Food Court Follies: Misled-By-Maple Class Action Against Quaker Oats Preempted

maple and brown sugarIn all the blogging we’ve done on food-related consumer-protection litigation over the past five years, we’ve said very little about one of our favorite federal constitutional doctrines, federal preemption. That’s because the Food Court Bar has filed the vast majority of its claims in California, which has a statute, the Sherman Food, Drug, and Cosmetic Law, that explicitly incorporates all federal food laws and regulations. Plaintiffs’ lawyers have been able to defeat most preemption arguments by asserting Sherman Act violations, remedies for which would impose the same requirements as would federal law. Preemption defenses can prevail only when state law (or a state court decision) imposes obligations in conflict with federal law.

But in a series of recent suits against Quaker Oats Company, plaintiffs’ lawyers took a shot at imposing controls on oatmeal-product labeling that went beyond what federal rules required. Perhaps they thought the Central District of California would give them a pass, or that they could convince the court through some legal slight-of-hand. Judge Philip S. Gutierrez, who is presiding over the consolidated class actions, wasn’t buying it, however. On October 10, 2017, he dismissed the plaintiffs’ claims as preempted by federal law. In re Quaker Oats Maple & Brown Sugar Instant Oatmeal Litigation.

Quaker Oats introduced products with its maple and brown sugar flavoring in 1970. Those flavorings are among the “natural and artificial flavors” disclosed in the ingredients list. The products contain no maple syrup. Forty-seven years later, several oatmeal purchasers, perhaps inspired by the hundreds of other purportedly misled consumers that have been besieging the courts, filed class-action suits alleging a variety of state-law violations.

The plaintiffs claim that the products’ names, along with on-package images of maple syrup and brown sugar, caused them to believe the instant oatmeal was made with those ingredients. That belief misled them into purchases. The plaintiffs allege they paid a “premium” price based on that misbelief.

Food and Drug Administration (FDA) regulation (21 C.F.R. § 101.22(i)) in fact explicitly permits Quaker to depict the “characterizing flavor” with graphic images and use descriptions of the flavors in the product name. Were the court to rule that Quaker misled consumers in violation of California law, the relief ordered, Judge Gutierrez wrote, would “impose novel labeling requirements that are ‘not identical’ to federal regulations.” Because the plaintiffs’ claim would directly undermine Congress’ intent to create a national, uniform regulatory scheme for food-product labeling, the court held it preempted.

Several other holdings of the In re Quaker Oats court are notable. First, the court held that because the plaintiffs now know that the instant-oats products don’t actually contain maple syrup, and thus can’t be misled in the future, they do not have standing to seek forward-looking injunctive relief. Some federal courts in California have held to the contrary, asserting that the larger policy goals of consumer-protection laws trump standing requirements. Judge Gutierrez correctly rejected such reasoning.

Second, the In re Quaker Oats court held that even though the class representatives had purchased only three of the six allegedly mislabeled oatmeal products, they had standing to claim state-law violations for all six. Judge Gutierrez reasoned, as have other California-based federal courts, that as long as the unpurchased products were “substantially similar” to the purchased products, the class representatives had standing.

That holding relies on a distorted interpretation of Article III standing jurisprudence. The U.S. Supreme Court has held that a plaintiff must have a “personal stake” in the outcome of “each claim he seeks to press.” If a consumer did not purchase a supposedly mislabeled product, how can he have claim to have been injured by it? Perhaps the courts that have conferred standing for unpurchased-product claims did so because consumer-protection laws should be applied broadly. But as Judge Gutierrez wrote when assessing standing for injunctive relief, “Article III cannot be trumped by policy concerns.”

Third, the court dismissed the plaintiffs’ claims without prejudice (i.e. they can file an amended complaint). The opinion even suggested a pleading path that might avoid preemption—allege that Quaker Oats’ actions created the false impression that their instant-oatmeal products used maple as a sweetener, instead of a flavoring.

As a general matter, courts should not be in the business of counseling well-represented plaintiffs on how to keep their class actions going. That is especially true in In re Quaker Oats, where the plaintiffs had already amended their complaints once before. Also, it is futile, considering the facts as they stand, to allow the plaintiffs to make a mislabeling claim based on maple as a sweetener. The defendant appears to have done nothing that would mislead a reasonable consumer to think Quaker instant oatmeal is sweetened with actual maple syrup. Such futility dictates dismissal with prejudice.

At bottom, however, the In re Quaker Oats ruling merits commendation for its straight-forward application of “conflict preemption” principles, reasoning that could prove useful to future Food Court defendants that face similar claims.

Also published by Forbes.com on WLF’s contributor page.

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