The tide seems to be turning in favor of food labeling class action defendants with respect to the “unlawful” prong of California’s Unfair Competition Law.  The UCL provides consumers with a claim for “unlawful,” “unfair,” or “fraudulent” business practices.  Cal. Bus. & Prof. Code § 17200.  Since the California Supreme Court’s opinion in Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 246 P.2d 877 (2011), there has been no doubt that the UCL requires that a named plaintiff prove actual reliance on the challenged advertising when pursuing claims under the UCL’s unfair or fraudulent prongs.  A number of plaintiffs have argued, however, that they need not plead reliance when proceeding under the unlawful prong of the UCL.  Those plaintiffs contend that simply purchasing an “illegal” product that is misbranded in violation of California law is sufficient; thus, they need not prove that they relied on the alleged misbranding in those circumstances.  Admittedly, the decisions of some judges in the Northern District of California in food labeling class actions may support the argument that the plaintiff need not demonstrate reliance under the unlawful prong but need only allege facts showing that it is plausible that the defendant violated the law when selling a product.  E.g., Trazo v. Nestle USA, Inc., 2013 WL 4083218, *9 (N.D. Cal. Aug. 9, 2013).  

Fortunately for class action defendants, however, the trend now seems to require reliance even under the UCL’s unlawful prong.  Judge Edward Davila issued the latest such decision in Thomas v. Costco Wholesale Corp., No. 5:12-CV-02908-EJD (N.D. Cal. Mar. 31, 2014).  There, two named plaintiffs alleged that Costco improperly labeled several products.  Judge Davila granted in part the motion to dismiss and emphasized the need for reliance for such claims under the unlawful prong.  Plaintiffs pursuing these claims allege they would not have purchased a product if he or she had known that it was mislabeled contrary to California law.  Because California law also makes it unlawful for a person to hold or offer for sale any misbranded food, such plaintiffs contend that they received products that are “worthless” and have no economic value, even if those plaintiffs consumed and enjoyed the products.  See Cal. Health & Safety Code § 110760 (unlawful for person to hold or offer for sale any food that is misbranded).

The plaintiffs in Thomas presented that same type of argument and contended that they need not show actual reliance on any of the several allegedly-improper labeling statements at issue. “Plaintiffs argue that their claims are not based on misrepresentation, [but] rather on the illegality of the products themselves as their misbranding violates the Sherman Law, and therefore there is no need for plaintiffs to prove reliance.”  Thomas Slip Op. at 12.  Judge Davila rejected Plaintiffs’ arguments:  “Plaintiffs cannot circumvent the reliance requirement by simply pointing to a regulation or code provision that was violated by the alleged label misrepresentation, summarily claiming that the product is illegal to sell and therefore negating the need to plead reliance.”  Id. As a backstop to the reliance issue, those plaintiffs also argued that they “relied on Defendant not to sell them illegal products (i.e., products misbranded under state law).”  Id. at 13.  The Court also rejected that proposition—Plaintiffs must plead and prove reliance “on the representation,” not on an implied assurance of “legality.”  Id.   

To be sure, Thomas is not a home run for class action defendants.  It denied the motion to dismiss as to several claims.  But it is an important addition to the growing line of cases holding that actual reliance is necessary under the UCL’s unlawful prong.  E.g., Gitson v. Trader Joe’s Co., 2014 U.S. Dist. LEXIS 33936, at *26 (N.D. Cal. Mar. 14, 2014) (holding that plaintiffs must demonstrate actual reliance); Kane v. Chobani, Inc., 2014 U.S. Dist. LEXIS 22258, at *22-23 (N.D. Cal. Feb. 20, 2014) (same).  

Some plaintiffs are successfully arguing that allegedly-illegal labels on certain products also support claims for breach of the implied warranty of merchantability.  They do not contend that they relied on any particular statements to support those claims.  Rather, they allege that they would not have purchased products that could not be legally sold or held, and that the defendant impliedly warranted that the product was “legal.”  These plaintiffs consumed and, apparently, enjoyed the products despite their “illegality,” and the products performed as expected (i.e., they could be safely consumed), so the notion of any sort of breach warranty shouldn’t apply.  With this continuing trend of requiring actual reliance under the UCL’s unlawful prong, I hope that these implied warranty claims also begin falling by the wayside.  It seems untenable to suggest that warranty claims can succeed where consumer fraud claims—which have broader remedial and ameliorative public policy purposes—fail.  
 
James Smith is a partner in the Phoenix office of Bryan Cave LLP.  He is a member of the Class & Derivative Actions Client Services Group and a member of the Food and Beverage Team.   

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Two recent district court decisions emphasize that food labeling class action defendants must carefully review complaints to identify what each named plaintiff contends it reviewed and whether the allegedly deceptive statements even affected the named plaintiff’s decision to purchase a product. These plaintiffs often string together unrelated allegations that have nothing to do with their purchases.  If a defendant connects the dots and shows just how unrelated those allegations are, you have a much better chance of succeeding early in the case.      

The first case involves five gallon bottled water that is municipal tap water that the seller put through a purification process.  In the Chicago Faucet Shoppe, Inc. v. Nestle Waters North America, Inc., No. 12 C 08119 (N.D. Ill. 2/11/14), the plaintiff alleged that the defendant failed to disclose that the water is municipal tap water and not natural spring water.  After buying the bottles for years, that plaintiff realized it was simply purchasing municipal tap water that underwent a purification process.  That defendant apparently referred to “spring water” on its website, invoices, and panels on its delivery trucks. Importantly, it did not include that statement on its labels.  That was crucial for purposes of the defendant’s preemption argument. Federal regulations exempt “purified water” from disclosing if the water comes from a community water system.  21 C.F.R. § 165.110(a)(3)(ii) & (a)(2)(iv).  In fact, the FDA considered but rejected requiring disclosure for purified water, concluding that consumers purchasing it were more concerned with purity and not the source.
            
This plaintiff knew it couldn’t force the defendant to add more to its label than federal law required. Instead, it argued that it only wanted the defendant to disclose the source in marketing materials and on invoices. But marketing really is no different than labeling. The federal Food Drug & Cosmetic Act prohibits states from imposing any food labeling that is not identical to a federal standard.  Because the federal regulations do not require “purified water” to disclose if it came from a municipal water source, federal law preempted this plaintiff’s claims even though it framed the targeted materials as marketing materials rather than labeling.  
            
You may wonder why the plaintiff did not allege affirmative fraud based on statements on the website and invoices referring to Ice Mountain “spring water.”  Indeed, the court wondered the same thing, so it analyzed (and rejected) an affirmative misrepresentation claim even though the plaintiff did not plead it.  Of course, the most likely reason that the plaintiff did not pursue an affirmative misrepresentation claim is the near impossibility of getting such a class certified.  The court did not touch on that issue, but anyone familiar with consumer fraud class actions certainly recognizes it.  If the plaintiff built its case on specific statements on the website or on invoices, it would have to explain how the court could certify a class without getting mired in individual issues of who saw the website, who relied on it, and what other sources of information they possessed.  That is why these types of food labeling claims tend to rely entirely on the product labeling as opposed to occasional statements on websites or other places.  
            
The next case is Kane v. Chobani, Inc., No. 12-CV-02425-LHK (N.D. Cal. 2/20/14).  This case is familiar to people following food labeling class actions and began in May 2012.  Since then, the court has granted various motions to dismiss but allowed that plaintiff more opportunities to plead cognizable claims. At this point, the plaintiff was on her fourth attempt and, thankfully, it is the last one.  This case is a little more typical because it is in the Northern District of California and relies on California consumer protection laws.  This plaintiff has been pursuing claims falling into two categories.  The first relates to Evaporated Cane Juice (“ECJ”); she alleges that ECJ is nothing more than sugar or dried can syrup, so referring to ECJ on the label is misleading and violates federal regulations requiring manufacturers to refer to ingredients by their common and usual names.  The second class of claims are “all natural” claims.  She alleges that using fruit and vegetable juice and turmeric for color was false and misleading because those are not “all natural.”
            
One of the most useful portions of this order is its discussion of California UCL claims under that statute’s “unlawful” prong.  Some plaintiffs have successfully argued that they need not rely on a labeling statement that is “unlawful”; rather, they only need to plead that it is plausible that a defendant broke a law (typically, a federal food labeling requirement).  In fact, a handful of other courts in the Northern District of California have accepted that rationale.  But Judge Lucy Koh was having none of it.  She reasoned that any UCL named plaintiff must allege that they relied on the offending statement or conduct, even under the “unlawful” prong.  This will be a developing area under California consumer fraud law.  At some point, the California Supreme Court or the Ninth Circuit will resolve this growing split among lower courts interpreting allegations of “unlawful” conduct and UCL claims.  For now, unfortunately, the outcome in such cases may turn on which judge handles a particular case.  
            
The court then analyzed whether this plaintiff actually relied on the alleged misstatements. This really is an interesting portion of the opinion, particularly considering how Judge Koh evaluated the plaintiff’s changing allegations over the course of the case.  As to ECJ, the plaintiff initially contended she did not realize that ECJ was just another sweetener.  But in other portions of the amended pleading, the plaintiff repeatedly referred to sugar and dried cane syrup interchangeably.  Judge Koh did not believe it was plausible that the plaintiff could realize that “dried cane syrup” was a form of sugar, but that “evaporated cane juice” was not.  Similarly, the plaintiff earlier sought a preliminary injunction (perhaps an unwise move) and submitted a declaration indicating she would not have purchased the product if she knew it contained “dried cane syrup”; again, this showed she knew that dried cane syrup was the same as sugar.  And despite the court’s earlier rulings, this latest pleading failed to explain how the plaintiff could understand that dried cane syrup was a form of sugar but was oblivious to that fact regarding ECJ, particularly considering that she purported to read and rely on the label.  
            
Perhaps showing some desperation, the plaintiff and her counsel suggested that the “cane” in ECJ could have referred to some other type of cane, such as bamboo cane or sorghum cane.  But during the hearing on the plaintiff’s preliminary injunction motion (again, probably not a good idea), the plaintiff’s counsel admitted that he does not know what people might think when they see ECJ on a label or whether they may believe it is something other than sugar cane.  It was too much for Judge Koh, who found the “which cane is it” argument to be nonsensical.    

The plaintiff also tripped over her own allegations because she acknowledged that “fruit juice concentrate” is a well-known added sugar.  In light of that admission, it was implausible that the plaintiff thought “evaporated cane juice” was something healthful when she admittedly knew that “fruit juice concentrate” was little more than sugar.  Juice was juice from the court’s perspective.
            
The court then turned to the “all natural” claims that relied on Chobani using fruit or vegetable juice concentrate as coloring.  The defendant’s labeling explicitly disclosed that it adds fruit or vegetable juice for color, and the plaintiff purported to read the label.  Hoping to salvage this claim, the plaintiff now alleged that the juices added were actually processed, unnatural substances. The court was not impressed.  In three prior complaints and several hearings, the plaintiff never before disclosed a theory that the juice concentrate used for coloring somehow was not “natural” due to some unidentified aspect of its processing.  It was not enough that the plaintiff alleged the juices were “highly processed unnatural substances far removed from the fruits or vegetables they were supposedly derived from”; that was nothing more than a conclusory statement without any factual support.  Judge Koh wanted to know how or why the juices were not natural, and this plaintiff never answered that question despite several opportunities.
            
Some take away points from Chicago Faucet Shoppe and Kane to consider:
  • In terms of substantive law, reliance and the “unlawful” prong of California’s UCL needs clarifying.  The Northern District of California likely is the federal court with the greatest volume of such claims, and some of its judges are split on whether a named plaintiff must have relied on the allegedly-unlawful statement.  
  • Dissect the plaintiff’s allegations and take the court step-by-step to identify: (1) what the plaintiffs actually saw or relied on; (2) what they included in the complaint as “fluff” (e.g., perceived bad facts that didn’t play a role in their purchase); (3) how their allegations may disprove their claims (e.g., they admit elsewhere that a listed ingredient is known to be “unnatural”); (4) conclusory assertions about ingredients that lack factual bases (e.g., something is “unnatural,” but the plaintiff doesn’t describe how or why); and (5) implausible assertions—courts are slowly showing more willingness to recognize that a label didn’t deceive a plaintiff merely because he or she alleged as much.      
Food labeling cases continue to be a favorite among the plaintiffs’ class action bar.  No doubt, the initial success in surviving motions to dismiss—often followed by quick class-wide settlements—encouraged them. Many courts, however, seem to be taking a closer and more skeptical view of these claims.
 
James Smith is a member of the Bryan Cave Food and Beverage Team and of the Class and Derivative Action Client Service Group.  He is a partner in the firm’s Phoenix office.     

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A recent decision from the Northern District of California provides defendants with reason for cautious optimism regarding food labeling class actions.  In Sethavanish v. ZonePerfect Nutrition Co., No. 12-20907-SC (N.D. Cal. Feb. 13, 2014), the court denied the plaintiff’s motion for class certification. That plaintiff alleged that the “all natural” representations on ZonePerfect bars were false and misleading because the bars contain at least one of ten specified non-natural ingredients.  The plaintiff alleged that she regularly purchased those bars for her then-fiancé, who was an active-duty Marine who eventually deployed overseas.  The plaintiff alleged that she and her fiancé relied on those representations and paid more for the ZonePerfect bars than she would have paid for other bars that were not all natural.  She alternatively alleged that she would have purchased another brand of nutrition bar that truly was all natural.

In ruling on class certification, the court first addressed whether the plaintiff had standing to bring her claims.  While the court’s ruling in this regard is not helpful to defendants, it is also not surprising.  The defendant argued that the plaintiff did not suffer any injury because its bars are less expensive than the Pure Protein bars that the plaintiff now purchases.  The defendant also noted that the plaintiff admitted that she and her fiancé were willing to purchase non-natural nutrition bars so long as they were less expensive than “all natural” alternatives.  Plaintiff also admitted that she has always been willing to eat foods with artificial and synthetic ingredients.  While the court saw some tension among the plaintiff’s declaration, her pleadings, and her deposition testimony, that tension was not enough to eliminate standing.  From the court’s perspective, “[i]t is enough that she has asserted that she would not have purchased the product but for Defendant’s alleged misrepresentation.  She bargained for a nutrition bar that was all natural, and she allegedly received one that was not.”  Again, the standing threshold is not a terribly difficult one to overcome, so this ruling is not too surprising.  
            
More helpful for defendants, however, is the court’s ruling on ascertainability.  The court agreed with the defendant that the plaintiff could not define an objectively ascertainable class.  The defendant overwhelmingly sells to retailers, and not directly to consumers.  Records could only identify a very small fraction of consumers who purchased ZonePerfect bars in the last several years.  Thus, no method existed to identify the members of the class.  
            
The district court noted that courts in the Ninth Circuit are split on the issue.  It cited Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075 (N.D. Cal. 2011), as an example of a case concluding a class could not be certified when there is no way to ascertain class membership.  That court declined to rely on affidavits from potential class members, reasoning that such a procedure could invite fraudulent or inaccurate claims.  In that respect, the Third Circuit’s opinion in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), also was instructive.  There, the Third Circuit found that retailer records were not sufficiently thorough or accurate to identify class members.  In addition, the Carrera court “held that fraudulent or inaccurate claims could dilute the recovery of absent class members, and, as a result, absent class members could argue that they were not bound by a judgment because the named plaintiff did not adequately represent them.”  The court also pointed to Ries v. AriZona Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012), as an example of a court rejecting a defendant’s ascertainability argument when dealing with “all natural” claims.  Nonetheless, this court found the reasoning in Xavier and Carrera more persuasive.  While those cases may restrict types of consumer class actions that may be certified, they do not bar such classes altogether.  Because this plaintiff did not identify any method to determine class membership, let alone an administratively feasible method, the court denied class certification without prejudice.  
            
One effect of such decisions may be to encourage class counsel to try to certify narrower classes.  For example, if a manufacturer sells directly to consumers through its website, a class action plaintiff may contend that a court could certify a class of those consumers.  Of course, that assumes that the manufacturer maintains adequate records of such customers.  Similarly, class representatives may argue that the court may certify a class of consumers who purchased the products at retail locations with robust consumer loyalty programs.  Those types of programs often track individual customer’s purchases, though the extent of data maintained varies considerably. This is not to say that such narrowed classes would be appropriate.  They would bring a host of other difficult issues.  Nonetheless, it would not be surprising to see plaintiffs resort to that tactic in hopes convincing a court to certify a class.  Such class certification would, of course, provide the type of leverage that class counsel seek to negotiate a broader settlement.  

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A recent federal court decision rejected a preemption argument under the Food, Drug, and Cosmetic Act and the Nutrition Labeling and Education Act regarding Smart Balance “fat-free” milks.  Admittedly, those defendants advocated a novel preemption theory.  It also did not help that a competing product used labeling that the plaintiffs acknowledged complied with all federal laws and would not provide a basis for state law claims.

In Koenig v. Boulder Brands, Inc., No. 13-CV-1186 (ER) (S.D.N.Y. Jan. 31, 2014), the plaintiffs alleged that the defendants deceptively labeled milk products as “fat free” when they truly contained one gram of fat per serving.  The defendants added an Omega-3 oil blend to fat-free milk, so the product contained less than 0.5 gram of milk fat per serving, but contained one gram of fat per serving due to adding the oil blend.  As is common in these types of claims, the plaintiffs alleged that the “fat-free” labeling deceived them and that they paid a premium for the products because of that deceptive labeling.
 
While the product labeling touted the “fat-free” nature of the milk, the front label also disclosed that it contained “(1 g fat from Omega-3 oil blend),” albeit in smaller font.  Of course, the nutrition facts panel also disclosed that the milk contained one gram of fat per serving, and the oil blend was the third ingredient listed.  Unfortunately for the defendants, however, the nutrition facts panel did not contain an asterisk or disclaimer modifying that description.  As we will see below, that was an important omission from the court’s perspective.
 
It is well-recognized now that states cannot impose labeling requirements different from those imposed by the Food, Drug, and Cosmetics Act (“FDCA”) and the Nutrition Labeling and Education Act (“NLEA”).  Federal law, however, does not preempt state laws that only impose identical labeling requirements.  A state consumer law may provide a claim even though the relevant federal laws do not provide any private remedies for consumers.  Thus, these plaintiffs had to establish that their state law claims only imposed the same obligations as federal law, while the defendants argued the opposite.
 
Not surprisingly, a specific regulation regarding labeling of “fat free” products exists.  Under that regulation, products labeled as “fat free” and that have an added ingredient consisting of fat must have an asterisk next to the ingredient and a statement along the lines of, “adds a trivial amount of fat,” “adds a negligible amount of fat,” or “adds a dietarily insignificant amount of fat.”  21 C.F.R. § 101.62(b)(ii).  That is why the lack of an asterisk came back to haunt these defendants.
 
The defendants argued, however, that FDA compliance policy guides allowed them to treat this milk product essentially as two combined products—one that is “fat-free milk” and the other that is not fat-free Omega-3 oil.  The defendants pointed to such policy guides regarding water with added minerals and peas and carrots.  No such guidance existed for a “fat-free” product with added fat, though.  The court rejected the argument that the policy guides for other products somehow pointed to preemption here.  After all, no policy guide exists for this type of milk product, and a competing milk product appropriately uses the asterisk to note added oil.  In fact, the court could not find any FDA policy guide involving combining an ingredient that is fat with a “fat-free” food.  Considering that a regulation specifically addresses such situations of adding fat to “fat-free” foods, there was no reason to try to analogize to other policy guides for different types of food.  Thus, the court concluded that the plaintiffs’ claims only sought to impose requirements that were identical to federal law.
 
The court then turned to the sufficiency of the state law claims.  First, the plaintiffs alleged consumer fraud under New York’s General Business Law (“GBL”) § 349.  That law relies on an objective test to assess whether practices are likely to mislead reasonable consumers acting reasonably under the circumstances.  The court noted that a reasonable consumer may conclude that the product contains a gram of fat per serving, but also noted that a reasonable consumer might focus on the more prominent wording on the label touting the product as “fat-free milk and Omega-3s.”  That was enough to defeat the motion to dismiss.  The court also concluded that the plaintiffs adequately alleged injury because they contended that they paid price premiums based on the defendants’ misrepresentations.
 
The court dismissed the plaintiffs’ breach of express warranty claims, however, due to the lack of privity.  It did so without prejudice, so the plaintiffs may attempt to replead that claim.  It seems difficult, however, to conceive of retail plaintiffs buying products directly from the manufacturers, rather than from a grocery store.  The court also dismissed the plaintiffs’ unjust enrichment claims as duplicative of other claims.
 
At this point in food and beverage labeling class actions, several courts have ruled on preemption issues and provide fairly consistent guidance on that doctrine.  That guidance, of course, cuts both ways for manufacturers—plaintiffs have fairly clear road maps for how to plead claims to avoid preemption.  More interesting questions, and perhaps more successful defenses, will arise in later proceedings such as summary judgment and class certification.  For example, nearly every state’s consumer fraud laws purport to rely on an objective standard.  That is, what would the reasonable consumer believe or would the labeling deceive the reasonable consumer?  It is not clear how class action plaintiffs intended to satisfy this burden in many respects.  Labels typically disclose the relevant information even when a plaintiff seizes on only one portion of the label (e.g., “fat free” or “all natural”).  It should not be sufficient for class action plaintiffs to rely only on the named plaintiff’s subjective interpretations.  There should be some requirement that they establish that a “reasonable” consumer would not have read other portions of the label, would not have understood them correctly, or would have disregarded them.  This seems particularly difficult to do and, at a minimum, should require statistically significant and valid survey data regarding consumer perceptions of the labels.  If a plaintiff does not offer that type of survey, a defendant should have grounds for summary judgment or to defeat class certification.
 
Another issue that these types of plaintiffs do not thoroughly address is injury due to alleged “premium” payments.  In sum, plaintiffs argue that they paid more for a mislabeled product than they otherwise would have.  That tends to be the entire measure of damages proffered by these types of class actions.  But this should be a difficult proposition to prove.  Grocery prices vary significantly depending on several factors.  Was the product on sale?  Did a customer belonging to a store’s “membership” program buy the product at a price lower than that for a non-offending product because of that membership?  Did a customer buy the product because her preferred alternative product was sold out?  Any number of differences may explain (1) whether a consumer actually paid a “premium” price and (2), if so, whether she paid that price because of the labeling or for unrelated reasons.  The United States Supreme Court’s recent decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), gives class action defendants considerable ammunition to attack plaintiffs’ proposed methodologies for establishing injuries and damages.  That ruling should play a significant role in defending any of these labeling class actions.
 
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Contrary to popular belief–even among some lawyers–off-label use is not necessarily entirely off-label.  That’s a good thing, too. One of the things we’ve harped on with this blog is that off-label use is legal, common, and in various fields can represent the prevailing medical standard of care.

One thing we’ve never argued on this blog is that off-label use (or any use) of prescription medical products is risk free.  Thus, in cases of widespread off-label uses, by all means the FDA should have the ability to ensure (as is the case with labeled uses) that a product’s labeling informs prescribing doctors of relevant risks.  The alternative view that we encountered back in the Bone Screw litigation (flirted with by the Kessler-era FDA), that warnings pertaining to off-label uses were somehow “promotion” and should be prohibited, always struck us as illogical and counterproductive.

It turns out that the FDA can indeed require warnings about off-label uses.

With prescription drugs, the Agency’s authority to order warnings about off-label uses is pretty well spelled out and straight-forward. The relevant regulations provide:

A specific warning relating to a use not provided for under the “Indications and Usage” section may be required by FDA in accordance with sections 201(n) and 502(a) of the act if the drug is commonly prescribed for a disease or condition and such usage is associated with a clinically significant risk or hazard.

21 C.F.R. §201.57(c)(6)(i) (emphasis added). 

A specific warning relating to a use not provided for under the “Indications and Usage” section of the labeling may be required by the Food and Drug Administration if the drug is commonly prescribed for a disease or condition, and there is lack of substantial evidence of effectiveness for that disease or condition, and such usage is associated with serious risk or hazard.

21 C.F.R. §201.80(e) (emphasis added).  The references in §201.57 to sections 201(n) (21 U.S.C. §321(n)) and 502(a) (21 U.S.C. §352(a)) of the FDCA are to general provisions relating to misbranding.

Thus “[i]n addition to warning about risks from approved uses, the FDA has authority to impose warnings about off-label or unapproved uses when there is evidence of a clinically significant risk.”  Bailey v. Wyeth, Inc., 37 A.3d 549, 556 (N.J. Super. Law Div. 2008) (emphasis added), aff’d, 28 A.3d 1245 (N.J. Super. App. Div. 2011) (citing §201.57 as authority for off-label drug warnings); see Harris v. Amgen, Inc., ___ F.3d. ___, 2013 WL 5737307, at *6 (9th Cir. Oct. 23, 2013) (same authority); Richardson v. Miller, 44 S.W.3d 1, 11-12 (Tenn. App. 2000) (same authority).  Thus, it’s apparent from the face of the FDA’s regulations that the Agency has authority to order prescription drugs to carry warnings relating to off-label uses.

Now for the kicker.  The express language of these regulations – “required by” the FDA – places warnings about off-label uses in the prescription drug context squarely within the realm of “impossibility” preemption under the Levine-Mensing-Bartlett line of Supreme Court authority, since off-label use warnings are not something that a drug manufacturer can add to its label unilaterally without prior FDA approval.  We’ve explained that rationale in greater detail here as to other types of label changes that require the Agency’s prior approval.  It’s also the same reasoning that requires preemption in the context of black box warnings, as we’ve discussed here and here.  So, if a plaintiff is demanding warnings about off-label uses, the defense has a preemption defense.

With medical devices, the FDA’s authority to add off-label information to labeling is not as explicit, but nonetheless present, as the FDA itself states here:

During its review, FDA may seek a statement in the labeling that there is a lack of evidence that a device is effective for an off-label use or indication.  The [summary of safety and effectiveness data] should contain an explanation of the basis for such limitations.
 
FDA, ODE, “Summary of Safety and Effectiveness Data (SSED) − Clinical Section Checklist,” at 6 (June 10, 2010) (emphasis added).
 
Why devices should be regulated differently from drugs with respect to off-label warnings is unclear, but we speculate that it might be related to 21 U.S.C. §396, which expressly forbids the FDA from regulating off-label use as a medical practice (FDA can’t restrict “the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease”).  Still, §396 expressly maintains existing FDA authority over device “labeling,” and putting something in a manufacturer’s label hardly amounts to restricting the practice of medicine.  As we’ve discussed before, FDA-approved labels don’t define medical standards of care.  Labeling is one of many sources of information that physicians may, in their discretion, consult.
 
The only thing we found in the device field similar to §§201.57 and 201.80 was 21 U.S.C. §360c(i)(E)(i), which gave the FDA express authority to order off-label warnings for substantially equivalent (§510k) medical devices:

[T]he director of the organizational unit responsible for regulating devices . . . may require a statement in labeling that provides appropriate information regarding a use of the device not identified in the proposed labeling if . . . there is a reasonable likelihood that the device will be used for an intended use not identified in the proposed labeling for the device; and . . . such use could cause harm.

However, by its terms that subsection “has no legal effect after the expiration of the five-year period beginning on November 21, 1997.”  21 U.S.C. §360c(i)(E)(iv).  So, with that provision expired for over a decade, what is the sourse of the FDA’s (plainly exercised) power to require warnings pertaining to off-label uses of medical devices?

The necessary FDA authority resides in 21 U.S.C. §360j(e) regarding “restricted devices.”  That section creates the concept of prescription-only devices, but does more than that:

(e) Restricted devices

(1) The Secretary may by regulation require that a device be restricted to sale, distribution, or use −

(A) Only upon the written or oral authorization of a practitioner licensed by law to administer or use such device, or

Emphasis added.  That’s the prescription-only part, but Part B of the same section of the FDCA also extends the FDA’s device labeling power:

(B) Upon such other conditions as the Secretary may prescribe . . . if, because of its potentiality for harmful effect or the collateral measures necessary to its use, the Secretary determines that there cannot otherwise be reasonable assurance of its safety and effectiveness. . . .  A device subject to a regulation under this subsection is a restricted device.

(2) The label of a restricted device shall bear such appropriate statements of the restrictions required by a regulation under paragraph (1) as the Secretary may in such regulation prescribe.

Emphasis added.  Thus under §360j(e) the FDA can impose “other conditions” on medical devices by regulation, and such “conditions” can require “appropriate statements” on the labeling of such devices.

The FDA has just such a regulation for “restricted devices,” which it defines as 
 
a device for which a requirement restricting sale, distribution, or use has been established by a regulation issued under section 520(e) of the act [§360j(e), quoted above], by order as a condition of premarket approval under section 515(d)(1)(B)(ii) of the act, or by a performance standard issued in accordance with sections 514(a)(2)(B)(v) and 514(b) of the act.

21 C.F.R. § 807.3(i) (emphasis added).  Notably, the “restricted device” definition not only includes devices with “requirements” imposed at the time of the PMA process, but also devices subject to FDA “performance standards.”

Now, finally, here is the substantive FDA labeling regulation authorized and required by 21 U.S.C. §360j(e).  As you can see, it’s plenty broad enough – and expressly includes warnings:

(a) FDA may impose postapproval requirements in a PMA approval order or by regulation at the time of approval of the PMA or by regulation subsequent to approval.  Postapproval requirements may include as a condition to approval of the device…

*          *          *          *

(3) Prominent display in the labeling of a device and in the advertising of any restricted device of warnings, hazards, or precautions important for the device’s safe and effective use … on risks and benefits associated with the use of the device.

21 C.F.R.  814.82(a) (emphasis added).

Thus the FDA’s power to order changes in the labeling of “restricted devices” covers just about any aspect:

(b) In specifying the labeling or change in labeling or change in advertising . . . eliminate or reduce the risk of illness or injury or the danger to the health of individuals, the Commissioner may require the manufacturer . . . responsible for the labeling or advertising of the device to include in labeling for the device, and in advertising if the device is a restricted device, a statement, notice, or warning.  Such statement, notice, or warning shall be in the manner and form prescribed by the Commissioner and shall identify the . . . risk of illness or injury or the unreasonable, direct, and substantial danger to the health of individuals associated with the device as previously labeled.

21 C.F.R. §895.25(b) (emphasis added).  That’s a lot of “shalls” and “requires.”

So, is this just the speculation of defense-oriented DDLaw bloggers?

Nope, we’re not making this up.  Rather, both the FDA and those courts that have addressed the topic of off-label warnings for medical devices rely on these regulations.  For example, in an early medical device preemption case, predating Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), the court extended preemption to labeling claims involving off-label use on this basis.

[T]he FDA can require a manufacturer to provide additional labeling that addresses potential off-label uses.  21 C.F.R. §895.25.  Consequently, the fact that [defendant’s] implant might have been used for an off-brand purpose is not sufficient to distinguish this case from [cases not involving off-label use].

Reeves v. AcroMed Corp., 44 F.3d 300, 305-06 (5th Cir. 1995) (emphasis added); see In re Orthopedic Bone Screw Products Liability Litigation, 1996 WL 221784, at *6 (E.D. Pa. Apr. 8, 1996) (“[t]hrough [§895.25(a)] the FDA regulates off-label uses of medical devices”); McGuan v. Endovascular Technologies, Inc., 106 Cal. Rptr.3d 277, 281-82 (Cal. App. 2010) (FDA’s power under §360j(e) to “condition its approval on adherence to various requirements” resulted in preemption of all claims, including for “off-label promotion”); see generally Carson v. Depuy Spine, Inc., 365 F. Appx. 812, 814 n.1 (9th Cir. 2010) (FDA “is free to impose device-specific restrictions by regulation.  §360j(e)(1).”); Caplinger v. Medtronic, Inc., 921 F. Supp.2d 1206, 1211 (W.D. Okla. 2013) (same); Wilhite v. Howmedica Osteonics Corp., 833 F. Supp.2d 753, 756 (N.D. Ohio 2011) (same).

In 2011, well after the expiration of 21 U.S.C. §360c(i)(E), the FDA cleared a §510k device, but imposed a black box warning pertaining to an off-label use.

FDA has determined that in order to provide reasonable assurance of safety and effectiveness, it is necessary to restrict the [device] to sale, distribution, and use with labeling, advertising, and promotional material that bears a warning statement in a black box that alerts users to the risk associated with off-label use. . . .  However, FDA believes it is necessary to require this warning in labeling and advertising by restricting the device under section 520(e) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. §360j(e)).

“Medical Devices; Ovarian Adnexal Mass Assessment Score Test System; Labeling; Black Box Restrictions,” 2011 WLNR 26903209 (FDA Dec. 30, 2011) (sorry, no internal pagination) (emphasis added).  There it is again – §360j(e) – used as authority for requiring that medical device labeling include warnings (in this case a boxed warning) about off-label use.  See also “Guidance for Industry and FDA Staff - Class II Special Controls Guidance Document: Ovarian Adnexal Mass Assessment Score Test System,” 2011 WL 1427005, at *19-20 (F.D.A. March 23, 2011) (containing the specific contents of the boxed off-label use warning in question).

Why do we care?  Number one, the FDA’s authority to require warnings and other information pertaining to off-label use demonstrates that off-label use isn’t some sort of unregulated and anarchic black hole.  The FDA still retains its usual authority to require the addition of risk information, subject to its established scientific standards.

Number two, implied impossibility preemption under Levine-Mensing-Bartlett should apply generally to prohibit all plaintiffs from making any demands for warnings pertaining to off-label uses against all prescription medical devices because, for both drugs and devices, such warnings explicitly and repeatedly require FDA pre-approval.  The FDA has always maintained tight control over the information that regulated manufacturers may provide that pertains to off-label uses.  Whether or not we like that as a First Amendment proposition, it’s a fact, and it’s reflected in the FDA’s regulations pertaining to off-label use warnings for both prescription drugs and medical devices.

Number three, in the specific context of PMA medical devices, the FDA’s power to require off-label information in labeling means that a plaintiff’s demand for off-label warnings “different from or in addition to” what the FDA has required (or chosen not to require).  That, in turn, mandates that such demands be expressly preempted under Riegel.

[R]egulations issued under section 520(e) . . .  of the act may impose restrictions on the sale, distribution or use of a device beyond those prescribed in State or local requirements.  If there is a conflict between such restrictions and the State and local requirements, the Federal regulations shall prevail.

Dunlap v. Medtronic, Inc., 47 F. Supp.2d 888, 895 (N.D. Ohio 1999).

Federal preemption is the strongest defense available to manufacturers of prescription drugs and medical devices.  Where available it should be employed to the maximum extent possible.

This blog was originally posted on December 19. Click here to read the original entry. 
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Food labeling class actions continue to plague food manufacturers and retailers, with the Northern District of California being the favored forum for these claims.  Indeed, in The New Lawsuit Ecosystem: Trends, Targets and Players (Oct. 2013), the U.S. Chamber Institute for Legal Reform identified food labeling class actions brought by plaintiffs, public interest groups, and attorneys general as one of the primary emerging liability threats facing American businesses.  One of the favorite allegations of such claims centers on the use of “all natural” or similar words on food labels.  Very often, a plaintiff alleges that a product contains ingredients from genetically modified soybean or corn, so the product allegedly cannot be considered “natural.”  With California’s liberal consumer protection laws, these claims often survive motions to dismiss, with courts reasoning that plaintiffs adequately pled that reasonable consumers will read “all natural” labels and conclude that the product does not contain genetically modified or other allegedly unnatural ingredients.  E.g., Parker v. J.M. Smucker Co., No. C 13-0690 SC (N.D. Cal. Aug. 23, 2013) (denying motion to dismiss claims that vegetable oils were not “all natural”).

Though not from the Northern District of California, another recent federal court decision from that state offers some hope to defendants in these actions.  In Pelayo v. Nestle USA, Inc., No. CV 13-5213-JFW (AJWx) (C.D. Cal. Oct. 25, 2013), the court dismissed an “all natural” labeling action.  That plaintiff alleged that a number of pasta products should not bear the “all natural” label because they contain synthetic xanthan gum and soy lecithin.  Thus, according to that plaintiff, the labels would be reasonably likely to deceive the public under California consumer protection laws.

In dismissing the claims that court seized on an issue that truly affects all of these “all natural” claims. That is, the plaintiff “fail[ed] to offer an objective or plausible definition of the phrase ‘All Natural,’ and the use of the term ‘All Natural’ is not deceptive in context.”  [Slip Op. at 4]  Notions that “natural” means only something existing in nature surely could not apply as any consumer would realize that pasta is a manufactured product; the reasonable consumer does not believe that pasta grows in fields or is ranched from livestock.

The court also rejected that plaintiff’s effort to rely on the definition of “organic” to bolster her claims. Unlike “natural,” the word “organic” has a specific definition in the Code of Federal Regulations. Moreover, the court concluded that “it is implausible that a reasonable consumer would believe ingredients allowed in a product labeled ‘organic,’ such as the Challenged Ingredients, would not be allowed in a product labeled ‘all natural’.” [Slip Op. at 5]

Finally, the court noted that the products bear the “all natural” label on the front and back of the packages, and that the label on the back appears immediately above the list of ingredients. Thus, the ingredient list clarifies any supposed ambiguity regarding the definition of “all natural” by identifying the challenged ingredients.  In such a circumstance, a reasonable consumer would not be misled by “all natural” appearing on the label.

Pelayo highlights a weakness of these “all natural” claims.  That is, there is no widely-recognized definition of that phrase.  It should be impossible to allege or prove that the mythical reasonable consumer will be misled by a phrase that does not have a uniform or even generally-recognized definition.  This is particularly true when ingredient labels identify the product’s contents.  Unfortunately, many defendants in the Northern District of California, in particular, could not obtain dismissal of such “all natural” claims against them.  Thus, those cases must progress to discovery and possibly summary judgment in order to make the points that the Pelayo court raised.  That is, there is no common understanding of the phrase “all natural,” so it is impossible to establish that the phrase misleads reasonable consumers.  Indeed, it is possible that consumers may interpret “all natural” in a manner that favors defendants.  It should be a plaintiff’s burden to prove what “all natural” means to reasonable consumers, likely though statistically significant and reliable consumer survey research.  Going through the discovery process to reach that stage and summary judgment is expensive and a distraction to defendants, of course.  In the interim, however, defendants may use the Pelayo court’s reasoning to attack such “all natural” claims at the motion to dismiss stage.

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Two recent district court decisions denying motions to dismiss in food labeling putative class actions demonstrate how plaintiffs’ counsel will use the presence of genetically modified crops as a basis for consumer fraud claims.  

In Parker v. J.M. Smucker Co., No. C 13-0690 SC (N.D. Cal. Aug. 23, 2013), the plaintiff alleged that four types of Crisco cooking oil were deceptively labeled as “all natural” because they are made with genetically modified crops and are chemically processed.  Parker is pending in the Northern District of California, which has become the favorite forum for food labeling class actions. That plaintiff alleged that the four types of cooking oil could not truthfully be called “all natural” because more than 70% of U.S. corn, more than 90% of U.S. soy, and more than 80% of U.S. canola crops are genetically modified.  That court rejected a number of arguments that the defendant raised in its motion to dismiss.  Most notably here, the defendant’s preemption argument failed because the FDA’s only action with respect to bioengineered foods to date is to refuse to require disclosing that a product includes such genetically modified ingredients.  The court rejected the notion that the plaintiff wants to force companies to label products as containing genetically modified ingredients.  Rather, the plaintiff only contended that products with genetically modified ingredients could not be labeled “all natural” without being misleading.  That theory was not preempted. Furthermore, the plaintiff’s California state law claims under that state’s consumer protection statutes could proceed. The court could not conclude as a matter of law at this stage that reasonable consumers would all understand that packaged, non-organic foods may contain bioengineered ingredients and that the only way to avoid such ingredients is to buy certified organic products.  The court found it plausible that a reasonable consumer would read the “all natural” statement and conclude that such a product does not contain bioengineered or chemically-altered ingredients.  

Interestingly, the Parker court also refused to dismiss the plaintiff’s express warranty claims.  Courts had been dismissing such express warranty claims relating to food products regularly, concluding that the Magnuson-Moss Act (or state law analogs) only applied to defects, and labeling on a package cannot support such claims.  In this instance, however, the court concluded that “all natural” is an affirmative claim about the product’s qualities sufficient to support common law express warranty claims.  

Another recent case is In re Frito-Lay North America, Inc. All Natural Litigation, No. 12-MD-2413 (RRM) (RLM) (E.D.N.Y. Aug. 29, 2013).  One item of note, of course, is that the case is not in the Northern District of California despite that court’s popularity with plaintiffs.  In this case, the plaintiffs alleged that a number of Frito-Lay products were deceptively labeled as “all natural” despite containing genetically modified ingredients.  While the court granted the motion to dismiss Frito-Lay’s parent company (PepsiCo, Inc.), it largely allowed the consumer fraud claims to proceed. The primary jurisdiction doctrine did not apply because the FDA has not formally addressed when food may be labeled as “natural.”  Moreover, there is no indication of when the FDA may define that term or whether its definition would shed any light on whether a reasonable consumer is deceived labeling a product “all natural” when it contains bioengineered ingredients.

Preemption did not apply because any guidance from the FDA was non-binding, and several other courts had recently rejected similar preemption arguments regarding the meaning of “natural.” The court also refused to conclude as a matter of law that a reasonable consumer would not conclude that “all natural” means that the product does not contain any genetically modified ingredients. Interestingly, this court dismissed the warranty claims because the plaintiffs did not allege that they provided pre-suit notice as required by the Uniform Commercial Code.  The court, however, refused to rule as a matter of law that “all natural” labeling could not constitute an express, factual description regarding the products’ qualities.

Because the substantial majority of certain American crops use bioengineering, these types of “all natural” claims likely will gain traction with the plaintiffs’ bar. Thus far, courts have not shown any tendency to dismiss these claims early in the litigation.  Unfortunately, food producers likewise may expect similar claims based on statements of products being “pure,” “nothing artificial,” and the like.  California consumer protection laws will continue to be the basis for a number of such claims because of the minimal standing requirements under those laws.  Absent regulatory action by the FDA or legislation from Congressional (which seems unlikely), these cases seem likely to multiply. Thus, the real battles may move from the motion to dismiss stage to class certification and summary judgment. At some point, these plaintiffs must come forward with admissible evidence that these labels are likely to mislead reasonable consumers.  Similarly, they must provide some methodology for measuring the alleged economic impact of the supposed misrepresentations; on that score, the Supreme Court’s 2013 opinion in Comcast Corp. v. Behrend may prove to be a considerable stumbling block for these plaintiffs seeking class certification in federal court.


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The U.S. Supreme Court’s decision in Mutual Pharmaceutical Co., Inc. v. Bartlett, No. 12-142, decided June 24, 2013, may assist defense counsel in defending product liability cases involving FIFRA-regulated products such as herbicides and pesticides. Although Bartlett involved design defect claims against manufacturers of generic drugs, which are regulated by FDA, the principles enunciated in Bartlett potentially have much greater application.

In Bartlett, the court held that the Federal Food, Drug and Cosmetic Act preempts state-law design defect claims against manufacturers of generic drugs. The court rejected outright plaintiff’s contention that under the so-called “stop-selling” theory, a generic manufacturer could comply with both federal and state law merely by removing its drug from the market.

In rejecting that argument, Justice Samuel Alito, writing for the majority, held that “the incoherence of the stop-selling theory becomes plain when viewed through the lens of our previous cases. In every instance in which the court has found impossibility pre-emption, the ‘direct conflict’ between federal and state law duties could easily have been avoided if the regulated actor had simply ceased acting.”

Thus, in reversing the First Circuit decision, the court slammed the door on plaintiffs hoping to circumvent the preemption defense by contending that a manufacturer might merely stop selling the product.

In an article in Law360 titled, “Bartlett’s Benefits Will Extend Beyond Generic Drug Makers,” 6/28/13, commentators offer the view that pesticide manufacturers may now be protected from plaintiff alleging a stop-selling theory of liability.  If the case’s holding is so extended, plaintiffs should no longer be able to allege that an herbicide manufacturer should not have placed a pesticide into commerce in the first instance. In essence, this is a variation of the often espoused argument that a product should not be marketed because its risks outweigh any potential benefits.  After all, the whole point of federal regulation is the underlying assumption you are going to market the product. 

This blog was originally posted on July 2 by William A. Ruskin on Toxic Tort Litigation blog. Click here to see the original post. 


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Many of you may be familiar with the famous confection known as the Kinder Surprise or Kinder Egg, a toy-filled chocolate that is touted as the single largest children’s candy category in the world. The treat is manufactured by the Italian company Ferrero and has risen to nearly cult status in certain countries. Kinder Eggs are sold worldwide; however, U.S. consumers have likely only tried the confection while traveling abroad or through some other surreptitious means. The candy has been banned in the United States for decades.

This spring, though, U.S. consumers might see something similar to the Kinder Egg in their Easter baskets. Kevin Gass, one of the founders of Candy Treasure LLC located in New Jersey, has developed a safe alternative to the Kinder Egg that meets the approval of both the U.S. Food and Drug Administration (FDA) and the Consumer Product Safety Commission (CPSC).

The FDA has long viewed the practice of intermingling confectionaries with trinkets with apprehension because of the potential choking hazard it presents. In fact, Section 402(d)(1) of the Federal Food, Drug, and Cosmetic Act expressly states that a confectionery is deemed to be adulterated “if it…has partially or completely imbedded therein any nonnutritive object,” unless the nonnutritive object has a functional value and would not be injurious to health.

It is clear that the agency’s thinking on this subject has not changed. Most recently, in April 2012, the FDA reissued its import alert against Kinder Eggs and other similar products containing imbedded, non-nutritive objects, being offered for sale in the U.S. In the alert, FDA explained that “[t]he imbedded non-nutritive objects in these confectionary products may pose a public health risk as the consumer may unknowingly choke on the object.” Individuals attempting to smuggle Kinder Eggs across the border are subject to refusal of admission and could face a potential fine of $2500 per egg.

Despite these restrictions, Gass announced earlier this month that his company’s product has been approved for sale in the U.S. Candy Treasure makes a confection called the Choco Treasure, which, like the Kinder Egg, is a chocolate egg that contains kid-friendly toys, such as figurines, full decks of mini playing cards, 3D puzzles and spinning tops. So how did this New Jersey company circumvent the country’s longstanding ban on the sale of confectionery that has a partially or completely imbedded non-nutritive object?

Gass explains that the Choco Treasure candy egg has a specially designed yellow egg-shaped capsule that contains each toy. There is a plastic ridge around the capsule which physically separates the two halves of the chocolate egg. It also alerts children that there is something hidden inside the chocolate. The capsule has a button that must be pushed in order to break it apart. In addition, the inedible toys contained inside the capsule are larger than those typically found inside the European equivalent. You can see how the concept works at the company’s website here

This modification to the traditional Ferrero Kinder Egg is considered acceptable and is permitted for sale in the U.S. Ferrero's similar confection remains illegal, on the hand. FDA explained in a Compliance Policy Guide that if the trinkets are physically separated from candy item by some form of wrapping, this would be a sufficient safety precaution.

So this weekend you can enjoy your confection with nonnutritive objects legally. Or, if you are so inclined, you can sign the petition currently pending to lift the ban on Kinder Eggs.

-This blog was originally posted on March 27 on the Stoel Rives LLP on the Food Liability Law Blog. Click here to see the original post. 
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A current trend in consumer class action litigation across the country focuses on food and beverage labeling.  Plaintiffs will allege that products labeled as “all natural,” being a good source of a certain nutrient, or having “no artificial ingredients” are deceptive and violate various unfair competition laws.  The United States District Court for the Northern District of California has become a particularly active forum for these claims, earning the nickname, “the food court.”  That court often denies motions to dismiss and grants class certification, largely relying on California’s consumer-friendly False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act.  A recent decision on one of the earliest “all natural” class actions, however, emphasizes that defendants can succeed against these claims even after losing the motion to dismiss and motion for class certification.  This decision reminds us that, as with any class action, it is important to prepare the case as if you will take it to trial (and be prepared to try it) and to put the plaintiffs to the test of meeting the essential elements of their claims.

Reis v. AriZona Beverages USA LLC, No. 10-01139 RS (N.D. Cal. Mar. 28, 2013), began in March 2010 and is one of the earlier “all natural” food labeling cases.  Those two plaintiffs alleged that the defendants falsely labeled AriZona Iced Tea as “all natural,” “100 percent natural,” and “natural” even though the products contain high fructose corn syrup and citric acid.  The plaintiffs contended that those ingredients are not natural and that the marketing, advertising, and labeling was deceptive.  The Northern District of California denied a motion to dismiss, denied a motion for summary judgment, and certified a class under Federal Rule of Civil Procedure 23(b)(2) to pursue claims under California law.

Things changed, however, after discovery had closed.  The plaintiffs never disclosed any expert opinion as to whether high fructose corn syrup and citric acid are not “natural,” and they did not provide any evidence as to how to measure restitution or disgorgement under California law.  Thus, the defendants renewed their motion for summary judgment.

The court took a particularly harsh view of plaintiffs’ failure to conduct basic discovery or provide evidence supporting essential elements of the claims.  Central to the claims, of course, is the assertion that high fructose corn syrup and citric acid are not “natural.”  The defendants provided an expert report from a food scientist who described the processes of making those ingredients, and who opined that they are natural.  The defendants also provided declarations from their suppliers reflecting that the high fructose corn syrup supplied to defendants satisfies FDA natural policy, and a certificate of the natural status of their citric acid.

The plaintiffs did not offer any evidence that high fructose corn syrup is artificial.  Instead, they asked the court to take judicial notice of patents issuing for the process of producing that product.  They argued that high fructose corn syrup is not natural as a matter of law because a patented process is necessary to create it.  The court quickly dismissed that argument as it lacked any legal support and was nothing more than an extension of plaintiffs’ contention that a product is artificial if it cannot be grown in soil, plucked from a tree, or found in the ocean.  As the court noted (Slip Op. at 7), “[i]n the face of a motion for summary judgment, rhetoric is no substitute for evidence.”

The plaintiffs truly seemed to discard their “not natural” argument.  Instead, they contended that the labels were misleading under California law because ordinary consumers would not know that “all natural” includes such ingredients derived through complex processes.  The court rejected that argument as well because California law requires that the statements be likely to mislead the public, not merely that they could mislead the public.  To succeed on this type of claim, the plaintiffs should have demonstrated by extrinsic evidence (such as consumer survey evidence) that the challenged statements tend to mislead the public.  Ambiguous deposition testimony from one of the defendant’s executives about the decision to include the “all natural” labeling on the products did not meet the plaintiffs’ burden.  

Equally important, the plaintiffs failed to meet their burden of establishing some way to measure damages.  Under California law, plaintiffs and the class would only be entitled to restitution or disgorgement.  The proper measure of such damages is the difference between what plaintiffs paid for and what they received.  Even under the plaintiffs’ theory, the drinks they purchased had some value—presumably the same value as “correctly” labeled beverages that did not tout being “all natural.”  But the plaintiffs did not even address this essential element of their claims.  “They offer not a scintilla of evidence from which the finder of fact could determine the amount of restitution or disgorgement to which plaintiffs might be entitled if this case were to proceed to trial.”  [Slip Op. at 11]  That failure alone was sufficient to grant summary judgment.    

Last, the court also decertified the Rule 23(b) (2) class that it had certified.  The court concluded that the plaintiffs and their counsel were not adequate representatives for the absent class.  The failure to even attempt the necessary discovery and to fail to address at all in their summary judgment opposition the proper measure of damages indicated they could not protect the class’ interests.

Although Ries is a district court decision, it is significant for a few reasons.  First, it is an important victory for class defendants facing such food labeling claims in the Northern District of California. That court has become a magnet for these types of claims.  Second, the decision emphasizes that class action defendants cannot view class certification as the end of their case.  Class action plaintiffs’ reliance on the vague meaning of “all natural” can work against them on the merits of the claim.  At some point, plaintiffs must prove that the ingredients they challenge truly are not “natural” or not a good source of a nutrient.  While plaintiffs in this district often defeat motions to dismiss through rhetoric (i.e., it is not natural if it can’t be grown or raised), meeting the burden of proof at summary judgment is a different matter altogether.  Defendants should be able to compel plaintiffs to provide, at a minimum, expert testimony to meet this burden.  Of course, expert testimony must satisfy Daubert at the summary judgment stage, so that provides another avenue of attacking the plaintiffs’ case.  As with every case, prepare it from the outset as if you are going to trial.  


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