On September 30, just two weeks after hearing oral argument in the case (which we previewed here), the Ninth Circuit released an unpublished opinion in Brazil v. Dole Packaged Foods, partially reversing the district court. The opinion correctly upheld the district court’s dismissal of one of Brazil’s “outlandish theor[ies]” and its decertification of the class. Unfortunately, the Ninth Circuit relied on nonbinding FDA guidance and warning letters to evaluate what would mislead a reasonable consumer, reversing the district court’s dismissal of his other claims. Although not officially precedential, the opinion is worth reviewing because it has the potential to guide lower courts and gives insight into the Ninth Circuit’s future food-labeling decisions.
The plaintiff, Brazil, filed a putative class action alleging that Dole Packaged Foods LLC (Dole) deceptively labeled several of its fruit-juice products with the words “All Natural Fruit” in violation of several federal and California statutes. Specifically, Brazil alleged that Dole had added synthetic ascorbic acid (Vitamin C) and citric acid, which made the “All Natural Fruit” label false or misleading, despite the fact that both ascorbic acid and citric acid occur naturally in the juice. The district court initially certified the class, but then later decertified it because Brazil’s proposed damages model could not accurately establish class-wide damages. In the district court, Dole also filed motions to dismiss and for summary judgment arguing that Brazil could not establish that the label would deceive a reasonable person, and that its products were not “illegal” because of any alleged mislabeling under California law. The district court granted those motions.
On appeal, the Ninth Circuit reversed the district court’s grant of summary judgment, finding that a trier of fact could determine that Dole’s labels would deceive a reasonable person. The appeals court identified two pieces of evidence that would meet this evidentiary burden. First, it pointed to an informal 1993 FDA guidance which stated foods that included “artificial or synthetic” additives that “would not normally be expected to be in the food” could not be deemed “natural.” Second, it referred to several FDA warning letters that informed companies that their “All Natural” labels were deceptive under the guidance because the products contained synthetic citric acid.
The problem, of course, is that FDA’s (nonbinding) “natural” definition does nothing other than restate the reasonable consumer test.* Further, the (nonbinding) FDA warning letters do not invoke the (nonbinding) “natural” definition’s “not normally be expected to be in the food” language. Thus, even taken together, this evidence did not actually establish that a reasonable consumer would not have expected synthetic ascorbic or citric acid in their juice. Even worse, the Ninth Circuit’s reasoning essentially converted an informal guidance and warning letters that relied upon that guidance into binding authority. And it did so with full knowledge that FDA is in the process of considering a new, more formal definition of “natural” in the context of food labeling.
In contrast, the Ninth Circuit correctly recognized that Brazil’s claims that Dole illegally sold its fruit products comprised an “outlandish theory” and affirmed the district court’s dismissal of those claims. The court explained that even if some of Dole’s online descriptions of its products were “illegal” under California law, Brazil did not allege that those statements caused him to purchase the allegedly infringing products.
Finally, the Ninth Circuit affirmed the district court’s decertification of the damages class. The appeals court observed that under California law, damages should be calculated based on the difference between the purchase price of the products and the value of the fruit that they bought. The court rightly recognized that Brazil’s theory of restitutionary damages was duplicative. Because Brazil did not adequately allege that the products he purchased were worthless, or explain how to calculate damages on a class-wide basis with common forms of proof, the court upheld the district court’s decertification order.
The Ninth Circuit thus held that Brazil’s individual actions could continue but his class action could not. Interestingly, the court did not directly address Brazil’s equitable remedies, namely his plea for injunctive relief. Brazil’s complaint asked the court to enjoin Dole from labeling future juice products as “All Natural Fruit” if they contain synthetic acids. However, his remaining individual causes of action require proof that he was actually deceived, something that, because of the very nature of his lawsuit, he can no longer allege on a going-forward basis. What good, then, would injunctive relief be? What harm to Brazil would an injunction now prevent?
All told, it is difficult to pinpoint the impact of the Ninth Circuit’s decision. Because it is unpublished, it will not bind district courts. However, its rulings on the reasonable consumer and class certification could be significant. On the negative side, the court’s reliance on informal agency documents to set the parameter of what a reasonable consumer would think invites a great deal of mischief by plaintiffs and sympathetic courts wishing to rule their way. Conversely, the court’s strict class-certification holding might make other plaintiffs’ attorneys less likely to bring class-action suits if they will face a similarly uphill battle for certification. The Ninth Circuit is scheduled to rule in another food labeling case soon, Briseno v. ConAgra, Inc. Perhaps that decision will give the lower courts more direct, precedential guidance.
*For more on the “reasonable consumer” test under California law, see the July 29, 2016 WLF Legal Backgrounder In California, the “Reasonable Person” Still Helps Consumer Class-Action Defendants.
Also published by Forbes.com on WLF’s contributor page.