All Natural Litigation

Playing Chicken with the USDA

All Natural Litigation, False Advertising, Food, ,

** Consumer Groups allege Chicken was laced with “Special K” in False Advertising Case  **                                                                                                                                                                                                 

By: Brent E. Johnson

The “Food Court” (aka the Northern District of California) has seen many unique lawsuits over the years, some of which we have reported on.  Currently pending before the court is a must-watch dispute between Sanderson Farms Inc. (the #3 poultry producer in the U.S.) and three consumer and environmental non-profits — not only because of the bitter feud between the parties, but because of the fascinating intersection between a relatively unknown USDA program and its overseers and consumer expectations of what “100% Natural” means in the advertisement of meat products.

The battle began on June 22, 2017, when Organic Consumers Association, Friends of the Earth, and Center for Food Safety filed suit, on behalf of themselves and the general public, against Sanderson claiming that testing conducted by the Food Safety and Inspection Service (“FSIS”) of the United States Department of Agriculture (“USDA”) in 2015 and 2016 under the National Residue Program showed that Sanderson’s chicken “contain[s] residues of antibiotics important for human medicine, residues of veterinary antibiotics, and other pharmaceuticals, as well as residues of hormones, steroids, and pesticides.”  Organic Consumers Association et al v. Sanderson Farms, Inc., No. 3:17-cv-03592-RS (N.D. Cal. June 22, 2017) Dkt. No. 1 at ¶ 2.  The consumer watchdogs alleged that these chemicals are “not natural.”  Id. at ¶ 5.  Moreover, the alleged presence of the chemicals in Sanderson’s chicken meat “strongly indicate[s] that the birds are raised in intensive-confinement, agro-industrial conditions where cruelty is inherent,” which runs counter to consumer expectations that “All Natural” includes the concept that the chickens are “humanely raised.”  Id. at ¶ 71.

Plaintiffs did not simply file a lawsuit, however.  They launched a public opinion campaign against Sanderson.  This effort included approaching large commercial purchasers of Sanderson’ poultry (Darden Restaurants, Olive Garden) to educate them concerning the company’s alleged practices in an effort to dissuade them from purchasing chicken raised with antibiotics.

Sanderson struck back with a motion to dismiss asserting that Plaintiffs lacked standing and their complaint was pre-empted by the Poultry Products Inspection Act (“PPIA”) and Federal Meat Inspection Act (“FMIA”).  Dkt. No. 23 (August 2, 2017); Dkt. No. 32 (September 13, 2017).  On February 9, 2018, the district court denied the motion.  It dispatched with Sanderson’s standing argument, holding that the diversion of Plaintiffs’ resources from their core public interest mission [i.e., to protect consumers’ right to safe, pollutant free food] to combating the alleged misrepresentations by Sanderson was sufficient injury to confer organizational standing.  Dkt. No. 48 at 6 – 7.  On pre-emption, the court ruled that there was no express pre-emption and implied pre-emption was not mandated because “[a]llowing plaintiffs to proceed with their advertising claims in no way undermines the PPIA’s [and FMIA’s] objectives of ensuring that poultry products are ‘wholesome, not adulterated, and properly marked, labeled, and packaged.’”  Id. at 9.  When Sanderson pointed out that the “100% Natural” wording on its label was specifically approved by USDA (as is true with the labels for all meat, poultry, and fish in the U.S.), the court responded that “common sense suggests even ‘language that is technically and scientifically accurate on a label can be manipulated in an advertisement to create a message that is false and misleading to the consumer.’”  Id.

It’s at this point that things got nasty.  A quick bit of background: the Plaintiff non-profits obtained the testing data upon which they based their complaint from USDA via multiple Freedom of Information Act (“FOIA”) requests.  According to the complaint, the test data revealed that FSIS conducted 69 inspections of Sanderson’s products in 2015-2016, and in 49 cases residue of synthetic drugs, antibiotics (including antibiotics for human use), and pesticides were found.  Dkt. No. 1 at ¶ 2.  The chemicals in some of the poultry tested were revelatory; for example, Ketamine – a Schedule III anesthetic used legally to induce a trance-like state at the beginning of general anesthesia and illegally (as “Special K,” “Cat Valium,” and “Jet”) as an hallucinogenic and date rape drug.  There is, of course, no sane reason for poultry producers to slip Special K into their chickens’ water troughs.  Plaintiffs produced this FSIS test results to Sanderson at the time they filed their successful opposition to the Company’s motion to dismiss.  According to Sanderson, the results showed negative levels of residue for some 40 chemicals tested – an obvious impossibility.  As for chemicals with positive test results, the levels were below the FSIS’s detection limits or Minimum Levels of Applicability (“MLA”).  For example, at least some poultry tested positive for Ketoprofen (an NSAID) – but at a level (less than one part per billion) far below the minimum levels of detection established by USDA in its own testing protocol —20 parts per billion (for poultry kidney screening) or 5 parts per billion (for muscle screening).  Dkt. No. 49 at 8.

Sanderson was surprised that the FSIS test results were the basis of Plaintiffs’ allegations because “Sanderson has consistently passed FSIS residue testing, which has shown no antibiotic residue or other contaminants in its chicken products, including on the very test dates and locations identified by Plaintiffs in their Complaint.”  Dkt. No. 49 at 12.  Sanderson’s surprise turned to apoplexy when it discovered that Plaintiffs communicated extensively with USDA and FSIS regarding the test results prior to filing the complaint and were told by the agency that the test results did not reflect the presence of the identified chemicals, but were “preliminary screening data” that had not been confirmed.  Id. at 5.

Based on these facts, Sanderson filed a motion for Rule 11 sanctions against Plaintiffs stating that “[t]he problem with Plaintiffs’ storyline is that [its] allegations are entirely false—and Plaintiffs and their attorneys know it.”  Id. at 5.  In a rare move, USDA’s Office of General Counsel approved Sanderson submitting the declarations of two FSIS officials, Dr. J. Emilio Esteban, Executive Associate for Laboratory Services, and Mark R. Brook, a Government Information Specialist for FSIS, in support of Sanderson’s sanctions motion.  Dr. Esteban’s declaration stated that in a teleconference with Plaintiffs’ attorneys, he explained that, in addition to the test results being “preliminary screening data,” “all of the findings in the screening tests . . . were ultimately confirmed as ‘non-detected.’”  Dkt. No. 49, Ex. 1.  Mr. Brooks swore in his declaration that, upon learning of the filing of the complaint, he spoke with a deputy director at FSIS who participated in conference calls with Plaintiffs and she opined that Plaintiffs’ “seemingly intentionally ignored the explanations of the FOIA data that the USDA/FSIS scientists had provided on the recent conference calls.” Dkt. No. 49, Ex. 2.

Plaintiffs’ opposition to the sanctions motion spends a significant portion of its page limit suggesting some sort of “undue influence” by Sanderson Farms over USDA.  (“Sanderson has admitted to contacting USDA in autumn 2017, and perplexing events began to occur around the same time.”)  Dkt. No. 55 at 6 – 7.  That argument (if it is an argument) is likely to go nowhere.  On the merits, Plaintiffs argue that Sanderson “conflat[es] regulatory standards with scientific standards” (which is a bit frightening, if one thinks about it).  Id. at 13 – 14.  Relatedly, Plaintiffs contend that the issue of the interpretation of the data it received from FSIS is a question for experts — not one to be resolved by the district court on a motion for sanctions.  Id. at 15 – 16.  Finally, Plaintiffs assert that Sanderson’s admitted use of antibiotics belies any notion that its poultry is “100% Natural” and suggests that its chickens “are not raised as portrayed in Sanderson advertising and referenced in the [complaint].”  Id. at 16.

What is it about the living conditions that Plaintiffs argue runs contrary to Sanderson’s USDA approved “100% Natural” label?  For Sanderson’s answer, one can consult Bob and Dale, the Sanderson spokesmen in their “The Truth About Chicken” advertising campaign”.  What Bob and Dale want you to know is that FDA has never approved the use of steroids or hormones in chickens and USDA does not allow poultry meat to be sold if it is not clear of antibiotics.  Therefore, any company that labels its poultry products as “hormone free” or “antibiotic free” in the United States is akin to Ford advertising that its cars and trucks have wheels.  It’s a redundancy.  While Plaintiffs argue that these advertisements are false and misleading — and assuming that Sanderson and the FSIS officials who submitted declarations are correct that the company’s poultry meat does not contain the chemicals alleged in the complaint — the case seems to boil down to the claim that, for a chicken to be “100% Natural,” a veterinarian can never have administered antibiotics to it (irrespective of whether the antibiotics are present at the time of sale).

The hearing on Sanderson’s motion for sanctions is set for April 5, 2018.  Rule 11 motions are notoriously difficult to win.  But in this case, Plaintiffs will be arguing that not only should the USDA’s approval of the Company’s “100% Natural” label be disregarded (as the court has already determined), but the USDA’s interpretation of its own test data as well.  It will be interesting to see if USDA has anything further to say on those issues.

Closer to the End for the Natural Impasse?

All Natural Litigation, Consumer Class Action, FDA, , ,

** Congress Looking at FDA to Release All Natural Guidelines **                                                                                                                                                                                                     

By: Brent E. Johnson                                                                                                                                                                                                                                         

Set of watercolor green logo. Leaves, badges, branches wreath, plants elements. Hand drawn painting. Sign label,textured emblem set. Organic design template.

 Are the Food and Drug Administration’s (FDA) “natural” guidelines imminent? As we have blogged about in the past, one well-worn path plaintiffs’ counsel have taken is to bring suit against a company using “natural” in its food labelling – set-up against plaintiff’s own particular (and sometime peculiar) definition of what a natural food or ingredient is.  The absence of FDA guidance has given room to maneuver on both sides of the issue in “natural” litigation.  In 2015, FDA opened a comment period on new regulations regarding the use of the term “natural” in food labeling, but there has been radio silence since (notwithstanding a growing volume of cases filed on the subject).  Notably, in a recent bill report accompanying the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, 2018 (H.R. REP. 115-232, 1), the House Committee on Appropriations directed “FDA to provide a report within 60 days of enactment of this Act on the actions and timeframe for defining ‘natural’ so that there is a uniform national standard for the labeling claims and consumers and food producers have certainty about the meaning of the term.” H.R. Rep. No. 115-232, at 72 (2017).  This appropriations bill, though formally introduced, remains pending in Congress – accordingly, the putative 60 day deadline for reporting to the committee has not yet commenced.  Nonetheless, it is a good sign that the issue has the attention of Congress (and in particular the committee that controls funding).  See discussion Rosillo v. Annie’s Homegrown Inc., No. 17-CV-02474-JSW, 2017 WL 5256345, at *3–4 (N.D. Cal. Oct. 17, 2017) (staying all natural case under primary jurisdiction doctrine).

Alert: Ninth Circuit Opens A Door For All Natural Class Claims

All Natural Litigation, Certification, False Advertising, FDA, Food, Individualized Damages, Injunctive Relief, , , , , , ,

** Appeal Court Panel Holds That Genuine Dispute Remained As To Whether All Natural Claims Would Survive Reasonable Consumer Test **

By: Brent E. Johnson                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        hires-2Judge Lucy H. Koh gave all natural class defendants cause for celebration back in 2014 when she closed the door on a putative class representative’s claim that Dole’s fruit juices and fruit cups were wrongfully labelled as “All Natural.”  Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK, 2014 WL 6901867 (N.D. Cal. Dec. 8, 2014).  Last week, however, the Ninth Circuit re-opened that door slightly – at least enough for the plaintiffs’ bar to try to squeeze their feet in.

Mr. Brazil alleged in his 2012 Complaint that Dole’s fruit cups and fruit juices were falsely labelled as “All Natural” because they contained citric acid (i.e. vitamin C) and ascorbic acid (used to prevent discoloring).  Dole successfully argued on summary judgment that Plaintiff had failed to show that a significant portion of the consuming public or of targeted consumers, acting reasonably under the circumstances, would be misled by its labeling.  Id. at *4, citing Lavie v. Procter & Gamble Co., 105 Cal.App. 4th 496, 507 (2003).  Plaintiff’s own opinion about the added Vitamin C and absorbic acid was not enough.  Id.  Neither was his rationale that a reasonable consumer could be misled by virtue of a label that violated FDA guidance on the topic (the FDA is not a reasonable consumer and vice versa, Judge Koh reasoned).  Further, in a prior ruling, Judge Koh decertified Plaintiff’s main damages class because Plaintiff’s damages model (or lack thereof) failed the threshold test of Comcast Corp. v. Behrend, 569 U.S. ___ (2013), i.e., that damages could be adequately calculated with proof common to the class.  Brazil appealed both the summary judgment and decertification decisions.

The Ninth Circuit affirmed in part and reversed in part.  Brazil v. Dole Packaged Foods, LLC, No. 14-17480, 2016 WL 5539863, at *1 (9th Cir. Sept. 30, 2016).

The good news is that the Ninth Circuit agreed with Judge Koh’s decertification of the damages class – and by so doing signaling that the Circuit will continue adhering to the Comcast principle that Plaintiffs have the burden of demonstrating a viable class-wide basis of calculating damages.  It held that the lower court correctly limited damages to the difference between the prices customers paid and the value of the fruit they bought—in other words, the “price premium.”  2016 WL 5539863, at *2 – 3, citing In re Vioxx Class Cases, 103 Cal. Rptr. 3d 83, 96 (Cal. Ct. App. 2009).  The Ninth Circuit reiterated that under the price premium theory, a plaintiff cannot be awarded a full refund unless the product she purchased was worthless – which in this case – the fruit was not.  Id. citing In re Tobacco Cases II, 192 Cal. Rptr. 3d 881, 895 (Cal. Ct. App. 2015).  Because Mr. Brazil did not (and presumably could not) explain how this premium could be calculated across a common class, the motion to decertify was rightly decided.  Id. at *3.

The bad news is that the Appeals Court rejected the lower court’s reasoning that bare allegations of an individual’s claims of deception were insufficient to show the reasonable consumer would be equally deceived.  Troublingly, the court used the FDA’s informal policy statement (see Janney v. Mills, 944 F. Supp. 2d 806, 812 (N.D. Cal. 2013) (citing 58 Fed. Reg. 2302–01)) on the issue as determinative of the reasonable consumer standard.  As one commentator has noted, this converts informal guidance into binding authority.

With the damages class gone, the Ninth Circuit remanded the case for a determination of Plaintiff’s injunctive relief class.  That may be a pyrrhic victory in the end.  As we have blogged in the past, a plaintiff who is aware of the supposed deception is not in a position, as Pete Townshend penned, to be fooled again.

The New Naturals

All Natural Litigation, Consumer Class Action, FDA, Food, , , , , , ,

** Where are Class Action Claims Against Consumer Food and Personal Product Companies Trending in 2016?**

By: Brent E. Johnson

 

PrintWe have blogged in the past about some of the “usual suspects” in the consumer class action line-up – particularly for food, beverage, cosmetics and related industries – for example, the “all-natural” case – the “evaporated cane juice” case – and the “handmade” or “craft beer” case.   Trends come and go – as Plaintiffs run out of companies to sue and as companies change their labeling and advertising in response to the litigation risks.

Which begs the question:  Where are the current litigation trends leading?  We have surveyed recent filings to identify some of the tropes and traps that plaintiffs lawyers are currently focusing on:

As we have discussed in the past, the attractiveness of the all-natural class claim lies in the gaps between FDA guidance and labeling law and the vagaries of the reasonable consumer standard.  That gap may be closing with the FDA taking comments and perhaps looking to expand its policy on “natural” foods.  As the term “Natural” loses some of its vagueness, the term “healthy” appears to be taking its place – particularly in so far as the term has the required “eye of the beholder” quality necessary to support class action claims (although in some respects the term “healthy” is regulated see e.g.,  21 CFR 101.65(d)(2)) .  For example in  Kaufman v. CVS Caremark Corp., No. 16-1199, 2016 WL 4608131, at *1 (1st Cir. Sept. 6, 2016) (reversing district court dismissal on Rule 12), CVS Pharmacy, Inc. was sued for its Vitamin E dietary supplement because its label touts the product as supporting “heart health.”  Plaintiff argues that this is misleading because the medical literature does not support a link between consuming vitamin E and cardiovascular health.  Kaufman v. CVS Caremark Corp., No. CV 14-216-ML, 2016 WL 347324, at *1 (D.R.I. Dkt. No. 1 at 7) (and in some studies cited by Plaintiff – Vitamin E dosage increases the rate of heart failure).  In Hunter v. Nature’s Way Prod., LLC, No. 16CV532-WQH-BLM, 2016 WL 4262188, at *1 (S.D. Cal. Aug. 12, 2016) (denying motion to dismiss), Plaintiff alleges that Nature’s Way’s coconut oil is advertised with various health claims (such as its “Variety of Healthy Uses”, “ideal for exercise & weight loss programs”, “fuel a[] healthy lifestyle”), but according to Plaintiff, coconut oil products are not “healthy” . . . “but rather their consumption causes increased risk of CHD, stroke, and other morbidity.” (Dkt. No. 1-5 Compl. at ¶ 118).  In Campbell v. Campbell Soup Co., No 3:16-cv-01005 (S.D. Cal. August 8, 2016) (Dkt 18) (Def. Mot. to Dismiss), Campbell’s Soup Co is defending against Plaintiff’s claims that its Healthy Request® soups are not “healthy” because they contains partially hydrogenated oil (PHO).  Notably, Campbell’s soups are somewhat unique from other food labelling cases because they contain more than 2% meat or poultry and therefore are USDA regulated (see 21 U.S.C. § 451, et seq.) and their labelling is pre-approved (see 21 U.S.C. § 457; accord 21 U.S.C. § 607).  Campbell’s has doubled-down on that argument – moving for Rule 11 sanctions.  No 3:16-cv-01005 (S.D. Cal. August 29, 2016) (Dkt 18).  In Lanovaz v. Twinings N. Am., Inc., No. 5:12-CV-02646-RMW (N.D. Cal. September 6, 2016) (dismissing remaining claims), Twinings successfully defended against claims that the labeling of its tea as a “healthy tea drinking experience” and having “antioxidant” benefits were misleading.  In particular Plaintiff claimed that Twinings’ health benefits could not be substantiated and  were contrary to FDA regulations.  No. 5:12-CV-02646-RMW (N.D. Cal. Dkt. Nos. 1, 24).  It appears that “Healthy” is the new “Natural.”

Plaintiff’s lawyers are also taking a close look at ingredients – to determine if touted anchor ingredients are prominent enough.  For example in Coe v. Gen. Mills, Inc., No. 15-CV-05112-TEH, 2016 WL 4208287, at *1 (N.D. Cal. Aug. 10, 2016) (Order denying Mot. to Dismiss), Plaintiffs argued (successfully at the pleading stage) that General Mills’ Cheerios Protein product labeling is misleading because it implies that the product is essentially the same as normal Cheerios but with added protein.  While Plaintiffs acknowledge that Cheerios Protein does have more protein than regular Cheerios (Plaintiffs calculate that 200 calories of Cheerios contains 6 grams of protein, whereas 200 grams of Cheerios Protein contains 6.4 or 6.7 grams of protein), they argue that this smidgen of an increase is so immaterial as to be misleading.  In another example, in Nazari v. Gen. Mills, Inc., No. 2:16-cv-02015 (E.D. Cal. Aug. 23, 2016), the Plaintiff sued Target with a proposed class action alleging the retailer’s up & up™ Green Aloe Vera Gel lacks traces of Aloe Vera.  Plaintiff alleges that while the product is labelled as an “aloe vera gel” with “pure aloe vera,” its laboratory testing (which it contends would have revealed acemannan, the key compound in aloe vera) could detect no active aloe ingredient.  In another example, in Torrent v. Thierry Oliver., No. 2:15-cv-02511 (C.D. Cal. Sept. 2, 2016) (denying motion to dismiss), Plaintiff survived dismissal on claims that Natierra brand Himalania Goji berries are misleadingly labeled because they are not berries from the Himalayan mountain region in China – which was inferred by the “Himalania” brand name.  In labelling, as in everything else, attention to detail counts.

We will update you on these trends as they progress.

Au Naturale

All Natural Litigation, FDA, Food, FTC, ,

** How can we “Know It When We See It” to divine when the FTC will label an all natural claim misleading? 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By: Brent E. Johnson                                                                                                                                                                                                                                         

On April 12, 2016, the Federal Trade Commission (“FTC”) announced proposed settlements with four skin care, shampoo and sunscreen companies over the use of the term, “natural” in their product labeling and advertising (ShiKai, Rocky Mountain Sunscreen, EDEN BodyWorks, and Beyond Coastal products).  The FTC issued an administrative complaint against a fifth skin care company making similar claims.  The gravamen of each of these actions is the FTC’s assertion that the companies’ products “are not ‘all natural’ because they contain[ ] or contained at least one synthetic ingredient.”  The FTC’s Director of the Bureau of Consumer Protection, in announcing the settlements, proclaimed, “’All natural’ or ‘100 percent natural’ means just that — no artificial ingredients or chemicals.”  “Companies should take a lesson from these cases.”

But what exactly is that lesson?  To answer that – lets recall the history of federal “natural” regulations (or more accurately, the lack thereof).  The Food & Drug Administration (“FDA”) is the primary federal agency responsible for the labeling of food, drugs and cosmetics sold in the United States to, among other things, prevent consumer deception.  21 U.S.C. § 331(a).  Three of the five companies sued by the FTC sell “drugs” (sunscreen).  So what is the FDA’s position on “natural”?  As we’ve blogged about before, the FDA has repeatedly demurred on the question asserting that “priority food public health and safety matters are largely occupying the limited resources that FDA has to address food matters.”  Letter from Leslie Kux, Assistant Commissioner for Policy Food and Drug Administration, to Judges Gonzalez Rogers, White, and McNulty, January 6, 2014 (responding to the question of whether GMO seed used to grow corn rendered the corn unnatural).  The FDA, from time to time, has relied on its 1991 “informal policy” of defining “natural” for food for human consumption “as meaning that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.”  56 Fed. Reg. 60421, 60466-60467 (Nov. 27, 1991).  For example, in a November 16, 2011 Warning Letter to Alexia Foods, the FDA asserted that the company had misbranded its mushrooms and red potatoes as “All Natural” when they contained disodium dihydrogen pyrophosphate — a synthetic chemical preservative.

Very recently, as we’ve also posted about, the FDA has requested public comment on a possible definition of “natural” for food labeling signaling that the FDA may be ready to issue some sort of concrete “natural” rule in the near future, at least as the term applies to food.  It will be interesting to see if things have changed since 1991, when the FDA, in assessing the possibility of consumer confusion, concluded that “natural” was already in “widespread use” “on a variety of products to mean a variety of things” with “consumers regard[ing] many uses of th[e] term as non-informative.”  56 Fed. Reg. 60421, 60466.

Unlike the FDA, the U.S. Department of Agriculture’s (“USDA”)  rules on “natural” for meat and poultry appear quite definitive.  According to the USDA’s Food Standards and Labeling Policy Book, “natural” means “(1) the product does not contain any artificial flavor or flavoring, coloring ingredient, or chemical preservative (as defined in 21 CFR 101.22), or any other artificial or synthetic ingredient; and (2) the product and its ingredients are not more than minimally processed.”  Is this a “bright line” test?  Not really.  The USDA Policy Book states that “Relatively severe processes, e.g., solvent extraction, acid hydrolysis, and chemical bleaching would clearly be considered more than minimal processing.”  Okay, so no “relatively severe processes.”  But it also states. . . “the presence of an ingredient which has been more than minimally processed would not necessarily preclude the product from being promoted as natural . . . if it can be demonstrated that the use of such an ingredient would not significantly change the character of the product to the point that it could no longer be considered a natural product.”  Oh.

In the end, the USDA relies on disclosure to alleviate consumer confusion.  The Policy Book states:  “All products claiming to be natural or a natural food should be accompanied by a brief statement which explains what is meant by the term natural, i.e., that the product is a natural food because it contains no artificial ingredients and is only minimally processed. This statement should appear directly beneath or beside all natural claims or, if elsewhere on the principal display panel; an asterisk should be used to tie the explanation to the claim.”  Because the USDA’s Food Safety and Inspection Service must approve all meat and poultry product labels before they are placed on store shelves, any issues over the nuances of whether a product is “natural” are worked out on the front end.

Brief philosophical interlude:  The USDA’s definition of “natural” has little or nothing to do with consumer health – a smoked meat (thought by some to expose consumers to carcinogens) is “natural” but a meat that undergoes relatively benign acid hydrolysis to round out flavor and break down proteins so they are more easily digested is unnatural.  But if a consumer equates “natural” with “wholesome” (the FDA’s term) or “healthy,” does the USDA’s “natural” rule help consumers at all?

This brings us to the FTC – the agency with the longest history of not making rules on “natural” claims.  “On December 17, 1982, the Commission decided to terminate its proposed trade regulation rule on food advertising.  The proposed rule would have regulated energy and weight control claims, fatty acid and cholesterol claims, and natural food claims.”  48 Fed . Reg. 23270 (May 24, 1983) (emphasis added).  This avoidance has continued unabated, up to and including the FTC’s revisions to the Green Guides governing environmental marketing claims.  “The final Guides do not address organic, sustainable, and natural claims. . . .  For . . . sustainable and natural claims, the Commission lacks sufficient evidence [presumably of what consumers think “natural” means] on which to base general guidance.”  16 CFR Part 260 (Oct. 6, 2010).

Of course, the FTC has long maintained that it has the right, on a case-by-case basis, to take enforcement actions against companies that use “natural” deceptively.  48 Fed . Reg. 23270 (May 24, 1983).  But in the absence of an actual rule, the FTC is relying on the Potter Stewart pornography principle  — “it know it when it sees it.”  Jacobellis v. Ohio, 378 U.S. 184 (1964).  That’s fine, but, under those circumstances, it is difficult for companies “to take a lesson” from the FTC’s five recent enforcement actions other than that the FTC doesn’t want to see chemicals in natural products.

But maybe that isn’t even true.  The proposed settlements that the FTC announced on April 12th appear on the surface to be easy ones – the challenged products contain substances with chemical-sounding names like Dimethicone, Polyethylene, Butyloctyl salicylate, Neopentyl glycol Diethylhexanoate, Ethylhexyl glycerin, Phenoxyethanol, Polyquaternium-7 and/or Caprylyl glycol.  The only public statement from one of the settling companies who sells sunscreen attributed its natural labeling to a mistaken belief that it could make the claim if the active ingredients were natural.  But is important to observe that the FTC complaint against the single settlement hold out, California Naturel, is much narrower than the other complaints citing to only one “synthetic ingredient” – dimethicone – in a single product – Sunscreen SPF 30 – despite the fact that California Naturel (according to its beautifully designed website) sells a variety of skin care products that include numerous substances that have chemical-sounding names (e.g., Polyglyceryl-3 polyricinoleate – “an emulsifier made from glycerol and fatty acids”). California Naturel takes care on its website to explain when its ingredients are “extracted,” or “derived from” natural sources, but does the extraction or derivation processes render the ingredients “synthetic”?  Apparently not.

So here we are – waiting for the FDA to maybe shed some light on what “natural” really means.  But it is certainly understandable why the agency, as well as the FTC, have hitherto been reluctant to make a call on the issue.  And whatever rule the FDA publishes, we must bear in mind its own admonition back in 1991 — “natural” “mean a variety of things” with “consumers regard[ing] many uses of th[e] term as non-informative.”  Will the FDA’s pronouncement distill the essence of consumer understanding on the subject (if it even exists) or will it simply be a set of rules?  If not the former, perhaps it’s better for the FTC and the FDA to continue to rely on the Potter Principle.

Is the Primary Jurisdiction Doctrine Alive Again for “Natural” Defendants?

All Natural Litigation, Consumer Class Action, FDA, , , ,

 ** Ninth Circuit Stays Natural Case In “Food Court” **

 

By: Brent E. Johnson
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The doctrine of primary jurisdiction is a prudential means to stay or dismiss a party’s claims if the claims are better adjudicated or answered by an administrative agency – it “is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties.” Ellis v. Tribune Television Co., 443 F.3d 71, 81 (2d Cir.2006). It is properly applied “whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” Id. When applicable, “a court defers to the agency for advisory findings and either stays the pending action or dismisses it without prejudice” Johnson v. Nyack Hosp., 86 F.3d 8, 11 (2d Cir.1996).

Courts must make a case-by-case determination when considering primary jurisdiction.   In doing so, they generally focus on: (1) whether the question at issue is within the conventional experience of judges or whether it involves technical or policy considerations within the agency’s particular field of expertise; (2) whether the question at issue is particularly within the agency’s discretion; (3) whether there exists a substantial danger of inconsistent rulings; and (4) whether a prior application to the agency has been made. Nat’l Commc’ns Ass’n v. AT & T, 46 F.3d 220, 222 (2d Cir.1995).

There was a time when “primary jurisdiction” was in vogue for “all natural” defendants because of the perception that the FDA was the proper administrative body to answer the question of what sort of ingredients and products qualify as “natural.”  The leading case was Astiana v. Hain Celestial Grp., Inc., 905 F. Supp. 2d 1013 (N.D. Cal. 2012). This case involved Hain Celestial’s cosmetics products with labels including “All Natural,” “Pure Natural,” or “Pure, Natural & Organic.” In this case, the putative nationwide class representatives alleged that they had been duped into purchasing Hain’s cosmetics that allegedly contained synthetic and artificial ingredients such as benzyl alcohol.  As is typical in such cases, the plaintiffs sought damages and injunctive relief under a variety of theories including statutory violations under the California’s Consumer Legal Remedies Act. The district court dismissed the case, applying primary jurisdiction, holding that “[in] the absence of any FDA rules or regulations (or even informal policy statements) regarding the use of the word “natural” on cosmetics labels, the court declines to make any independent determination of whether defendants’ use of “natural” was false or misleading. Doing so would “risk undercutting the FDA’s expert judgments and authority.” Other district courts invoked the agency’s primary jurisdiction to wait and see if the FDA intended to offer  regulations regarding the use of the term “natural” (in particular in GMO food cases). In re Gen. Mills, Inc. Kix Cereal Litig., No. CIV–A–12–249 KM, 2013 WL 5943972 (D.N.J. Nov. 1, 2013), Barnes v. Campbell Soup Co., No. C12–05185 JSW, 2013 WL 5530017 (N.D.Cal. July 25, 2013) (GMO food case), Cox v. Gruma Corp., No. 12–CV–6502 YGR, 2013 WL 3828800 (N.D.Cal. July 11, 2013) (GMO case).

Undeterred by the district court’s dismissal, the Plaintiffs in Astiana went on a two pronged attack. They went directly to the FDA seeking guidance on the definition of “natural.”  The FDA responded by letter stating – “cosmetic public health and safety matters are currently fully occupying the resources that FDA has available for proceedings on cosmetics matters” and “proceedings to define ‘natural’ do not fit within [the agency’s] current health and safety priorities.” Plaintiffs also appealed to the Ninth Circuit.  Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 759 (9th Cir. 2015). The Ninth Circuit held that — while the district’s court primary jurisdiction doctrine decision was not wrong — it should have stayed the matter awaiting an FDA response. Upon remand, the district court revisited the primary jurisdiction argument and, recognizing that the recent FDA letter demonstrated that the FDA has no interest in the subject matter and, therefore,  referral to the FDA would be futile, the court denied defendant’s motion to stay on primary jurisdiction grounds. Astiana v. Hain Celestial Grp., Inc., No. 4:11-cv-06342-PJH (N.D. Cal. October 9, 2015) (Dkt. No. 114).

Courts in other jurisdictions have followed this same rejection of the primary jurisdiction doctrine argument made by cosmetic company defendants in “natural” cases. Goldemberg v. Johnson & Johnson Consumer Companies, Inc., 8 F. Supp. 3d 467, 476 (S.D.N.Y. 2014) (“the FDA has not begun to promulgate a rule concerning the term natural in cosmetics . . [i]nstead, it recently declined to make such a determination . . . [t]hus, as the agency is not simultaneously contemplating the same issue . . . this factor weighs against applying the primary jurisdiction doctrine”); Paulino v. Conopco, Inc., No. 14-CV-5145 JG RML, 2015 WL 4895234, at *1 (E.D.N.Y. Aug. 17, 2015); Langan v. Johnson & Johnson Consumer Companies, Inc., 95 F. Supp. 3d 284, 290 (D. Conn. 2015); Fagan v. Neutrogena Corp., No. 5:13-CV-01316-SVW-OP, 2014 WL 92255, at *1 (C.D. Cal. Jan. 8, 2014) (“Plaintiffs’ claims are not barred by the doctrine of primary jurisdiction . . . [as the] FDA has affirmed that proceedings to define the term natural in the context of cosmetics do not fit within its current health and safety priorities.”); see also Reid v. GMC Skin Care USA Inc., No. 815CV277BKSCFH, 2016 WL 403497, at *1 (N.D.N.Y. Jan. 15, 2016) (rejecting primary jurisdiction in case alleging that face cream with “DNA repair effect” statements was misleading); Randolph v. J.M. Smucker Co., No. 13-80581-CIV, 2014 WL 1018007, at *6 (S.D. Fla. Mar. 14, 2014).

At the same time that the primary jurisdiction doctrine was being buried with respect to “natural” claims, it remained viable in various food cases, particularly those presenting discrete technical questions, i.e. Backus v. Gen. Mills, Inc., 122 F. Supp. 3d 909, 933 (N.D. Cal. 2015) (primary jurisdiction invoked on question of the amount of trans fat in baked goods that is safe); Saubers v. Kashi Co., 39 F. Supp. 3d 1108 (S.D. Cal. 2014) (primary jurisdiction invoked with respect to “evaporated cane juice” labels) (collecting cases). The basis for primary jurisdiction in particular in the ECJ cases is that that FDA has indicated that it WILL issue regulatory guidance on evaporated cane juice – but not until the end of 2016. See also Draft Guidance for Industry on Ingredients Declared as Evaporated Cane Juice; Reopening of Comment Period; Request for Comments, Data, and Information, 79 Fed.Reg. 12,507 (Mar. 5, 2014).  Most evaporated cane juice cases are currently stayed (or dismissed) see, e.g., Gitson, et al. v. Clover-Stornetta Farms, Inc., Case No. 3:13-cv-01517-EDL (N.D. Cal. Jan. 7, 2016) (extending ECJ stay for an additional 180 days, until August 2016) (Laporte, J.); Swearingen v. Amazon Preservation Partners, Inc., Case No. 13-cv-04402-WHO (N.D. Cal. Jan. 11, 2016) (Orrick, J.) (extending ECJ stay and continuing case management conference until July 2016). A few judges have lifted the ECJ stay (impatient at the FDA’s movement) but they appear to be out-liers. See Figy v. Lifeway Foods, Inc., No. 3:13-cv-4828-TEH (N.D. Cal. Jan. 4, 2016), Dkt. No. 57; Swearingen v. Pacific Foods of Oregon, Inc., No. 13-cv-04157 (N.D. Cal. Jan. 5, 2015), Dkt. No. 61.

But we digress.  Back to “natural” and a significant development.  In November 2015, the FDA issued a request for comments regarding the use of the term “natural” in connection with food product labeling. See Use of the Term “Natural” in the Labeling of Human Food Products; Request for Information and Comments, 80 Fed. Reg. 69,905 (Nov. 12, 2015).  See our previous blog post.  While noteworthy in and of itself, the FDA’s requests for comments also raised the secondary issue of whether the FDA’s new-found interest in potentially defining “natural” with respect to foods  triggers the primary jurisdiction doctrine?   Last week, the Ninth Circuit answered – Yes. In Kane v. Chobani, LLC, No. 14-15670, 2016 WL 1161782, at *1 (9th Cir. Mar. 24, 2016), the circuit court dealt with an appeal from the Northern District of California where buyers of Chobani fruit flavored Greek yogurt filed suit against  the company alleging that its labels and advertising violated California law because the “all natural” yogurt included fruit juice and turmeric.  Before the district court, the plaintiffs had a difficult time articulating why it was plausible to allege that fruit juice and turmeric are unnatural vacillating between the argument that it is unnatural to use these ingredients to color yogurt and the argument that the fruit juices at issue were so heavily processed that they are no longer natural.  Ultimately the district court found that the case warranted dismissal on Rule 9(b) and 12(b)(6) grounds. Kane v. Chobani, LLC, 973 F. Supp. 2d 1120, 1138 (N.D. Cal. 2014).  Plaintiffs appealed on the basis that under primary jurisdiction their case should have been stayed – not dismissed. And the Ninth Circuit agreed,  vacating the dismissal and remanding to the district court under a stay pending resolution of the FDA’s “natural” proceedings. So a win for the plaintiffs in Chobani – but one that defendants will take careful note of – in the Ninth Circuit and beyond.

 

FDA Seeks All Natural Comments

All Natural Litigation, FDA, Federal Preemption, ,

Green apple with stethoscope

**Are we a step closer to solving the All Natural problem?**

By: Brent E. Johnson

There are problems faced by “All Natural” or “100% Natural” defendants.  See prior post. A specific problem for defendants is the inability to rely on any definitive Food and Drug Administration (FDA) guidance.  The FDA’s position has been clear – it “has not promulgated a formal definition of the term ‘natural’ with respect to foods.”  See Letter Leslie Kux, Assistant Commissioner for Policy, Food and Drug Administration, to the United States District Court, Northern District of California, dated January 7, 2014.  To date the FDA has created only an “informal policy statement.” Janney v. Mills, 944 F. Supp. 2d 806, 812 (N.D. Cal. 2013) (citing 58 Fed. Reg. 2302–01).  If there was federal regulation – defendants would have clarity in their positions – and state law claim would likely be pre-empted, see e.g., Lam v. General Mills, Inc., 859 F.Supp.2d 1097, 1102–03 (N.D.Cal.2012). In the absence of regulation, the question of what “natural” means and whether a product’s labeling violates the law is currently governed by an unwieldy “reasonable consumer standard”.  Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir.2008) citing Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir.1995)). This lack of objective standards is one of the reasons why the litigation has been able to take hold – at the same time as “natural” labeled food has boomed (the Washington Post reports that nearly $40.7 billion worth of food items in the U.S. has some labeling of this type). Fortunatley, the FDA has changed tack – responding, inter alia, to requests from Federal Courts and a citizen petition from the Grocery Manufacturers Association it has published a Federal Register notice asking for information and comments on the use of the term “natural” in food labeling. Specifically, the FDA asks for information and public comment on questions such as: whether it is appropriate to define the term “natural,”; if so, how the agency should define “natural,”; and how the agency should determine appropriate use of the term on food labels.  Notably, the FDA notes that it may be looking to expand its policy on natural foods to include – not only the synthetic/artificial divide, but also questions of whether pesticide free and manufacturing processes should be part of the equation.  The FDA is accepting public comments beginning on November 12, 2015 and finishing February 10, 2016.  Comments may be submitted electronically (under FDA-2014-N-1207).

 

Natural Tobacco?

All Natural Litigation, Consumer Class Action,

**Class Action Bid in Florida Against “Natural” Tobacco Maker Accused of Falsely Advertising the Natural Benefits of its Products** . . .                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

By: Brent E. Johnson                                                                                                                

Past “All Natural” class action suits, see prior post, cover various products but the plaintiffs’ allegations are the same – the consumers were allegedly duped because they believed the products labeled “natural” were healthier for them.  Surely, this logic cannot apply to cigarettes — a product consumers have known for decades to have very little, if any, redeeming health qualities?  Hence, can plaintiff’s counsel allege with a straight face that his client bought Santa Fe Natural Tobacco Company cigarettes for their health and safety?  That is the question raised by the complaint bought in the United States District Court, Southern District of Florida in Sproule v. Santa Fe Natural Tobacco Co., No. 0:15-cv-62064-JAL (October 14, 2015).  Certainly a case to watch.

 

Honest-ly: All Natural

All Natural Litigation, Consumer Class Action,

**Jessica Alba’s Honest Company the Latest Target in California of the All Natural Plaintiff Class Action Bar in cocamidopropyl betaine case ** . . .                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

By: Brent E. Johnson                                                                                                                                                                   

Honesty and related virtues on a product box or package for instant reputation building, including sinerity, trustworthiness, honor, candor and integrity

The “All Natural” conundrum is yet to be solved.  The latest target is The Honest Co. – the celebrity driven purveyor of baby and cleaning products.  Rubin v. The Honest Company, Inc., 3:15-cv-04036-EDL (N.D. Cal. September 3, 2015).  The complaint touts a familiar trope – that defendant’s products with “natural” labeling actually have some artificial or synthetic ingredients.  In this case (inter alia) the allegedly offending ingredient is cocamidopropyl betaine.  A scary sounding ingredient – and one that sounds artificial.  In reality, it is a compound derived from coconut oil.  Courts have been consistent that scary sounding names aside, just because an ingredient is manufactured or extracted does not make it “un-natural.”  See Pelayo v. Nestle USA, Inc., 989 F. Supp. 2d 973, 978 (C.D. Cal. 2013) (holding that the “reasonable consumer is aware that Buitoni Pastas are not springing fully-formed from Ravioli trees and Tortellini bushes”); Balser v. Hain Celestial Group, Inc., CV 13–05604–R, 2013 WL 6673617 (C.D. Cal. Dec. 18, 2013) (dismissing without leave to amend a complaint involving a product line of over 30 “natural” shampoos and cosmetics, because “shampoos and lotions do not exist in nature, there are no shampoo trees, cosmetics are manufactured  . . . [t]hus Plaintiffs cannot plausibly allege they were deceived to believe shampoo was existing in or produced by nature”); Kane v. Chobani, Inc., 973 F.Supp.2d 1120, 1137 (N.D. Cal. 2014) (rejecting outright the assertion that fruit or vegetable juices were “highly processed unnatural substances far removed from the fruits or vegetables they were supposedly derived from and in fact were more akin to synthetic dyes like coal tar dyes”); see Rooney v. Cumberland Packing Corp., 2012 WL 1512106 (S.D. Cal. Apr. 16, 2012) (dismissing without leave to amend a complaint alleging that “Sugar in the Raw” was deceptive because it was actually processed and not natural sugar).  Thus ingredients with “un-natural” names like sodium bicarbonate, citric acid and glycerin have been held to be natural and thus not misleading.  See, respectively, Astiana v. Dreyer’s Grand Ice Cream, Inc., No. C-11-2910 EMC, 2012 WL 2990766, at *1 (N.D. Cal. July 20, 2012) (noting that sodium bicarbonate is a non-synthetic alkalizing agent); Ries v. Arizona Beverages USA LLC, No. 10-01139 RS, 2013 WL 1287416, at *1 (N.D. Cal. Mar. 28, 2013) (granting summary judgment to defendant on question of whether citric acid in iced tea was natural, and defendant’s expert testimony that citric acid is a natural ingredient); Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK, 2014 WL 6901867, at *5 (N.D. Cal. Dec. 8, 2014) (same); Thurston v. Bear Naked, Inc., 2013 WL 5664985, at *7–8 (N.D.Cal. July 30, 2013) (holding, at class certification stage, plaintiff not entitled to proceed with claim that reasonable consumer would “view the presence of glycerin . . . as contrary to 100% Natural statement on label”).  A number of other cosmetic companies have been hit with cocamidopropyl betaine claims – including Neutrogena (4:12-cv-00426-PJH (N.D. Cal)), Johnson & Johnson (3:13-cv-00524 (D.N.J.)).  These matters settled.