Federal Court in NY Cites Obstacle Preemption in Dismissing State-Law Fraud Suit Against Organic Producer

Cruz-Alvarez_FFeatured Expert Contributor — Civil Justice/Class Actions

Frank Cruz-Alvarez, a Partner in the Miami, FL office of  Shook, Hardy & Bacon L.L.P. with Ravika Rameshwar, an Associate with the firm.

On August 23. 2016, the US District Court for the Eastern District of New York dismissed a class-action suit that alleged the makers of Similac® Advance® Organic Infant Formulas fraudulently misrepresented the products as “organic,” holding that the state claims are preempted by federal law—specifically, the Organic Foods Production Act of 1990.  Marentette et. al. v. Abbott Laboratories, Inc., 2016 WL 4444787 (E.D.N.Y Aug. 23, 2016).  The court stated that Congress designed the OFPA to create a national standard for organic labeling that would be “disrupted, if not thwarted,” by inconsistent state and federal court decisions.  Marentette, 2016 WL 4444787, at *8. Continue reading

Ninth Circuit to Hear Oral Argument in Pair of Food-Labeling Cases

9thCirToday, September 12, the United States Court of Appeals for the Ninth Circuit will hear oral arguments in two class-action food-labeling cases.  The issues before the court are similar and the cases arise from nearly identical facts: the plaintiffs allege that the defendants’ product labels are false or misleading in violation of various state laws because they claim to be “natural.”  The appeals will also be heard by the same panel—Judges Fletcher, Christen, and Friedland.  In considering these two appeals, the Ninth Circuit will have a chance to set a major precedent that could either reduce the flow of food-labeling suits into California-based federal courts or open the spigot even wider.

The similarities between the two cases, Brazil v. Dole Packaged Foods, LLC and Briseno v. ConAgra, Inc., are striking.  The plaintiffs filed putative class actions alleging that the defendants violated various statutory and common-law causes of action by labeling some of their products as “All Natural” or “100% Natural.”  Brazil claims that Dole’s use of “All Natural” on several of its juices’ labels is false or misleading because the company added ascorbic acid (vitamin C) and citric acid.  Both additives occur naturally in the juice products.  Similarly, Briseno claims that ConAgra’s “100% Natural” label is false or misleading because the Wesson Oil in question contains genetically modified organisms (GMOs). Continue reading

When Prices for an App Increase, There’s a Lawsuit for That

LogMeInBy Trey Wassdorf, a Judge K.K. Legett Fellow at Washington Legal Foundation in the summer of 2016 who is currently a third-year student at Texas Tech University School of Law.

Recently, online video-on-demand service Hulu decided to migrate from a business model that had provided either a free ad-supported service or a subscription-based premium service. The new service is a bit complicated; there will be a $7.99 per month ad-supported service, an $11.99 per month ad-free service, and users will still be able to watch some Hulu content for free through their distribution partners, most notably Yahoo’s new Yahoo View.  Hulu will also offer customers that currently use its free service a 30-day free trial to the subscription service.

Hulu’s decision is one that many digitally-based businesses, especially developers of mobile-device applications, are making. They accept that some users won’t be thrilled with having to pay for what they previously got gratis, but it’s unlikely that many businesses have contemplated the threat of litigation when making such a move. Recent litigation against app developer LogMeIn, however, should act as a wake-up call to digital businesses large and small. Continue reading

U.S. v. Clay: A Federal White Collar Criminal Case to Keep an Eye On

matt_kaiser300Guest Commentary

Matthew G. Kaiser, Partner, Kaiser, LeGrand & Dillon PLLC

A court case that should be on the radar screen of all business executives and white-collar criminal-defense attorneys in 2016 is United States v. Clay, in which the U.S. Court of Appeals for the Eleventh Circuit heard oral argument on October 2.

The case, about which I authored a Washington Legal Foundation Legal Backgrounder last March, implicates the fundamental question of who decides the meaning of a law—a judge or a jury? The Eleventh Circuit will also implicitly decide whether the government can cast aside more appropriate civil or administrative remedies and prosecute corporate officers operating a business in a complex regulatory environment when their interpretation of a law is objectively reasonable. Continue reading

Eleventh Circuit Has Opportunity in “U.S. v. Clay” to Reshape Prosecutors’ & Courts’ Approach on Criminal Intent

11th CircuitOn Friday, October 2, the U.S. Court of Appeals for the Eleventh Circuit will hear oral arguments in a closely followed criminal health-care fraud case, U.S. v. Clay. Earlier this year, Washington Legal Foundation published a Legal Backgrounder on the case and its broader ramifications, Clay v. United States: When Executives Receive Jail Time for Ordinary Business Decisions.

In Clay, federal prosecutors converted a contract dispute between a medical services provider, WellCare Health Plans, and the State of Florida Agency for Healthcare Administration (AHCA) into a criminal action. The company had interpreted a complex state law regarding the repayment of Medicaid premiums to the state in a manner that was contrary to AHCA’s interpretation. AHCA’s interpretation was not memorialized in a state regulation or guidance document. Despite this lack of guidance, federal prosecutors indicted WellCare and its executives for health care fraud. The company entered into a deferred-prosecution agreement, leaving the executives to fend for themselves. Continue reading

WLF Attorney Interviewed for FCPA Compliance and Ethics Report Blog Podcast

Attorney Thomas R. Fox, a prominent Foreign Corrupt Practices Act (FCPA) practitioner and author of a forthcoming WLF Legal Opinion Letter, “Is SEC Heading toward a Strict Liability Application of the Foreign Corrupt Practices Act?,” recently interviewed WLF Legal Studies Division Chief Counsel, Glenn Lammi, about WLF’s public interest work and our focus on the FCPA.

 Episode 151-Glenn Lammi, Washington Legal Foundation.

Supreme Court’s “Omnicare” Decision Follows Middle Path Advocated by Lane Powell and WLF

greeneddavisjGuest Commentary

By Douglas W. Greene and Claire Loebs Davis, Shareholders with Lane Powell PC in Seattle, Washington. They co-authored WLF’s amicus brief pro bono in Omnicare.

In the opinion issued on March 24 in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund (“Omnicare”), the Supreme Court rejected the two extremes advocated by the parties regarding how the truth or falsity of statements of opinion should be considered under the securities laws. Instead, it adopted the middle path advocated in the amicus brief filed by Lane Powell on behalf of Washington Legal Foundation (“WLF”).

In doing so, the Court also laid out a blueprint for examining claims of falsity under the securities laws, which we believe will do for falsity analysis what Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007), did for scienter analysis. Hence, Omnicare will help defense counsel defeat claims that opinions were false or misleading in § 11 cases, as well as in cases brought under § 10(b) of the Securities Exchange Act. Continue reading