Suit seeks to require Phillips to identify crabmeat as foreign

Seafood house accused of misleading patrons into thinking it uses Md. crab

April 16, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

A group that promotes U.S.-made products filed a lawsuit yesterday against Phillips Foods Inc., alleging that the Baltimore company misleads consumers into believing that its products are made with Maryland seafood.

The suit was filed by the Made in the USA Foundation, a Bethesda group that encourages consumers to buy products that are made in the United States.

"If they fooled me, and I've been chairman of the foundation for 13 years, then they can fool anyone," said Joel D. Joseph, a lawyer and head of the foundation.

A spokeswoman for Phillips declined to comment, saying the company has not seen the lawsuit, filed in U.S. District Court in Baltimore.

"All retail packaging and all packaging in the marketplace, as far as I know, is correct," said Honey Konicoff, vice president of marketing for Phillips.

Along with Phillips Seafood Grill Inc.'s restaurants - three in Ocean City, one in the Inner Harbor and one in Washington - Phillips sells many of its products at retail locations such as Giant Food and Costco stores.

Crabmeat containers in retail locations indicate the product contains "crabmeat from Thailand." But the boxes for Phillips' frozen crab cakes say they are manufactured in Baltimore.

The menu at the Inner Harbor restaurant never specifically claims that diners are eating Maryland crab. However, the description of the "traditional crab cake sandwich" says it is from "Phillips original 1956 Maryland Eastern Shore recipe."

Joseph claims that back in the 1950s the company was using Maryland crabs but that now it largely uses imported crab from Asia, so the recipe has changed because the crab is different.

The lawsuit is seeking a court order to force Phillips to state more clearly the origins of its seafood.

The Federal Trade Commission, which usually handles claims about whether a product is American-made, said its rules do not apply to food products.

According to the U.S. Customs Service, products must be labeled so the "ultimate purchaser" knows the country of origin of that product.

Origin not needed

A manufacturer, such as Phillips, could be considered the ultimate purchaser if the product will be substantially changed before being sold to the public, which means it would not have to disclose the country of origin.

However, according to the Customs Service regulations, if only a minor change is made, then the country of origin must be disclosed to consumers at the retail level.

A spokeswoman for the agency said the issue would have to be studied by a Customs Service lawyer to determine how Phillips should label its products.

The Food and Drug Administration said it would only get involved in a packaging issue if claims were made that were false or misleading - something that would involve an in-depth study.

In 2000, the Made in the USA Foundation sued Black & Decker Corp. of Towson over its Kwikset locks. The suit alleged the products were labeled "made in USA" and "all American made" when in fact some of the products were partially assembled in Mexico. A judge tentatively ruled in favor of the foundation last month, but a final ruling is not due until early next month.

Started in 1914

Phillips started in 1914 as a crab picking plant on Hoopers Island - a facility that is still in operation. Its first restaurant was opened in Ocean City in 1956 by Brice Phillips - son of the founder - and his wife Shirley.

The company is in the process of moving its manufacturing facility from West Baltimore to Locust Point. The move is being undertaken with the help of the state Department of Business and Economic Development, which said it had learned that Phillips was looking at out-of-state sites for a new distribution facility.

The state is paying $6.8 million for Phillips' distribution facility on Monroe Street, which was appraised at $1.8 million. The Maryland Department of Transportation plans to build a new maintenance facility at the Monroe site.

As part of the deal, Phillips agreed to keep its 300 jobs in the city for at least seven years and spend $15 million on new facilities, and to keep its current level of operations.

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