Update: Mixed Outcome For Kraft In False Labeling Class Action Decision

Still in The Food Court
Still in The Food Court

Cross-posted at WLF’s Forbes.com contributor page

In a March post, Another Grocery Basket Full of Lawsuit Claims for The Food Court, we examined a U.S. District Court for the Northern District of California decision on Kraft’s motion to dismiss a false labeling suit aimed at a slew of Kraft products. Some claims survived outright while others were temporarily rejected; for the rejected claims, Judge Ronald Whyte drafted a road map for plaintiffs to follow for their forthcoming amended complaint.

Ruling on the Amended Complaint. Ms. Ivie’s lawyers not only reasserted the rejected claims, but also took the opportunity to accuse countless other Kraft products (which she had never actually purchased) of being misbranded. On June 28, Judge Whyte issued his latest ruling in Ivie v. Kraft on that amended complaint.

Regarding Ms. Ivie’s unpurchased products, Judge Whyte threw out (with prejudice) each claim on products which featured only “similar” packaging to those she had bought. He allowed her to pursue new claims involving gum which had “essentially identical” packaging to gum targeted in her first complaint.

On the claims involving certain purchased products that Judge Whyte previously preempted, Kraft again received mixed results. The amended claim involving “natural lemon flavor” for Crystal Light packets met the same fate as the original claim: preempted. Judge Whyte reversed his previous rulings on allegations involving nutrient content claims for a Planter’s nut mix and for a Mexican-style cheese blend. He permitted those amended allegations to proceed. Because rulings on the nutrient content claims would merely parallel, not exceed, what federal labeling rules require, Judge Whyte rejected Kraft’s express preemption arguments.

No Implied Preemption.  More importantly, the judge also addressed implied preemption. Kraft argued that a March 2013 U.S. Court of Appeals for the Ninth Circuit ruling, Perez v. Nidek, created a “narrow gap” through which a state lawsuit must navigate to avoid conflicting with the relevant federal regulatory scheme. Kraft argued that Ivie’s claims did not thread that needle.

Judge Whyte disagreed, writing that

nowhere in its opinion did the Ninth Circuit argue that allowing plaintiffs to bring state-law claims that parallel federal requirements would constitute ‘private enforcement’ of FDA regulations that would conflict with the FDA’s regulatory authority.

Because Ms. Ivie’s allegations on the nut mix and cheese labeling arose under California’s Sherman Act, whose requirements parallel FDA regulations, Judge Whyte found no implied preemption.

In a June 18 ruling from the same district court, Samet v. Procter & Gamble Co., Magistrate Judge Paul Grewal addressed the same implied preemption argument that Kraft made in Ivie. The judge construed the Perez precedent this way:

[T]he plaintiff must not be suing to enforce provisions of the FDCA, which would be impliedly preempted under Section 337(a) of the FDCA, but rather to vindicate an independent right under state law.

Just as Judge Whyte did in Ivie, Judge Grewal found that the state-law claims parallel federal regulations, and that “Congress and the FDA intended that the states would be free to adopt a statutory scheme paralleling the FDCA and offer a private suit of enforcement.”

Private Enforcement of Federal Law Achieved. The implied preemption rationale offered in Ivie and Samet reflect the perverse reality that processed food makers face in state-law labeling class actions.

Only FDA can enforce federal laws and regulations. Federal laws provide no private right of action. The California Sherman Act incorporates every federal food labeling law and rule, transforming federal rules into state law. The Sherman Act similarly lacks a private enforcement mechanism, but California plaintiffs get around that by bringing a private action under the state Unfair Competition Act (UCA), with Sherman law violations as predicates for UCA liability.

This double boot-strapping thus requires federal judges in California to determine whether a food label complies with federal law (or, as Judge Grewal put it in Samet, “with state common-law duties that also happen to coincide with the federal statutory scheme” [our emphasis]) even though the supposedly harmed consumers could not sue to enforce those federal laws directly. And those judges’ decisions, if they survive appeal, theoretically will impose labeling requirements for products not just in The Food Court’s jurisdiction, but throughout the nation.

Is that really what Congress intended?

4 thoughts on “Update: Mixed Outcome For Kraft In False Labeling Class Action Decision

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