Antitrust Law Daily Wrap Up, ADVERTISING—CDCal: Consumer’s Claim Against Walgreens for Labeling Pollen-Removed Product as “Nice 100% Pure Honey” Dismissed, (Apr 16, 2013)

By Peter Reap, J.D., LL.M

A consumer’s claim that Walgreens violated the California Honey Statute by selling a product labeled as "Nice 100% Pure Honey" from which all the naturally occurring pollen had been avoidably removed was dismissed because the California Honey Statute was preempted by the federal Food, Drug, and Cosmetic Act ("FDCA"), as amended by the Nutrition Labeling and Education Act ("NLEA"), according to the federal district court in Los Angeles. (Perea v. Walgreen Company, April 11, 2013, Carter, D.).

Even if the court took at face value the consumer’s argument that her claim was not about labeling, but was "based on the fact that the Nice Product cannot legally be sold in California," She had no viable cause of action under sections 29413(e) and 29671, either standing alone or as the basis for a California Unfair Competition Law (UCL) claim.

Background. On July 17, 2012, consumer Terri Perea purchased a container of Walgreens’s private-label brand of "Nice 100% Pure Honey" (the "Nice Product"). When Perea purchased the Nice Product, she believed that it had not been altered in any way to remove the pollen. However, she subsequently had the Nice Product tested by a melissopalynologist, Professor Vaughn Bryant of Texas A&M University, who concluded that the Nice Product contained no pollen.

Honey must be filtered to remove debris such as dirt and bee parts in order to be safe for human consumption. Some producers also filter most or all of the pollen from honey because it helps to slow down or prevent crystallization of the honey.

Ingesting the pollen naturally occurring in honey is believed to provide health benefits. Pollen contains protein, vitamins, minerals, beneficial fatty acids, carotenoids, and bioflavonoids. Many consumers believe that pollen helps lower cholesterol and may prevent other ailments.

In addition, the pollen in any given sample of honey can be used to identify the geographical origin of the honey. Knowing where their honey comes from is important to consumers because they can avoid purchasing honey from places like China. Chinese honey has been known to contain chemicals, metal, and antibiotics. Because Defendant’s Nice Product is completely devoid of pollen, it is impossible to be certain that the product did not originate from China.

Perea alleged that the Nice Product was unlawfully being sold in California because, pursuant to section 29413(e) of the California Food and Agriculture Code, no product may be sold as "honey" that has had its natural pollen removed where such removal is avoidable. By selling the Nice Product as "honey" in contravention of section 29413(e), Walgreens also violated section 29671 of the California Food and Agriculture Code and the California UCL, Perea alleged.

What is the lawsuit about? Walgreen filed its motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on the following grounds: Perea’s claims were preempted by federal law, the California Honey Statute impermissibly burdened interstate commerce, Perea lacked standing, and Perea failed to state a claim under the UCL.

Perea argued that this lawsuit could sidestep the growing body of case law holding that labeling claims regarding pollen-removed honey are preempted by the FDCA, as amended by the NLEA.

The only reasonable inference from the facts alleged in the complaint was that Perea purchased the product because she relied on the "100% Pure Honey" label and that she would not have purchased the product were it not labeled "Honey" or if it were labeled with some disclaimer such as "Pollen-Free Honey" or "Honey Without Pollen," the court determined.

Second, the only permissible reading of the first cause of action, section 29413 (e), together with section 29671, was that the statutes established a "labeling requirement" for what can be sold as "honey." Third, although Perea maintained that her claim had nothing to do with labeling, she resorted to a labeling case to argue that she had standing to bring her claim. Perea’s cause of action was inescapably a labeling claim, the court held, and it proceeded accordingly with its analysis.

Standing. Perea paid money to purchase the product labeled as "100% Pure Honey" because she believed that honey sold in California must contain pollen, and she alleged that honey without pollen has less value than what she paid for the Nice Product. Walgreens argued that Perea has not suffered an injury because it is perfectly legal to sell pollen-less honey in California. But whether or not Perea properly construed California law to support her claim that it was illegal to sell pollen-less honey was a question going to the merits of this case and should not be conflated with the question of standing, the court ruled.

Walgreen’s argument that its "money-back guarantee" deprived Perea of the ability to allege that she suffered economic injury was unavailing and unsupported by any legal precedent, the court decided. Thus, Perea had standing to bring her claim.

Preemption. Perea argued that her claim was not preempted because the FDCA did not preempt state-created standards of identity unless the federal government created a federal standard of identity for honey. This argument failed, the court held.

It was well established that the states had a legitimate interest in protecting local citizens against fraudulent or deceptive marketing and sale of food products. However, the Supremacy Clause dictated that state laws must yield where Congress has stated a "clear and manifest purpose" to displace individual state regulation. California’s section 29413(e) fell within the scope of the express preemption clause of the NLEA and thus was unconstitutional, the court determined.

Section 29413(e), in conjunction with section 29671, created a requirement for the labeling of "honey" that is not identical to 21 U.S.C. §343(i)(1) of the NLEA. That subsection required the Nice Product to be labeled "honey" (the "common or usual name" for the food). Section 29413(e), together with section 29671, prohibits the Nice Product from being sold when "labeled, marked, or designated" as "honey." Therefore, federal law preempted Perea’s claim that the California State Standard of Identity for honey prohibited the sale of the Nice Product as "honey."

Accordingly, Walgreen’s motion to dismiss the complaint under Rule 12(b)(6) was granted.

Even if the court took at face value Perea’s argument that her claim was not about labeling, but rather was "based on the fact that the Nice Product cannot legally be sold in California," her complaint would be dismissed, the court stated. As explained below, Perea had no viable cause of action under sections 29413(e) and 29671, either standing alone or as the basis for a UCL claim.

California vested enforcement of the honey statutes in "[t]he director and the commissioners of each county of the state, their deputies and inspectors[.]" California’s honey statutes provide for civil penalties for a first violation, and criminal conviction for more than one violation within a single year that is punishable by a fine of up to $1,000, or imprisonment.

The statutes did not provide for a private right of action, but rather authorized "prosecution" in "any county where any part of the offense occurred." It was clear from this statutory scheme that there was no private right of action to enforce sections 29413(e) and 29671, according to the court.

As to the UCL claim, 21 U.S.C. § 343(i)(1) requires a product for which there is no federal standard of identity to be labeled with the "common or usual name" when sold in interstate commerce. The "common or usual name" for Walgreen’s product was "honey." Therefore, 21 U.S.C. § 343(i)(1) clearly permitted Walgreens to sell its product labeled as "honey."

Because federal law permitted the conduct that is the basis of the complaint, Perea did not state a claim for unlawful business practices under the UCL.

The case is No. EDCV 13-00119 DOC (ANx).

Attorneys: Christopher T. Williams (Altus Trial Law) for Terri Perea. Jeffrey M. Thompson (Meagher & Geer) for Walgreen Company.

Companies: Walgreen Company

Cases: Advertising ConsumerProtection StateUnfairTradePractices CaliforniaNews