Front of Package Labeling Claims Survive Motion to Dismiss
A recent decision held that Front of Package (”FOP”) labeling claims may not (yet) be subject to federal preemption. The decision in a putative class action, Chacanaca v. The Quaker Oats Company, involves what has become a common fact pattern: The FDA says an issue is complex and subject to industry guidance and possibly rule-making (for example, use of the terms “natural,” “wholesome,” and “smart choices”), while a court says the issue may not be complex and may be perfectly within the expertise of the judiciary and jury system.
Federal District Court Judge Richard Seeborg of the Northern District of California dismissed plaintiffs’ state law claims targeting the “0 grams trans fat,” “good source,” “made with whole grain oats,” and “no high fructose corn syrup” declarations on preemption grounds. Yet, insofar as Quaker Oats "seeks a favorable judgment at this juncture on all state claims that focus on the term 'wholesome'; on images of children, nuts, or oats; or the 'smart choices made easy' language or decal," the court denied the motion to dismiss.
The plaintiffs’ challenges to Quaker Oats’ use of the term ”wholesome” and images of the children seem targeted exactly at the claims that were preempted: the trans-fat issue. The court concedes that the FDA has recently indicated its intent to explore rule-making in the area of FOP labeling claims and that the FDA already “has extensively regulated food labeling in the context of a labyrinthine regulatory scheme.” “Nonetheless,” according to the court, ”plaintiffs advance a relatively straightforward claim: they assert that defendant has violated FDA regulations and marketed a product that could mislead a reasonable consumer. As courts faced with state-law challenges in the food labeling arena have reasoned, this is a question ’courts are well-equipped to handle.’”
Are the plaintiffs’ claims really that straightforward? How is a court "well-equipped" to determine the meaning of ”wholesome,” ”natural,” or other FOP claims? Is a court able to fully consider comments and information from all corners of the food manufacturing world? Isn’t this really in the wheelhouse of the regulators (or possibly the legislators)? Can the food business in the United States function effectively with individual courts and states determining their own common law (or even statutory) rules for product labeling?
Cleaning Up the Docket - Northern District of California Dismisses Lanham Act Claim Alleging Mislabeling of Personal Care Products
As we have blogged about, litigation regarding product labeling has been a hot topic within the food and beverage industry. A recent decision from the Northern District of California could hold interesting implications for Lanham Act claims centering on the labeling of products as “organic.” While the case, One God Faith, Inc. v. Hain Celestial Group, Inc., involved personal care products rather than agricultural products, the rationale used by the court in reaching its decision to dismiss the claims of the plaintiff is illustrative for the general category of “organic”-labeled products.
In One God Faith, plaintiff, a manufacturer of personal care and cosmetic products, including soap labeled as United States Department of Agriculture (“USDA”) certified “organic” or “Made with Organic” oils in compliance with USDA National Organic Program (“NOP”) standards, sued multiple defendants under § 43(a) of the Lanham Act alleging defendants falsely, misleadingly, and confusingly labeled and advertised similar products as “organic” even though they did not meet NOP standards for the designation, resulting in a loss of sales for plaintiff.
As we blogged about in our discussion of the POM v. Ocean Spray decision, pursuing a false advertising claim under the Lanham Act can be a difficult task for plaintiffs. When Congress enacted the Organic Food Products Act (“OFPA”) in 1990, the legislation that authorized the USDA to implement the NOP, it expressly declined to create a private right of action to enforce the statute or any of its implementing regulations. The plaintiff in One God Faith argued that the OFPA by its statutory language applies only to “agricultural products,” and the USDA has made clear that its comprehensive regulatory scheme governing the use of the term “organic” does not apply to personal care products, the category of products at issue in the case.
However, the court in One God Faith was not persuaded by this argument. While the court did find that it was undisputed that the USDA has declined expressly to impose the NOP standards on personal care products, this was not sufficient to justify the exercise of subject-matter jurisdiction by the Northern District. The court noted that the issue of amending existing regulations to include “organic” claims with respect to personal care products has generated significant recent discussion and that the USDA has asserted its authority over personal care products in other significant ways, including allowing producers and handlers of such products (including the plaintiff) to seek USDA certification under the NOP. As stated by the court, the mere fact that the USDA has not to date expressly imposed the NOP standards does not excuse plaintiff from exhausting available remedies under the USDA’s administrative appeal procedure. Consequently, the court held that granting the plaintiff its requested injunctive relief would negate the legislative bar on private actions and effectively enforce the NOP standards against defendants. As such, plaintiff’s complaint was dismissed for lack of subject-matter jurisdiction.
