Defense Perspective: "all Natural" Class Actions

• Publication year: 2014
• Author: By Rhonda R. Trotter & Oscar Ramallo.

DEFENSE PERSPECTIVE: "ALL NATURAL" CLASS ACTIONS

By Rhonda R. Trotter¹ & Oscar Ramallo.²

Since 2011, the courts have been flooded with hundreds of complaints involving "natural" and "all natural" advertising claims, with the majority of filings in California.³ Most of the cases have involved food and beverages, but they have also been brought against defendants offering products as diverse as cosmetics⁴ and diapers.⁵ Many cases have led to seven-figure settlements, including a $5 million settlement by a Kellogg subsidiary for Pita Crisps and other products, a $3.4 million settlement by Trader Joe's, and a $9 million settlement from PepsiCo for Naked Juice. How can a defendant avoid a multi-million dollar payout?

As discussed below, arguments that labeling claims are preempted by United States Food and Drug Administration ("FDA") regulations have been a first line of defense. But these arguments have been hampered by the FDA's recent decision not to decide which "all natural" claims are proper. Defendants have accordingly turned to arguing in court that their "all natural" claims are not misleading and have achieved victories at the class certification, summary judgment, and the pleading stages. Additionally, defendants have challenged plaintiffs on the traditional prerequisites to class certification, with the greatest successes on ascertainability of the class and predominance of common issues with respect to damages.

I. PREEMPTION

A first line of defense in "all natural" cases has been federal preemption and the related doctrine of primary jurisdiction. In the food context, the Nutritional Labeling and Education Act ("NLEA") expressly preempts any state law regarding labeling of food products that is "not identical" to federal law.⁶ Courts have interpreted this statute as not preempting "a requirement imposed by state law [that] effectively parallels or mirrors the relevant sections of the NLEA."⁷

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California's Sherman Food, Drug, and Cosmetic Law ("Sherman Law")⁸ incorporates federal food labeling law into California law with one major difference: unlike federal law, California law allows a private cause of action for enforcement. Defendants have argued that private causes of action are, accordingly, at least impliedly preempted by federal law, but, to date, the lower courts have not been receptive to that argument.⁹

While preemption is not a panacea for eliminating all claims, depending on the plaintiff's theory of the case, it can still be raised successfully. For example, in Ang v. Whitewave Foods Company,¹⁰ the plaintiffs argued that products with names like natural "soy milk," "almond milk," and "coconut milk" were misleading because the FDA defines "milk" as a substance coming from lactating cows. In addition to finding the plaintiffs' claim implausible, the court also found it was preempted by FDA regulations governing the common names of food.¹¹

II. PRIMARY JURISDICTION

The primary jurisdiction doctrine allows a court to stay proceedings pending the resolution of an issue by an administrative agency with special competence.¹² Because the FDA has only issued an informal policy rather than a formal definition of "natural" in food labeling, three courts stayed litigation involving bioengineered ingredients and asked the FDA to weigh in.¹³ On January 6, 2014, the FDA responded to the courts' requests by more or less saying that it had better things to do than define "natural." The FDA refused to go through the process of defining "natural" because it "operates in a world of limited resources" and "necessarily must prioritize which issues to address."¹⁴ For the foreseeable future, the FDA's response forecloses primary jurisdiction stays for the purpose of defining the term "natural."

III. DEFINING "NATURAL"

With the FDA stepping aside, the definition of "natural" is being fought in the courts, and defendants have had successes on this issue, even at the earliest stages of the proceedings. In Pelayo v. Nestle USA, Inc.,¹⁵ the court dismissed on the pleadings an "all natural" claim against Buitoni Pastas because "the reasonable consumer is aware that Buitoni Pastas are not 'springing fully-formed from Ravioli trees and Tortellini bushes.'" The court also noted that immediately below the "all natural" claim on the pasta boxes, Buitoni listed its ingredients, thereby "removing any ambiguity regarding the definition of 'All Natural.'"¹⁶ While Pelayo is a heartening defense victory, it has been criticized by other courts as misreading consumer perceptions and as being at odds with Ninth Circuit precedent on whether small print on a box can cure misleading representations on the front of packaging.¹⁷

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Moving beyond the pleading stage, the definition of "natural" can also provide opportunities for defense victories at the class certification and summary judgment stages. In Astiana v. Kashi Co.,¹⁸ the Court denied class certification on a number of products under the commonality and predominance requirements of Rule 23 because plaintiffs could not "show that either consumers or food producers have any kind of definition of 'All Natural' that affects purchasing decisions, such that the 'All Natural' representation was not materially false." The court, however, did certify a class for products containing ingredients defined as synthetic by regulation and under the defendant's definition on its own website.¹⁹ Similarly, in Ries v. Arizona Beverages...