from virgin oils but has been processed to reduce the free acidity to less than 0.3%, and it has an acceptable odor and taste. Olive oil is

defined as a blend of refined and virgin oils, has a free acidity of <1.0%, and has good organoleptic characteristics. Next there is

Refined olive-pomace oil, which is oil that has been extracted with the use of solvents, has a free acidity of <0.3%, and has acceptable odor and taste. Finally, Olive-pomace oil is a blend of refined

olive-pomace oil and virgin olive oils, and has a free acidity of <1.0% and good organoleptic characteristics16. The United States Department of Agriculture (USDA) adopted updated voluntary standards that are nearly identical to the IOC and Codex standards17. 2010. These standards went into effect on October 25,

The main difference of the USDA standard is that it dropped the Therefore, the USDA recognizes

category Ordinary virgin olive oil.

six categories of olive oil for human consumption, in descending order of quality: U.S. Extra Virgin Olive Oil, U.S. Virgin Olive Oil, U.S. Olive Oil, U.S. Refined Olive Oil, U.S. Olive-pomace Oil,

15 16 17

Id. Id.

USDA, United States Standards for Grades of Olive Oil and Olive-Pomace Oil, Effective October 25, 2010. This is the second issue of the United States Standards for Grades of Olive Oil published in the Federal Register on April 28, 2010. It supersedes the first issue, which has been in effect since March 22, 1948.

and U.S. Refined Olive-pomace Oil18.

The USDA defines some of the

positive organoleptic attributes of olive oil as olive, apple, green, sweet, grass, nutty and tomato, and negative attributes as musty, fusty, winey-vinegary, muddy-sediment, and rancid19. III. OLIVE OIL HAS A LONG HISTORY OF FRAUD IN THE UNITED STATES For as long as consumers have prized the highest quality olive oils, swindlers have tried to pull the olive branch over their eyes. As Hart described in his landmark article on the history of food adulteration20, the adulteration of foods is as old as commerce itself21. Hart goes on to say, as commerce developed and knowledge A history of olive oil

spread, adulteration grew more subtle22.

consumer fraud in the United States reveals this progression, and the specific factors that have driven olive oil adulteration from a bald swindle to a technological arms race between cheaters and prosecutors. Meanwhile, federal and state statutory and case law have attempted to keep pace with catching a scam that appears simple at first blush, but has proven as difficult to eradicate as cancer is to cure. A review

18 19 20

Id. at 3-5. Id. at 7.

Note Hart used a narrower definition of the term adulteration than that used in the Federal Food, Drug and Cosmetic Act, in order to focus on the history of the intentional adulteration of foods for economic gain, instead of instances where a food is naturally adulterated through unintentional means. This paper will have the same focus.
21

See F. L. Hart, A History of the Adulteration of Food Before 1906 (January 1952), pp. 5.
22

Id.

of this history is intended to provide an informed backdrop in order to analyze the current options available for policing the market. A. EARLY YEARS OF OLIVE OIL FRAUD The earliest cases of olive oil fraud involved the whole or partial mixing of olive oil with cottonseed, sesame or peanut oil. These cases were prosecuted under state law23, before the promulgation of the Federal Pure Food and Drug Act of 1906 (1906 Act)24. Hart

cited a report claiming that, around 1880, 71% of all olive oils sold in New York and Massachusetts were adulterated with cottonseed oil25. A Pennsylvania case in 1897 upheld a lower court ruling for violation of the pure food law where a grocery sold what they claimed to be olive oil, when in fact it was 100% cottonseed oil26. A report from

the Connecticut Experiment Station on the adulteration of olive oil with cottonseed, sesame and peanut oils showed that in 1897 close to 40% of the 60 oils sampled from grocers were adulterated; in 1900 the percent adulterated was unchanged27. Classical physical and chemical tests were used during this early period to detect these adulterants, including refractive index, specific gravity, the Halphen test to detect the presence of

23 24

See Bronco Wine Co. v. Jolly, 33 Cal. 4th 943, 960 (Cal. 2004).

Pure Food and Drugs Act, ch. 3915, 6, 34 Stat. 768 (1906) (repealed 1938).
25

See Hart, supra note 21, at 21. Com. v. Curry, 4 Pa. Super. 356 (Pa. Super. Ct. 1897).

26 27

Public Document No. 24, Thirty-third and Thirty-fourth Annual Reports of The Connecticut Agricultural Experiment Station (State of Connecticut 1910). pp. 214-217.

cottonseed oil, and the Villavecchia test for sesame oil28. tests were later replaced by direct methods of detecting the percentage of olive oil in a blend, discussed infra.

These

By 1906 Congress attempted to combat food fraud out of health and safety concerns, but also with an awareness of the negative economic effects of food adulteration29. The Pure Food and Drug Act of 190630

established definitions of adulteration and misbranding31, and subjected foods to seizure and destruction for violations32. The establishment of legal definitions for adulteration and misbranding provided the federal government with an effective legal framework to prosecute olive oil fraud. This legal framework operated

in tandem with the scientific sophistication necessary to chemically detect adulterants. Section 7 of the 1906 Act defined adulteration

broadly, under six categories, including the dilution or substitution of valuable constituents, the masking of inferiority, and the addition

28 29

See Firestone, supra note 12, at 176.

See Richard A. Merrill & Earl M. Collier, Jr., Like Mother Used to Make: An Analysis of FDA Food Standards of Identity, COLUM. L. REV. 561, 564-65 (1974).
30

Act of June 30, 1906, ch. 3915, 34 Stat. 768, repealed 52 Stat. 1059 (1938), available at http://www.h-net.org/~hst203/documents/pure.html

31

Note When olive oil is intentionally adulterated for economic gain, the perpetrator either substitutes the olive oil in whole or in part with a different oil altogether, or will add a lower grade of olive oil to a higher grade of olive oil, and then intentionally misrepresent the product as being of the higher grade. In either circumstance, depending on the olive oils label, the adulterated product may also be misbranded. While the language that distinguishes between a product that has been adulterated and misbranded will be explored infra, it is important to note that in cases where olive oil is intentionally adulterated for economic gain, it is almost always the case that it has been misbranded as well.
32

See Merrill and Collier, supra note 29, at 564; See also Act of June 30, 1906, supra note 30, Section 10.

of deleterious ingredients33.

Section 8 of the Act defined the

misbranding of foods under four categories, including the sale of an imitation food, the labeling or branding of a food intended to deceive the consumer, the incorrect labeling of weights or measures, and if a mixture or compound is a distinctive product, it was misbranded when it did not contain the words compound, imitation, or blend34. The threat of legal action at the federal level led to a rapid improvement in the marketplace, although as has been true for the entire history of olive oil adulteration, this improvement was shortlived. The Connecticut Report noted the improvement of adulterated

olive oils sold at grocers since 1905, and noted the effect of the law on correct labeling which found thirteen samples in 1905 and eleven samples in 1906 were labeled compound, whereas before they were just referred to as pure olive oil3536. Despite this favorable

change, the Connecticut Report reveals the confusing array of labels that the average consumer still faced: Pure Lucca Oil; Olive oil Superfine Clarified; Virgin Olive Oil; Qualit extra Suprieure; Pure Olive Oil; Huile dOlive Extra Surfine; Olive Oil Qualit Extra; Olive Oil, Extra Gold, The Duck; Butter-Nut Huile dOlive Qualit Superfine; Virgin Olive

33 34 35 36

See Act of June 30, 1906, supra note 30, Section 7. See id. at Section 8. See Public Document No. 24, supra note 27, at 217.

Note It is likely that many manufacturers of olive oil changed their labels in anticipation of the federal law going into effect.

10

Oil, Extra Quality; Castles Cream Olive Oil; Extra Virgin Olive Oil; Strictly Pure Olive Oil37. So long as these olive oil labels were not grossly inaccurate, they were largely protected from claims of misbranding. However, the

words virgin, extra virgin, superior, superfine, etc. lacked any standard meaning. Consumers had to rely on their senses to Neither the

discern the quality of the product they were buying38.

Federal Pure Food and Drug Act of 1906 nor state laws established a system of food standards for consumers or the courts to compare the inferiority or imitation of one product to another39. This was a major weakness of a law that seemed straightforward when enacted; to catch olive oil fraud prosecutors had to both detect the presence of foreign oils in the olive oil (the scientific challenge) and they had to prove a legal violation relative to a commonly understood benchmark. This was easiest to do when a label

specifying that the product was pure olive oil had been diluted with cottonseed or sesame oil. However, once the word compound or

blend was introduced, it became easier for adulterated olive oils in the market to pass as legitimate products. B. THE SALAD OIL CASES

37 38 39

See Public Document No. 24, supra note 27, at 217. See Merrill and Collier, supra note 29, at 566.

See Miller and Skinner, The Nose of the Camel: The Paradox of Food Standards, 39 Food Drug Cosm. L.J. 99, 100 (1984); See also Christopher Chen, Food and Drug Administration Food Standards of Identity: Consumer Protection Through the Regulation of Product Information, Food & Drug L.J. 185, 193 (1992).

11

In looking for a more euphemistic term to describe these olive oil blends, marketers turned to the word salad oil as a means of deceiving consumers. in 1917 noted: The French, Spanish and Italians have long used olive oil to dress their salads. This became fashionable among American A description of this event from Dental Digest

housewives, who purchased salad oil with an understanding that it was a low grade of olive oil. Enterprising American food

manufacturers found great commercial possibilities in salad oil and salad dressing, and wanted to use cheaper oils in place of olive oil for salad oil and salad dressing, prompting a trade dispute. However, they wanted it both ways: millions of tin cans

and bottles were made, decorated with designs of foreign flavor and phrases. Often the tin cans of adulterated salad oil were

ornamented with olive leaves and statements about the sublime quality of the pure olive oil it contained, but this was all a ruse: many of the salad oils never contained any olive oil whatsoever. Dr. Harvey W. Wiley exposed this fraud, and these

brands dropped the ruse and just called their product, salad oil. The common people, always slow to learn, never suspected that the salad oil was not olive oil at all. They just bought and paid

for the product that was sold in a glass bottle or tin can believing that it was the genuine article40. The courts attempted to define the meaning of salad oil, but as will be seen, the adulterated olive oils eventually prevailed in
40

See A. W. McCann, Questions About Food, Dental Protective Association of the United States, Volume 23, Jan-Dec. 1917, pp. 729-730.

12

seizing the salad oil moniker for themselves.

The early definition of

salad oil was established in a Second Circuit ruling in 1910, Brina v. United States, which affirmed a conviction for misbranding salad oil because, salad oil prima facie imports olive oil: that is what the world has been accustomed to regard as salad oil41 [internal quotations omitted]. The oil in question was cottonseed oil and was

calculated to mislead the purchaser and induce him to believe the cans contained olive oil42. Brina followed another lower court ruling that

also defined salad oil as olive oil43. Brina was followed by another Second Circuit ruling in 1912, Von Bremen v. United States, which reversed a lower court ruling that found the label, Imported Salad Oil Morel Brand to be false and misleading because the oil in question was entirely sesame oil and did not contain any olive oil whatsoever44. The reversal was based on the

lower courts error in refusing to allow sufficient testimony to justify their findings45. in the air. This ruling left the meaning of salad oil up

41 42 43

See Brina v. United States, 179 F. 373 (2d Cir. N.Y. 1910). Id.

See The Journal of Industrial and Engineering Chemistry, March 1910. (N.J. 133) Adulteration and Misbranding of Olive Oil (A mixture of Cottonseed and Olive Oils) from January 10, 1910. the statement that the product was a compound of salad oil and olive oil was untrue because the usual acceptation of the term salad oil does not include cottonseed oil.
44 45

Von Bremen v. United States, 192 F. 904 (2d Cir. N.Y. 1912). Id. at 906.

13

Any question as to the meaning of salad oil was definitively laid to rest in U.S. v. 52 One-Gallon Cans and U.S. v. 397 Cases, etc46. this time, the court felt that the landscape had shifted, i.e., that the public no longer equated salad oil with olive oil. In 52 OneBy

Gallon Cans, where the labels in question described the product as, Pure Vegetable Salad Oil, the court stated, Regardless of what the understanding may have been many years ago when about [sic] the only salad oil commonly known was olive oil, today with great advances made over the old days the words salad oil and olive oil are everywhere recognized as being distinctly different products47. In 397 Cases,

etc., where the label in question was the same as one of the labels in 52 One-Gallon Cans, the court was more emphatic: On the front and back panels of the can, there are three diagonal stripes of red, white, and green, as a background for the printed matter. There are three vertical stripes of red, white, and green in the national flag of Italy. Is the court to believe that the public has been deceived for years into thinking that Canada Dry Ginger Ale is a Canadian product because the word Canada is part of its trade-name, and because the map of Canada is displayed on its label? Is the court to believe that the public considers Italian Balm an Italian or foreign product? Is the court to believe that the public is misled by Kraft French Dressing and numerous similar products prepared by

46

See United States v. 52 One-Gallon Cans, 16 F. Supp. 385 (D. Conn. 1935); See also United States v. 397 Cases, etc., 16 F. Supp. 387 (D.N.J. 1936).
47

See United States v. 52 One-Gallon Cans, 16 F. Supp. 385, 387 (D. Conn. 1935).

14

reputable dealers and which have been in use for years? The court gives the public credit for not being so gullible. It believes the can in question does not mislead, nor is it likely to mislead the public as alleged in the libel48. These salad oil cases demonstrate how the original use of a name, salad oil, as a way to accentuate the superior taste and quality of olive oil on salads, could be co-opted by adulterating brands until the meaning was completely subsumed. Moreover, the lack of a

provision requiring manufacturers to list the ingredients in their food products made it difficult for the courts to compare imitation foods to traditional foods, and thus find that the former were inferior to the latter, which would have rendered them adulterated and misbranded under the 1906 Act49,50. For salad oil, a clear standard of

identity or a disclosure of the ingredients could have protected or alerted unsuspecting consumers to this shift in definition. C. OLIVE OIL ADULTERATION POST PURE FOOD AND DRUG ACT OF 1906 Despite the favorable changes in the marketplace following passage of the Pure Food and Drug Act of 1906, by the 1910s and early 1920s olive oil adulteration was back in full swing. Cotton Oil Press reported on this phenomenon: In 1921 the

48 49 50

See United States v. 397 Cases, etc., 16 F. Supp. 387, 390 (D.N.J. 1936). See Merrill and Skinner, supra note 39, at 100.

Note One major defeat of the government in this regard is seen in the case, United States v. Ten Cases Bred Spread, 49 F. 2d 87 (8th Cir. 1931), where the defendant prevailed against the charge that their jam-like concoction of low-fruit bred spread was adulterated because it was mixed so as to conceal its inferiority, and the misbranding of the article because it was an imitation of another article, jam.

15

Large quantities of olive oil, sold in New York as virgin olive oil, but declared to have been adulterated with cotton-seed, soya bean, peanut and sesame oils, have been confiscated by the Federal Government within the past three weeks, according to the statement of W. R. M. Wharton, chief of the Eastern Food and Drug District, Bureau of Chemistry. The practice of certain New York brokers and dealers of mixing cotton-seed and other vegetable oils with olive oil, and selling same to the public at higher prices, based on imported olive-oil quotations, is reported to have become so prevalent that the American Olive Oil Association has offered its assistance to the Federal officials in stopping the practice. "Adulterated olive oil," said R. U. Delapenha, president of the American Olive Oil Association, in commenting on the situation, "is largely fabricated in New York City, and it is difficult for an honest retailer of limited experience to be sure of much of the oil sold today under the pseudonym of olive oil. The Federal authorities are busy every day testing olive oil and watching the shipment out of the State of New York. The port officials can keep out adulterated olive oil, but they cannot prevent its adulteration after landing51."

51

See The Cotton Oil Press, Official Monthly Bulletin of the Interstate Cottonseed Crushers Association, v.5, no.1 (1921), pp. 38.

16

A Popular Mechanics article from 1925 noted the hundreds of seizures and prosecutions52 that had taken place to combat olive oil fraud: The substitution of cottonseed oil in whole or in part for olive oil is another form of adulteration that persists on the part of some dealers in spite of hundreds of seizures and prosecutions. Cottonseed

oil is an excellent, wholesome product, having a well-deserved and extensive market on its own merits. But since it is cheaper than

olive oil, its sale as olive oil at a higher price than it would command under its own name is a fraud53. By the 1930s tea seed oil (Thea sinensis) was being used to adulterate olive oil because it was able to avoid detection by the usual chemical and physical tests54. The Food and Drug Administration

(FDA) responded by devising a test to detect this adulterant directly, as had been done for cotton and sesame seed oils55. However,

by this time it became clear that it would be useful to develop a test that could directly estimate the amount of olive oil in a blended

52

There are numerous cases of seizure and condemnation reported for olive oil adulteration and misbranding under the 1906 Act. Many of these cases were published in the Service and Regulatory Announcements from the U.S. Bureau of Chemistry, which was part of the Department of Agriculture. Starting in 1927, many cases were reported in the Notices of judgment under the Food and drugs act as part of the newly formed Food and Drug Administration. There also continued to be cases prosecuted under state law.
53

See PR. H. Moulton, Protecting the Nations Food Supply, Popular Mechanics, (August 1925), pp. 292.
54 55

See Food engineering. (1936). Chilon Co., V.8, pp. 359. See Firestone, supra note 12, at 176.

17

sample, instead of testing for the presence of many different adulterants56. D. THE SQUALENE RACKET In 1943, a test was developed to measure squalene, a chemical compound that exists in significantly greater quantities in olive oil compared to vegetable oils57. As David Firestone, a career chemist at

the FDA who focused on assuring the integrity of food oils and fats observed, For a brief period in the middle 1940s the olive oil content of olive oil-vegetable oil blends approximated label claims following successful legal actions against several adulterated blends and their packers58. It did not take long for fraudsters to figure Firestone described the squalene

out a way to evade this new test.

racket that was occurring as he started his career: In early 1946, FDA inspectors heard rumors that squalene was added to blends to make them appear to have more olive oil than actually present. Laboratory examinations showed high squalene In June 1947, the source of

content but weak olive oil flavor.

the adulterant was traced to a manufacturer of chemicals and vitamins who obtained squalene as a by-product of shark liver fractionation (shark liver is an excellent source of vitamin A). Squalene production was stopped when the manufacturer was informed of its apparently illegal use and it was agreed that 75
56 57

Id.

See United States v. Antonio Corrao Corp. et al, 185 F.2d 372, 376 (1950); See also Firestone, supra note 12, at 177.
58

See Firestone, supra note 12, at 177; See also People v. Bertola, 70 N.Y.S.2d 854 (1947) as a typical case where the squalene test was used.

18

gallons of squalene on hand would be identified with a chemical marker to distinguish it from vegetable oil squalene... The test was used to detect adulterated olive oil blends which began to appear on the market and preparations were ongoing to initiate a court contest following seizers of marked blends as I began my FDA career. The court case was concluded in favor of the

government and the squalene olive oil racket was ended59. The court case at the heart of this racket was United States v. 5 CASES, ETC.60, also known as the Figlia Mia adulterated oil case. a discussion of the Figlia Mia case, FDA commissioner Paul B. Dunbar noted that a number of other cases very similar in character were terminated in May by pleas of guilty by seven individuals, one blending corporation, and the drug store operated by the individual who furnished squalene to the blender. These cases are extremely In

involved since they are characterized by all of the earmarks of a tremendous racket carefully worked out by experienced racketeers. Enough squalene had been purchased by the convicted drug store to adulterate over one million gallons of peanut oil to simulate a 20 per cent olive oil blend61. E. OLIVE OIL ADULTERATION AFTER THE FEDERAL FOOD, DRUG AND COSMETIC ACT OF 1938

59 60

See Firestone, supra note 12, at 177.

See United States v. 5 Cases, More or Less, 179 F.2d 519 (2d Cir. Conn. 1950).
61

See P. B. Dunbar, On the Food and Drug Administration, Food Drug Cosmetic Law Journal, August 1950, Vol. 5, No. 6, pp. 463-64.

19

The cases utilizing the squalene test were all prosecuted under the Federal Food, Drug and Cosmetic Act of 1938 (FD&C Act). The

FD&C Act attempted to address some of the shortcomings of the 1906 Act through the addition of several new definitions62. Two of these

definitions are germane to the prevention of olive oil adulteration, although neither of them has had any significant effect on actually stemming olive oil adulteration. First, the FD&C Act added a clause to the definition of adulteration that was absent from the 1906 Act. This clause, which is

the final language of Section 402(b)(4) of the Act, states that a food is adulterated if any substance has been added thereto or mixed or packed therewith so as to ... make it appear better or of greater value than it is63. This broad language expanded the legal scope of While most olive oil adulteration

what constitutes adulteration.

cases now fall under this broad definition, the previous definition under Section 7 of the 1906 Act, which stated if any substance has been mixed or packed with it so as to reduce or lower or injuriously affect its quality or strength, was already a sufficient legal definition to prosecute those who attempted to dilute olive oil64. The second addition was a provision, 401, empowering the FDA to formulate standards of identity for foods65. Despite a confusing array

62

See Peter Barton Hutt, Richard A. Merrill and Lewis A. Grossman, Food and Drug Law: Cases and Materials 13 (Foundation Press 2007, 3rd ed.).
63 64

See 21 U.S.C. 342(b)(4).

Note 401(b)(1) and (2) have been cited as appropriate provisions whereby olive oil adulteration may be prosecuted; the language in 401(b)(1) and (2) largely mirrors the language from the 1906 Act.
65

See 21 U.S.C. 341.

20

of labels for different grades of olive oil that have been on the market for over a century, the FDA has never exercised its 401 authority to set standards of identity. The Agency issued a Notice of

Intent to Establish [a] Standard in the Federal Register in 197966. The notice offered interested parties an opportunity to review and comment on the proposed Codex Alimentarius standard for olive oils and on the need for a standard in the United States67. Before this standard was proposed, the period from the early 1960s until the 1980s saw only one case of olive oil fraud prosecuted68. Firestone noted that olive oil adulteration and

misbranding had a low priority, few additional FDA resources were expended until the 1980s69. In 1976, the New York City Department of

Consumer Affairs reported widespread mislabeling of olive and vegetable oil blends70. In 1978 a Spanish official reported that

significant quantities of esterfied olive oil (i.e., chemically treated to reduce the olive oils acidity level), which was illegal to sell in Spain and other Mediterranean countries, was being shipped in international trade71.

66

See 44 FR 10742-01, Virgin And Refined Olive Oil And Refined Olive-Residue Oil, Notice of Intent to Establish Standard. Vol. 44, No. 38 (1979).
67

Id.

68

See United States v. 40 Cases, More or Less of Pinocchio Brand 75% Corn, Peanut Oil & Soya Bean Oil Blended with 25% Pure Olive Oil, 289 F.2d 343 (2d Cir. 1961)
69

See Firestone, supra note 12, at 177. Id. Id.

70 71

21

Under Firestones recommendation, the FDA began to pay closer attention to the problem, and formed a relationship with an Italian researcher to create a validated analytical method to identify different grades of olive oil72. This move by the Agency came on the

heels of a massive food poisoning outbreak around the Madrid area in Spain in 198173. More than 20,000 people fell ill and over 800 people

died when aniline-laced industrial rapeseed oil was sold as olive oil and other cooking oil74. This tragedy demonstrates the perilous

position of ignoring economic adulteration because it normally does not pose a health risk. A survey conducted in late 1981 indicated that imported olive oils were adulterated with undeclared vegetable oils, which was then substantiated by the Italian Experiment Station for Fats and Oils75. The FDA instituted an olive oil sampling program in 1982 to stop this adulteration and misbranding76. Three of the initial seven oils A further

sampled were found to contain esterfied olive oil77.

inspection in 1983-1984 found 18 of 25 products labeled olive oil or virgin olive oil to contain either esterfied or olive pomace oils78. Interestingly, in the midst of this stepped-up sampling and with renewed attention to the problem of olive oil adulteration, in
72 73 74 75 76 77 78

Id. Id. Id. Id. at 178. Id. Id. Id.

22

September of 1982 the FDA terminated its consideration of the establishment of a U.S. standard based on the Codex standard79. Agency stated, There is neither sufficient interest nor need to warrant proposing a U.S. standard for these foods80. Of the sixtyThe

five comments received in response to the advanced notice of proposed rulemaking in 1979, The majority of comments favored establishing a U.S. standard because they wanted the sale of lower quality refined olive-residue oil as higher priced pure or refined olive oil to be curtailed81 [internal quotation marks omitted]. Despite the favorable

response, the Agency cited a lack of data submitted as justification for its conclusion that there was insufficient need to warrant proposing a standard under its section 401 authority82. The decision

to terminate consideration was done without prejudice to future consideration of the matter83. Firestone noted, While the presence of undeclared esterfied olive oil was soon eliminated from olive oil products, it was found that continuing surveillance was required to keep mislabeling at a minimum. detained. In the early 1990s, 15-20% of imported olive oils were By 1995, detections dropped to 2%84. Firestone ends his

essay by noting, Constant development of new and more useful

79

See 47 FR 42123, Virgin Olive Oil, Refined Olive Oil, and Refined OliveResidue Oil; Termination of Consideration of Codex Standard.
80

Id. Id. Id. Id. See Firestone, supra note 12, at 178.

81 82 83 84

23

analytical techniques as well as continuous surveillance is required to control adulteration and mislabeling of olive oil products85. F. THE UC DAVIS REPORT In July of 2010, the newly formed UC Davis Olive Center issued a report on the results of their collaboration with the Australian Oils Research Laboratory where they evaluated the quality of extra virgin olive oils on retail shelves in California86. The research team

collected 14 imported brands and five California brands from three different regions in California from March 3, 2010 to March 10, 201087. The two laboratories evaluated these oils based on standards and testing methods established by the IOC and the U.S. Department of Agriculture (USDA), in addition to cutting edge testing methods developed in Germany and Australia. specific findings: 1) 69 percent of imported olive oil samples and 10 percent of California olive oil samples labeled as extra virgin olive oil failed to meet the IOC/USDA sensory (organoleptic) standards for extra virgin olive oil88. 2) 31 percent of the imported samples that failed the sensory standards also failed the IOC/USDA standards for UV absorbance of The study reported several

85 86

Id. at 179.

UC Davis Olive Center Report, July 2010, Tests indicate that imported extra virgin olive oil often fails international and USDA standards. Id. Id.

87 88

24

oxidation products, which indicates that these samples were oxidized and/or were of poor quality89. 3) 83 percent of the imported samples that failed the IOC/USDA sensory standards also failed the German/Australian DAGs standard. Two additional imported samples that met the IOC/USDA sensory standard for extra virgin failed the DAGs standard90. 4) 52 percent of the imported samples that failed the IOC/USDA sensory standards also failed the German/Australian PPP standard. Two additional imported samples that had met the IOC/USDA sensory standard for extra virgin failed the PPP standard91. 5) The IOC/USDA chemistry standards confirmed negative sensory results in 31 percent of cases, while the German/Australian DAGs and PPP standards confirmed negative sensory results in 86 percent of cases92. This last finding is particularly revelatory because the DAG and PPP tests are indicators of potential adulteration with refined oil. The Report refers to media reports of fraud in the olive oil business, where extra virgin olive oils have been adulterated with cheaper refined oils such as hazelnut oil. Another method is to

adulterate extra virgin olive oil with cheaper refined olive oil, thereby making chemical detection of adulteration more difficult93. One media report in particular stands out for its in-depth
89 90 91 92 93

Id. Id. Id. Id. Id.

25

analysis of the trade in adulterated olive oil.

The article was

titled Slippery Business, and was published in 2007 by Tom Mueller of the New Yorker magazine94. Muellers article chronicles how a powerful

olive oil trader got rich in the early 1990s from importing Greek olive oil and re-selling it to some of the largest producers of Italian olive oil, including Nestle, Unilever, Bertolli, and Oleifici Fasanesi95. This Greek oil was actually hazelnut and sunflower seed By 1997 and 1998,

oil from Turkey and Argentina respectively96.

Mueller reports, olive oil was the most adulterated agricultural product in the European Union, prompting the E.U.s anti-fraud office to establish an olive-oil task-force97. One investigator told

Mueller, Profits were comparable to cocaine trafficking, with none of the risks98. Mueller also exposes a range of adulteration tactics. olive-oil frauds are easy to detect using chemical tests. Most However,

there are more sophisticated scams taking place at high-tech factories, where hazelnut and deodorized lampante olive oil are used to doctor high quality olive oil. It was the sophistication of these

frauds that prompted E.U. regulators in 1991 to respond by adding organoleptic standards in addition to the chemical standards already

94

See Tom Mueller, Letter from Italy: Slippery Business, The New Yorker (Aug. 13, 2007), available at http://www.newyorker.com/reporting/2007/08/13/070813fa_fact_mueller?currentPa ge=all.
95 96 97 98

Id. Id. Id. Id.

26

in place for grades of olive oil. By 2007, the Italian government announced that it had investigated 787 olive-oil producers, and found that 255 were likely adulterated and falsely labeled99. In one case in 2006 that reached

American soil, federal marshals seized 61,000 liters of supposedly extra-virgin olive oil and 26,000 liters of a lower-grade olive oil from a New Jersey warehouse100. Italy101. The importer blamed its suppliers in

Mueller points out that the FDA still considers olive-oil

fraud a relatively rare problem and does not conduct routine testing102. Instead, the Agency relies on major producers and trade

groups, like the North American Olive Oil Association, to alert it to suspicious products103. With the industry as its own watchdog, the

United States has remained as a dumping ground for low quality olive oils being sold as extra virgin. The UC Davis Report prompted the filing of a class action lawsuit in August of 2010104. The case, Martin v. Carapelli, was filed in

Orange County Superior Court, and alleged six causes of action against at least 24 named defendants and 1000 does for fraud, negligent misrepresentation, breach of warranty, false advertising under CA Business and Professions Code 17500 and 17200, and unjust

99 100 101 102 103 104

Id. Id. Id. Id. Id. Unpublished.

27

enrichment105.

These defendants were olive oil merchants, retail The pleadings base most of their claims

stores, and distributors106.

on the UC Davis Report, and refer to a article published in the Los Angeles Times which alleged that falsely labeled extra virgin olive oil is being sold for almost 80% more than it is worth107. However,

for unknown reasons, the plaintiffs requested a dismissal without prejudice on December 8, 2010 and the request was granted the following day. III. OPTIONS FOR RESPONDING TO OLIVE OIL ADULTERATION Two trends emerge from the long history of olive oil adulteration in the United States. First, there has been a perpetual technological Regulators initially

arms-race between adulterers and regulators.

relied on basic physical and chemical tests to detect adulteration, later they developed tests to identify specific adulterants. Subsequently, the testing moved to identify the percent of olive oil in a blend, and now this testing methodology has advanced to a point where highly sophisticated instrumentation is used to profile the range and ratios of specific chemical compounds. dovetails with the second. This first trend

After each new tool was developed to

detect adulteration, there was a period of stepped-up enforcement, followed by a change in tactics by adulterers to once-again evade detection. Furthermore, enforcement has not been constant. The FDA

See Martin v. Carapelli, 2010 WL 3216040 (Cal. Superior), For docket see 30-2010-00395464-CU-FR-CXC.
106 107

105

Id. Id.

28

has seen its responsibilities enlarge over the years, and with limited resources, it is forced to prioritize the allocation of its enforcement resources. A. GAME THEORY Game theory provides a useful analytical framework to conceptualize the potential responses to the problem of adulteration. It also is an aid for understanding the behavioral dynamic behind the pendulum swing of periods of successful enforcement and a corresponding clean-up of the marketplace, and back again to rampant fraud. Game theory is a tool for analyzing behavior in strategic situations, where the success of one party is dependent on the choices of others. An equilibrium is said to exist in any given situation

where a) the parties know the equilibrium strategies of the other parties and b) no party can benefit by changing their strategy while the others keep theirs unchanged. The game theory strategy in selling olive oil is simple; like the majority of business endeavors, success is dependant on maximizing profits. Since diluting expensive oils is highly profitable, there is Firms that engage in illegal

a strong perpetual incentive to do so.

adulteration without getting caught have a competitive advantage over those that choose to remain honest. This competitive advantage

creates pressure on honest merchants to cheat in order to remain competitive. Absent any enforcement, the equilibrium would be that

the majority of firms would attempt to maximize profits by cheating their customers, en masse.

29

However, the equilibrium is constantly changing in response to three risks: the risk of detection, the risk of enforcement, and the risk that the consumer will reject a particular brand of oil altogether. The marketplace as a whole will also suffer when

consumers reject an entire category of a product, like all extra virgin olive oils, because they find the majority of products to be unacceptable. Given a situation where the risk of detection was high,

the risk of enforcement was high, and the risk that consumers would immediately turn away from ones brand was high, then the equilibrium would change toward a market where consumers were getting the grade of olive oil they paid for. This is the equilibrium sought by This conceptual model

regulators, consumers and honest merchants.

suggests that any solution to reach this equilibrium must take into account a sustained, robust ability to detect and enforce olive oil adulteration. If these two factors are present, consumers will be

able to make accurate choices, and if there is a perception that the market for olive oil is not tainted with fraud, then demand should rise overall. B. INCREASING THE RISK OF DETECTION Detecting olive oil fraud is a technological challenge. The IOC

has a Chemists Working Group that is constantly researching, updating and recommending new methods of detection108. Academic centers in While

olive producing countries are also engaged in this research.

many of the technical processes are beyond the scope of analysis in

108

See Firestone, supra note 12, at 179.

30

this paper, it seems clear that those methods of detection that are the most accurate and the least costly will be the most useful for increasing the risk of detection. One approach recommended by the Grocery Manufacturers Association (GMA) is the establishment of a product fingerprint from which to compare an unknown sample109. The GMA points out that

establishing such a fingerprint is an expensive process that has dampened its adoption110. They suggest a collaborate effort to

establish this fingerprint, so as to reduce the costs to any individual company or government. In the GMAs report on economic

adulteration, they stated, Most leading companies already use a number of sophisticated testing methods for detecting common day-today, known quality and safety concerns. Yet due to the inherent variability within natural raw materials, it is difficult to test for every unknown threat. Verifying the authenticity of an ingredient, rather than verifying the absence of every possible adulterant, provides the best way to detect adulteration111. Torrecilla recently published one attractive model, useful as an illustration, in the Journal of Food Engineering112. This paper

compared the use of differential scanning calorimetry (DSC), where minute temperature changes are measured relative to heat input, to the

See AT Kearney and Grocery Manufacturers Association, Consumer Product Fraud: Deterrence and Detection, 14 (2010).
110 111 112

109

Id. Id. at 17.

Torrecilla Jose S, et al. (2011). Quantification of adulterant agents in extra virgin olive oil by models based on its thermophysical properties. Journal of Food Engineering 103:211-218. (available online 26 October 2010)

31

use of much more complex instrumentation utilizing spectroscopic and chromatographic techniques. The use of DSC is far less expensive than

the use of these other instruments. What makes the use of DSC unique in this paper is that it was combined with complex statistical analysis that has only become available in this era of powerful computing. Torrecilla reported that

this DSC-stat technique had a lower limit of detection for refined olive oil of 1.2%113. This was lower than the limit detectable from Torrecilla noted,

the more complex and expensive instrumentation.

This difference in the lower limit of detection shows the power of lag-k autocorrelation coefficient concerning adulteration of EVOO. This widens the horizon to design tools which solve the problem of illegal adulterants, which in some cases can cause serious problems aside from constituting economic fraud114. Torrecilla goes on to say

that the calculation of these lag-k autocorrelation coefficients is easy, and can then be extracted from huge databases such as DSC scans115. He then suggests, Complex DSC profiles can be transformed

into simple LCC profiles which maintain the information necessary to detect slight adulterations with inferior edible oils116. The attractiveness of this approach the combination of inexpensive testing equipment with complex math and computing is that the data can be collected by anyone, like school children,

113 114 115 116

Id. at 216. Id. Id. Id.

32

consumers, consumer protection groups, universities and of course the government. The analysis of this collected data could then be done If this approach were capable of raising

quickly over the Internet.

the risk of detection significantly, then it would make average consumers the best enforcers. C. INCREASING THE RISK OF ENFORCEMENT There should be at least a two-prong approach to enforcement. First, there is always a role for the FDA to directly or indirectly test the olive oil entering the United States for adulteration. role can be viewed as an early-warning system since the volume of products entering is so great that it is inevitable that impure olive oil will enter the market. The FDA can also work with state This

governments to monitor and test the food supply to ensure its safety and purity. As suggested though, if the cost of detection is low and its accuracy against unknown adulterants is high, then this makes it easier for consumers and other interest groups to be the primary police of the marketplace. Under this scenario, the government

state or federal - should create incentives for this policing, similar to those created under California Civil Code 52117. Under 52(a),

an individual who has been discriminated against is entitled to treble damages, with minimum statutory damages of $4000118. If a person is

able to pay for example, $20 for the cost of detection, and they are

117 118

Cal. Civ. Code 52. Id.

33

entitled to receive $4000 for prevailing against a manufacturer who sells an adulterated product (or even the store that sells the product), then this would create a very strong enforcement mechanism. In California, a cottage industry has arisen around pursuing violators of the Americans with Disabilities Act (ADA), where violation of the act allows one to recover under Californias 52(a)119. This zealous enforcement of disability discrimination laws

prompted some backlash by small business that were discontent that they were not allowed to rectify their violations before being sued120. However, prevailing party language seems to require such an offer for correction of ones violations for recovery of attorneys fees. Also, it would not be difficult to create a statutory regime that does give committers of olive oil fraud a chance to rectify their actions before an individual can recover for damages. This sort of statutory scheme, combined with legally enforceable standards of identity for different grades of olive oil, like those adopted for voluntary use by the USDA121, would work in concert with the latest technology to fundamentally change the current equilibrium towards one where consumers and honest businesses win. IV. CONCLUSION It is easy to predict the fallout from the UC Davis Report. Aside from a chorus by the media for reform, and a desire by the FDA

See California Access Compliance, Americans with Disabilities Act (ADA) in California, available at http://ashdownarch.com/blog/?p=1
120 121

119

Id. See USDA, supra note 17.

34

to address the problems of economic adulteration (although action may be wanting), the winds of change will inevitably diminish. In the

next few years, olive oils will quickly go back to tasting stale, and swindlers in the marketplace will continue to operate as they always have. With rising demand in the United States, and increasing

production of olive oil by California growers who are struggling to compete, this dual approach of detection and enforcement may be a path forward.

35