On July 15, U.S. District Court for the Northern District of California Judge William Alsup rejected Nissin Foods Company’s motion to dismiss a claim alleging that Nissin’s use of trans fat in its instant noodles was an unfair trade practice under California law. The decision comes just a month after the federal Food and Drug Administration (FDA) issued a Declaratory Order removing the generally recognized as safe (GRAS) designation from partially hydrogenated oils (PHOs), the main source of trans fat in Americans’ diets. Judge Alsup’s opinion is the first we know of to reference FDA’s order.
In June, we cautioned that FDA’s order was setting the table for state-law consumer class actions and product-liability suits against food makers whose products contain, or ever contained, PHOs. The decision in Guttmann v. Nissin Foods validates that concern.
In the statement of facts, Judge Alsup parrots Guttmann’s complaint (which had cited a conclusion from FDA’s initial PHO determination): “any incremental increase in trans fat consumption increases the risk of [cardiovascular disease].” He also declares that “the use of partially-hydrogenated oils is not required by law,” and notes FDA’s decision.
Guttmann bases his unfair business practice claim, as well as a state-law mislabeling claim, on the fact that Nissin printed “0g Trans Fat” on its packaging. An FDA regulation permits such a declaration when a product serving contains less than 0.5 grams. On that ground, Judge Alsup holds that Guttmann’s state-law mislabeling claim was preempted.
On the unfair competition claim, however, Judge Alsup concludes that “Nissin violated California law by including such a poisonous ingredient as artificial trans-fat in its noodles.” The judge acknowledges, “No decision has addressed whether the lawful use of a dangerous substance in a food product can constitute an unfair business practice within the context of the Unfair Competition Law.” He applies a balancing test utilized in other cases to determine if a practice was “unfair,” which pits the harm to the consumer against the utility of the defendant’s practice. The plaintiff’s unfairness claim was plausible, the court decides, because the “only utility” of PHOs—lower cost—could not outweigh the serious harm caused by the substance.
Although Judge Alsup did not directly rely upon FDA’s PHO determination, his reference to the order, his citation to FDA’s s alarming “any incremental increase” conclusion, and his use of such inflammatory terms as “poisonous” and “dangerous” reflect that the agency’s decision had an impact on the court. His use of those terms is as legally inaccurate as it is judicially intemperate. FDA’s PHO determination does not apply retroactively. At the time Nissin utilized a de minimis amount of PHO in its noodles, FDA generally recognized trans fat as safe. And as we argued in our June 23 post, “not GRAS” does not mean “unsafe.” FDA, however, not only failed to make this clear in its PHO order, it didn’t affirm that until June 2018 (the deadline for phasing out artificial trans fat), the use of PHOs is lawful. Such silence encouraged Judge Alsup, and emboldens Mr. Guttmann and other “aggrieved” plaintiffs to sue more food companies.
Numerous other copycat suits, all brought by the same law firm, are pending in the Northern District of California and other federal courts, including one filed two days after FDA’s PHO determination, Backus v. Heinz. Now that Judge Alsup has shown the way on PHO-related claims under the Unfair Competition Act, Heinz and other future defendants should brace for similar results. Judges in the Food Court have occasionally differed on food-labeling suits where the facts and claims are identical, but regretfully, such diversity of opinion has been rare.
Also published by Forbes.com on WLF’s contributor page