Antitrust Law Daily Wrap Up, ADVERTISING—Cal. App.: State consumer law claims based on butter labeling preempted by Food Drug and Cosmetic Act, (Sep 26, 2013)

By Jody Coultas, J.D.

California consumer protection law claims filed by a purchaser against a butter manufacturer and The Kroger Corporation were preempted by the federal Food Drug and Cosmetic Act (FDCA), a California appellate court has held (Simpson v. The Kroger Corporation, September 25, 2013, Epstein, N.). However, the purchaser’s mislabeling claims under the California Sherman Food, Drug and Cosmetic Law were not preempted.

Dairy Products, Inc. manufacturers Challenge Spreadable Butter with Canola Oil and Challenge Tuscan Style Spreadable Butter. The purchaser claimed that the products were not butter and were mislabeled as “spreadable butter with” either canola oil or a combination of canola and olive oil. The additional oils were allegedly not identified with requisite prominence on the labels. The purchaser argued that the labels violated the California Milk and Milk Products Act of 1947 (MMPA), California Sherman Food, Drug and Cosmetic Law, and the California consumer protection laws.

A trial court held that the California claims were preempted because the products were nonstandardized butter, for which there is a federal labeling requirement but no comparable California labeling requirement. On appeal, the purchaser argued that the trial court should have granted leave to amend to allege violations of the Sherman Law labeling requirements because they were identical to those under the FDCA and, therefore, not preempted.

The FDCA prohibits false or misleading labeling. Under both the FDCA and the Sherman Law, foods are categorized as either standardized foods, those for which a definition and standard of identity has been created by federal regulation, and nonstandardized foods, those not defined by federal regulation. Nonstandardized foods must bear the common or usual name of the food and, if two or more ingredients are included, the common or usual name of each food except spices and flavorings must be on the label. The parties dispute whether the products at issue were standardized or nonstandardized foods. The FDCA preempts nonidentical state laws and requirements. Congress, however, intended to allow states to establish their own requirements so long as they are identical to those contained in the FDCA and did not limit the scope of state remedies for violations of state laws identical to the FDCA.

The purchaser’s Sherman Law claims were not preempted because they were identical to provisions of the FDCA and expressly incorporated the requirements of the FDCA, according the court. Section 343(a) of the FDCA provides that food is misbranded if its labeling is false or misleading. The Sherman Law claim at issue was identical to this provision and, therefore, not preempted.

The MMPA claims were expressly preempted, according to the court. The purchaser argued that the MMPA claims were not preempted because the broad federal definition of margarine was substantially identical to the state definition of spread and because both state and federal law have the identical prominent labeling and misbranding requirements for this kind of butter substitute. However, the provisions of the state and federal law were not identical. The FDCA also does not extend the exemption from preemption to state laws which are substantially identical rather than identical.

The trial court did not abuse its discretion in refusing to grant leave to amend the purchaser’s California claims, according to the court. Kroger argued that the spreadable butter with oil products at issue were nonstandardized products and were properly labeled with their common and usual name under the implementing regulations. The labels here clearly informed any reasonable consumer that the products contained both butter and canola or olive oil. No reasonable person could purchase these products believing that they had purchased a product containing only butter.

The case is No. B242405.

Attorneys: Jens B. Koepke (Morris Polich & Purdy) for Mary L. Simpson. Keri E. Campbell (Kelley Drye & Warren) for The Kroger Corporation.

Companies: The Kroger Corporation; Diary Products, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews