Ninth Circuit Ruling Rejecting Preemption in Food Labeling Class Action Difficult to Swallow

Cruz-Alvarez_FFeatured Expert Column

by Frank Cruz-Alvarez, Partner, Shook, Hardy & Bacon, L.L.P., Miami office, with Travis Robert-Ritter, an associate in the firm’s Miami office.

Last week, the U.S. Court of Appeals for the Ninth Circuit in Lilly v. ConAgra Foods, Inc. held that California statutes obligating food manufactures to label the sodium content of the coating on sunflower seed shells are not expressly preempted by federal labeling law that exempts “bone, seed, shell, or other inedible components” from nutritional labeling requirements. — F.3d —-, No. 12-55921, 2014 WL 644706, at *1–3 (9th Cir. Feb. 20, 2014) (emphasis added). In doing so, the court departed from the fundamental precept of judicial interpretation that a statute or regulation “should be construed to give effect to the natural and plain meaning of its words,” and read a distinction into an unambiguous federal regulation where none exists. Id. at *3–4 (Vinson, J. Dissenting).

The appeal arose out of a putative class action filed against ConAgra Foods, Inc. for allegedly violating various California statutes by failing to include the sodium content of the coating on sunflower seed shells in the Nutritional Facts Panel of the company’s products. Id. at *1–2. ConAgra argued before the district court that the state-law claims were expressly preempted because they sought to impose a labeling requirement for sodium that is different from what is required under federal food labeling law. Id. The district court agreed, dismissing the putative class action as preempted because the claims attempted “‘to impose an additional sodium labeling requirement that [was] not identical to the’ Nutrition Labeling and Education Act (21 U.S.C. § 343).” Id.

On appeal, a divided panel reversed the district court. Id. at *2–3. The two-judge majority outlined the federal statutory scheme governing food labeling, and noted that the resolution of the appeal ultimately hinged on the meaning of a federal regulation requiring a product’s sodium to be calculated “‘based on only the edible portion of food, and not bone, seed, shell, or other inedible components.” Id. at *2. (quoting 21 C.F.R. § 101.12(a)(6)) (emphases added). Applying the regulation, the court reasoned that although the sunflower seed “shell is not edible . . . the coating is and is intended to be.” Id. at *3. The majority therefore held that “federal law requires . . . [that] the portion of the edible coating on the shell must be accounted for in the calculation of the sodium content,” and that the state-law claims were not preempted because they attempted to impose the same obligations as the governing federal labeling law. Id.

Dissenting Senior District Judge C. Roger Vinson (of the U.S. District Court for the Northern District of Florida, sitting by designation) offered a sharp criticism of the majority’s reasoning, contending that the regulation at issue excludes the sodium content of inedible shells from its reach. Id. at *3–4. The dissent explained: “Although we might prefer a regulation that includes the shell’s absorbed salt and to draw a distinction between an edible ‘coating’ and an inedible shell, we are nonetheless bound to apply this unambiguous regulation objectively as it has been written.” Id. at *4. Reading the governing federal regulation as plainly excluding the sodium content of inedible shells, the dissent viewed the California statutes as unquestionably imposing greater labeling requirements than federal labeling law. Id. at *3–4.

The holding of Lilly v. ConAgra Foods, Inc. is a troubling (and too common) example of a court legislating from the bench where it finds federal statutes or regulations inadequate. Though Lilly v. ConAgra Foods, Inc. is the first reported federal case to interpret and apply the food labeling regulation at issue, courts subsequently faced with similar questions should pay special attention to Judge C. Roger Vinson’s logical, well-reasoned dissent.

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