Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Dole may be liable for mislabeling “all natural” food, (Sep 26, 2013)

By Jody Coultas, J.D.

A Dole food product purchaser stated, in part, California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) claims against Dole Food Company, Inc. for allegedly mislabeling its food products as “all natural,” the federal district court in San Jose has held (Brazil v. Dole Food Company, Inc., September 23, 2013, Koh, L.). The purchaser had standing to assert claims based on products he did not actually purchase.

The purchaser sought to represent a class of Dole food product purchasers that were allegedly deceived by Dole’s false and misleading labeling of its products in violation of the Sherman Food, Drug, and Cosmetic Act and California’s UCL, FAL, and CLRA.

Products not purchased. The purchaser had standing to bring claims based on products he did not actually buy, according to the court. To satisfy Article III standing, a plaintiff must allege: (1) an injury-in-fact that is concrete and particularized, and actual or imminent; (2) that the injury is fairly traceable to the challenged action of the defendant; and (3) an injury that will be redressed by a favorable ruling. Courts have found that purchasers have standing to proceed on claims based on products the purchaser did not buy where the products and claims were substantially similar. Here, the purchaser claimed that he was misled by the improper use of the term “all natural” on Dole Mixed Fruit in Cherry Gel, and that the injury he suffered was not meaningfully distinguishable from the injury suffered by an individual who was misled by the use of the term “all natural” on Dole Mixed Fruit in Black Cherry or Peach Gel.

Website statements. However, the purchaser lacked standing to sue over website statements he never viewed, according to the court. The purchaser argued that the Food and Drug Administration has held that statements made on websites whose addresses appear on a product’s label are incorporated into the label as a matter of law, and that the Dole products label contained its website address. Because it is unlawful to sell misbranded food products, the purchaser argued that he purchased “illegal” products as a result of misrepresentations made on the website. Even if the website statements violated federal law by virtue of the FDA’s position, it was unclear how the regulatory violation caused the purchaser to buy products when he neither saw the allegedly offending statements nor relied on them in deciding to purchase the products. The purchaser’s “illegal product” theory was also inconsistent with the California law standing requirements that a plaintiff view the advertising.

Sufficiently detailed claims. The court denied Dole’s motion to dismiss based on the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Dole argued that, with respect to the substantially similar products, the purchaser had merely provided a list of product names and statements that appear on the product labels without explaining how the labels were unlawful or misleading. However, the claims were sufficiently detailed. Dole’s argument that the purchaser should have listed the regulatory violations associated with every single product with the same degree of exhaustive detail provided for the purchased products. However, that amount of detail would render the complaint cumbersome, redundant, and excessively long.

Preemption. The purchaser’s claims, based on Dole’s alleged affirmative duty to disclose regulatory violations on their food product labels, was preempted and dismissed with prejudice by the court. States may not directly or indirectly establish any food labeling requirement that is not identical to certain FDA labeling requirements, including those related to nutrition information, nutrient levels, and health-related claims. The purchaser’s claim that the fact that Dole sold misbranded products and did not disclose it was a deceptive act was an attempt to impose on food manufacturers an affirmative duty to disclose labeling violations on their packaging that does not appear in the FDCA or FDA regulations. Therefore, the claim was preempted.

Nationwide class claims. The court denied Dole’s motion to strike the nationwide class claims. California’s choice-of-law rules require each class member’s consumer protection claim to be governed by the consumer protection laws of the jurisdiction in which the transaction took place. A detailed choice-of-law analysis was required to determine whether California’s choice-of-law rules applied to bar all, some, or none of Brazil’s class claims.

The case is No. 12-CV-01831-LHK.

Attorneys: Alex Peet (Lovelace Law Firm, P.A.) for Chad Brazil. William Lewis Stern (Morrison & Foerster LLP) for Dole Food Company, Inc.

Company: Dole Food Company, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews