Cross-posted at WLF’s Forbes.com contributor site
Food makers’ use of “natural” on product labels and advertisements continues to provide class action lawyers with litigation fodder. Such a case-by-case approach to determining what is and is not natural, we have argued previously, poorly serves consumers and producers. Recent judicial developments, described below, have done nothing to sway our opinion that, regardless of how torturous it will be, formal federal rulemaking is preferable to regulation-by-litigation.
A Divided Food Court? As we noted in a May 22 Legal Pulse post, Northern District of California Judge Hamilton rejected General Mills’ request that Janney’s class action be put on hold under the “primary jurisdiction doctrine” to give the Food and Drug Administration (FDA) a chance to act. Such a delay would be “futile” in Judge Hamilton’s words. Janney v. General Mills.
Fast forward to June 7 in the same court, where Judge Rogers issued a tentative ruling in Cox v. Gruma Corp. that she was “inclined to order that this matter be stayed under the doctrine of primary jurisdiction” for six months to await FDA action to define natural. Plaintiff Cox argues that Gruma’s Mission Tortilla products are mislabeled as natural because Gruma uses genetically-modified grains. Without referring to Janney, Judge Rogers drew a distinction between the facts there, which involve sweeteners, and in Cox, which involve so-called GMOs, a subject “FDA has not addressed, even informally” with regards to “natural.” FDA has been asked to address the issue, as Cox herself cited in a potentially counterproductive June 10 response. That filing referenced an agency website passage on a pending GMO labeling citizen petition. Judge Rogers has asked for further briefing to be completed by Friday.
Battle of the Puffins’ Class Actions. Meanwhile, in a courtroom version of the legendary East Coast-West Coast rap music rivalry (well, ok, not really, but we couldn’t resist), separate camps of class action lawyers filed identical suits against Barbara’s Bakery, maker of Puffins cereal and other related products. Barbara’s mislabeled their products as “natural,” both suits allege, because they contain GMO corn. On the West Coast: Disgruntled Puffins consumer Richard Trammell filed a national class action on May 12, 2012 in The Food Court. On the East Coast: Two different plaintiffs filed separate class actions (since consolidated) in the Eastern District of New York last November and December, respectively.
In Trammell, the parties pursued mediation and on April 25, filed a proposed settlement with Judge Charles Breyer. The proposal is quite remarkable in its breadth and impact. In addition to pledging $4 million for customer refunds (of up to $100 per customer, no receipts required), Barbara’s Bakery will nationally alter its product labeling to eliminate terms like “natural” and “no artificial additives.” Barbara’s will also eliminate the use of GMO ingredients and submit to third-party verification testing.
Meanwhile in New York, plaintiffs Silber and Moro urged Judge Kuntz to impose a preliminary injunction on Barbara’s packaging claims. In an interesting and entertaining (see, e.g., footnote 7) June 14 decision, Judge Kuntz rejected the request. In his conclusion, the judge referenced the Trammell Proposed Settlement which “contemplates the same relief requested by Plaintiffs here.” He added that while “this settlement does not influence this Court’s decision” on the injunction motion, “this Court looks forward with interest” to what happens in The Food Court.
Not surprisingly, the lawyers for East Coast plaintiffs Silber and Moro are not thrilled with the West Coast developments. They filed an intervention motion with Judge Breyer, bent on making their views on the Proposed Settlement known. If Judge Breyer approves the settlement of Trammell’s nation-wide class action, Ms. Silber and Ms. Moro, as Puffins purchasers, would presumably be part of the settlement class. At that point, Barbara’s Bakery would no doubt ask Judge Kuntz in New York to dismiss of Silber based on the Trammell settlement’s res judicata effect.
A hearing is set for this Friday, June 21, in Judge Breyer’s court on the Trammell settlement.