Federal Court Denies Vermont’s Motion to Dismiss Food Producers’ Lawsuit against Labeling Law, But Denies Food Producers’ Motion to Enjoin Enforcement of the Law Prior to Trial
A long-awaited court preliminary decision on Vermont’s first-in-the-nation GMO labeling law was issued Monday (April 27, 2015).
Vermont’s GMO labeling law, Act 120, was passed and signed in May, 2014 and is scheduled to take effect in 2016. It requires certain foods sold in Vermont to be labeled as containing GE ingredients and bans such foods from being labeled or marketed as “natural.” A food industry group, the Grocery Manufacturers Association (GMA), sued the State of Vermont over the law and sought an injunction. Vermont countered by moving for the dismissal of the entire lawsuit. The Vermont federal court addressed the competing motions by issuing a preliminary decision on the constitutionality of the law. In its analysis, the court addressed the two key aspects of Act 120: 1) the requirement that food producers label their products as containing GE ingredients (the “affirmative labeling requirement”), and 2) the ban on the use of the term “natural.”
1. Discriminatory Effects Under The U.S. Commerce Clause: Court holds that Act 120’s ban on the use of the term “natural” violates the Commerce Clause, but its affirmative labeling requirement does not.
In the lawsuit, GMA claims that Act 120’s ban on the use of the term “natural” on signs and advertising violates the Commerce Clause of the U.S. Constitution. The court stated that although under the Constitution the states retain some regulatory power concerning matters of legitimate local concern, they cannot regulate commerce, such as advertising, that takes place in other states and between and among other states. Therefore, the court denied Vermont’s motion to dismiss this claim. This is a win for the plaintiffs (GMA).
The GMA also claims that Act 120’s affirmative requirement that manufacturers label their products as “produced with genetic engineering” violates the Commerce Clause by “discriminating” against manufacturers who sell products nationally. The court found this argument unpersuasive because, as difficult or as expensive as it might be for manufacturers to label products separately for the Vermont market, the labeling requirement only applies to products sold in Vermont, not elsewhere. Therefore, the affirmative labeling requirement does not violate the Commerce Clause and the court granted Vermont’s motion to dismiss on this claim. A win for Defendants (Vermont).
2. Federal Preemption: Court holds that Act 120’s GE labeling requirement is partially pre-empted by federal law.
The GMA claims that Act 120’s affirmative labeling requirement is pre-empted by certain federal laws that mandate what must be stated on the labels of food products. With respect to non-meat foods, the court found that none of the several federal laws that dictate what must be stated on a food label (ingredients, nutrition information, etc.) prevent a state from requiring that additional information also be on the label. Therefore, the affirmative labeling requirement is not federally pre-empted as to non-meat foods and the court granted Vermont’s motion to dismiss on this claim. Another win for Vermont.
On the other hand, the court found that federal statutes that regulate meat and foods that contain meat are strict as to what a label must say and cannot say. Therefore, Act 120’s affirmative labeling requirement, as it pertains to any GMO foods that contain meat, is federally pre-empted and the court denied Vermont’s motion to dismiss this claim. A win for the plaintiffs.
3. First Amendment: The court believes that Act 120’s affirmative labeling requirement is not barred by the food producers’ free speech rights under the First Amendment, but denied Vermont’s motion to dismiss the First Amendment challenge because the court recognizes that this is a serious question of law as to which courts might disagree; but the court finds that Act 120’s ban on the term “natural” does violate the First Amendment.
The GMA claims that the affirmative labeling requirement infringes its free speech rights under the First Amendment. The court found that Act 120 regulates only “commercial” as opposed to “political” speech and that courts apply a very low level of constitutional scrutiny to laws that regulate purely commercial speech. The court therefore found GMA’s First Amendment claims against the affirmative labeling requirement to be unpersuasive. Nevertheless, given the seriousness of this issue, the court denied Vermont’s motion to dismiss GMA’s First Amendment challenge to the affirmative labeling requirement. A tenuous win for plaintiffs.
The GMA also claims that the ban on the use of the term “natural” violates its First Amendment rights. Here, the court agreed with GMA because Vermont does not define anywhere what “natural” supposedly means. Therefore, its use by food producers is not inherently misleading. Act 120’s ban on the use of this term as it applies to foods that contain or may contain GE ingredients violates the First Amendment and the court denied Vermont’s motion to dismiss GMA’s challenge to the ban on the use of the term “natural.” A win for plaintiffs.
4. Preliminary Injunction: The court denied GMA’s request that enforcement of Act 120 be enjoined prior to the trial of this lawsuit.
Although the court found that GMA is likely to prevail on certain of its claims (as explained above), it did not find that GMA proved that it will suffer “irreparable harm” if the enforcement of Act 120 is not enjoined prior to the trial of this lawsuit.
Thus, this decision is a mixed bag. It expressed skepticism towards many of GMA’s claims that Act 120 is unconstitutional, but denied Vermont’s preliminary motion to dismiss most of those claims. At the same time, it found that, prior to a trial on the merits, GMA was not entitled to enjoin the enforcement of Act 120, which becomes effective in 2016.
Walter Judge is a commercial litigator at Downs Rachlin Martin, Vermont’s largest law firm.
UPDATE: The Grocery Manufacturers Association (GMA) and the other plaintiffs have today (May 6, 2015) filed an appeal of the Vermont federal court's denial of their request for an injunction to block the law from taking effect. The appeal is to the United States Court of Appeals for the Second Circuit, in New York City, which is the federal appeals court that has jurisdiction over appeals from federal courts in Vermont, New York, and Connecticut. In a statement, the GMA says, “The court’s opinion in denying our request to block the Vermont law opens the door to states creating mandatory labeling requirements based on pseudo-science and web-fed hysteria. If this law is allowed to go into effect, it will disrupt food supply chains, confuse consumers and lead to higher food costs.”
Click here to read a copy of the Notice of Appeal.