Court's Decision on CR 12(b)(6) Motion In Zupnik: FFDCA Preemption Under Further Attack and Twombly Ignored
We previously cited the motion to dismiss in Zupnik, et al. v. Tropicana Products, Inc. as an example of good pleading practice in a putative consumer fraud class case. United States District Judge Dale S. Fischer apparently disagreed with our assessment, this week issuing an order denying the motion.
Tropicana’s lead argument was a failure of pleading. Tropicana attacked the complaint both on the basis of Rule 9(b), and under the Supreme Court’s recent decision in Twombly. The Twombly decision requires the federal court on a Rule 12(b)(6) motion to determine whether operative factual allegations are “plausible” and more than simply “conclusory.”
Judge Fischer rejected summarily Rule 9(b) arguments. She completely disregarded Tropicana’s Twombly arguments, failing even to mention the Supreme Court’s decision.
Tropicana also moved to dismiss based on federal preemption. Most of Judge Fischer’s decision is devoted to the preemption argument. She ruled that since California’s Sherman Law is substantively identical to 21 U.S.C. § 343(a) of the FFDCA, the preemption argument fails.
Judge Fischer theorized that even though plaintiffs could not point to anything on Tropicana’s label that violated any FDA regulation, the FDA could bring an enforcement action “to target specific false or misleading labels.” If the FDA can bring that kind of action under 21 U.S.C. § 343(a), plaintiffs, according to Judge Fischer, should also be able to bring a private right of action under the identical California law. Query whether Judge Fischer’s reasoning negates any FFDCA preemption defense to a claim brought under California’s Sherman Act?
The Table Is Set For Class Action Litigation Over the Use of Smart Choices Labeling
By Guest Blogger Troy Hutchinson
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In response to recent consumer complaints and state attorney general investigations that the use of the Smart Choices label is misleading and deceptive, food companies now face the threat of consumer class action litigation under state fraud and deceptive practices statutes.
Adding to the uproar, the Food and Drug Administration (FDA) announced that it will consider using its regulatory tools if front of pack nutrition labeling is not used in a common, credible way, it said in a letter to industry on October 20, 2009.
In a conference call with journalists, Margaret Hamburg of the FDA said that the FDA wants to work with industry, but that over time it “will take enforcement action for egregious examples.” Hamburg did not pinpoint specific products, but mentioned claims of “zero trans fats” on the front of packaging for products that have high levels of saturated fat, and said: “There are products that have got the Smart Choices check mark that are almost 50 percent sugar.”
At least one member of Congress has also weighed in on the issue. U.S. Rep. Rosa DeLauro announced that she is “very encouraged by FDA’s commitment to proceed with enforcement actions” against unauthorized claims. She went on to state that “[c]learly something is wrong when foods such as Froot Loops cereal, Cookie Crisp cereal, and Uncle Ben’s Instant Rice are designated as ‘healthy’ by these labeling systems.”
Responding to the FDA’s letter, president of the Grocery Manufacturers Association Pamela Bailey said in a statement that the organization is looking forward to working with the FDA “to determine what nutrition information is most useful in providing consumers with the tools they need to help them build a healthful diet.”
While companies who are using the Smart Choices program to promote legitimately healthy options should encourage FDA enforcement, that enforcement brings with it the risk of class action litigation. Whenever there are attorney general investigations or other regulatory enforcement action taken, class action litigation often follows. Food companies using the Smart Choices labeling should be strategizing on how best to defend these actions. Some private litigation may be preempted if the FDA has used its rule making authority. Where companies are legitimately using the Smart Choices label to promote healthier food options, those companies should encourage the FDA to use its rule making function to give clear rules on how companies can use the Smart Choices label.
Bottled Water Association Sues Over Water Bottle Ads
The International Bottled Water Association (IBWA) is taking aim at an advertising campaign for Eco Canteen stainless steel water bottles, claiming the ads wrongly suggest that plastic water bottles are unhealthy and unsafe.
In a lawsuit filed in the U.S. District Court for the Western District of North Carolina, IBWA claims that Eco Canteen’s television ads and content on various Eco Canteen websites deceive the public into believing that single-serve and reusable plastic water bottles constitute a safety and health risk to consumers. Among other things, IBWA’s lawsuit alleges that some of Eco Canteen’s ads have:
- Improperly linked plastic water bottles to breast and prostate cancer and stated that plastic water bottles “could be poisoning you and your family”;
- Matched images of single-serve plastic water bottles with Eco Canteen’s claims “relating to an organic compound called Bisphenol A (BPA) with the intent to confuse consumers into believing that single-serve bottles also contain BPA even though they do not”;
- Conveyed false and misleading information regarding the alleged health risks of BPA; and
- Suggested that exposing certain water bottles to warm temperatures can lead to leaching of chemicals.
IBWA brings two claims against Eco Canteen: (i) a false advertising claim under the Lanham Act, 15 U.S.C. § 1125; and (ii) an unfair competition claim under North Carolina law. A copy of the complaint (including exhibits showing some of the Eco Canteen ads about which IBWA complains) is available here.
Kellogg Co. Agrees to Settle False Advertising Claims
Cereal maker Kellogg Company has entered into a consent agreement with the U.S. Federal Trade Commission to settle charges that certain Kellogg advertisements contain false or misleading statements.
At issue in the FTC’s complaint are statements from Kellogg’s advertising that eating a bowl of Kellogg’s Frosted Mini-Wheats cereal for breakfast is clinically shown to improve kids’ attentiveness by nearly 20 percent. The complaint also challenges a separate advertising claim that eating Frosted Mini-Wheats for breakfast was clinically shown to improve children’s attentiveness by nearly 20 percent when compared to children who ate no breakfast. The complaint alleges that both of the challenged claims are false and violate the Federal Trade Commission Act.
The proposed settlement would, among other things, bar Kellogg from making comparable claims about Frosted Mini-Wheats unless the claims are true and not misleading. The consent agreement will be subject to public comment through May 19, 2009. The FTC will then decide whether to make the agreement final.
