Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Inclusion of ‘poisonous’ artificial trans-fats may be unfair business practice, (Jul 16, 2015)

By Jody Coultas, J.D.

The federal district court in San Francisco held that a consumer’s California consumer protection law claims concerning the labeling of Nissin Foods (U.S.A.) Company, Inc.’s noodle products as “0g Trans Fat” were preempted by federal law and Food and Drug Administration regulations. However, claims regarding the inclusion of artificial trans-fats as an unfair business practices were allowed to proceed (Guttmann v. Nissin Foods (U.S.A.) Company, Inc., July 15, 2015, Alsup, W.).

The consumer purchased and consumed a variety of instant noodle products manufactured and sold by Nissin, which contained partially-hydrogenated oil, a food additive derived from low-cost oils. Although all of Nissin’s noodle products contained partially-hydrogenated oils, the nutrition-facts panel on each of the product labels included the indication “Trans Fat: 0g.”

Mislabeling claims. Nissin was granted dismissal of the consumer’s misleading labeling claims by the court based on federal preemption. The consumer argued the claims based on Nissin’s labels were not preempted because the “0g Trans Fat” nutrient-content claim was misleading. Nutrient-content claims, which are statements about the nutrient contents of a food product outside of the nutrition-facts panel, are governed by federal law and FDA regulations. Nutrition facts are also governed by federal law and FDA regulations. To permit state-law claims based on a “0g Trans Fat” nutrient-content claim while the FDA requires trans-fat to be declared as zero in the nutrition-facts panel would impose a different burden than what is required by federal law. Therefore, the claims were preempted.

Use claims. The consumer’s allegations that Nissin violated California law by including such a poisonous ingredient as artificial trans-fat in its noodles went to use, not labeling, and was not preempted, according to the court. The allegations that inclusion of artificial trans-fats was an unfair business practice under the California Unfair Competition Law had yet to be decided by a California court. However, the consumer plausibly alleged that Nissin’s conduct violated the UCL by presenting in detail the serious harm artificial trans-fats pose to public health, and that the only utility in the use of partially-hydrogenated oils is that they are less expensive. The claim was not preempted, and the FDA’s prior declination to prohibit or expressly permit the use of other partially-hydrogenated oils and artificial trans-fat did not establish a safe harbor protecting use of that ingredient from the reach of California law.

The case is No. C 15-00567 WHA.

Attorneys: Gregory Weston (The Weston Firm) for Victor Guttmann. Stuart Matthew Richter (Katten Muchin Rosenman LLP) for Nissin Foods (U.S.A.) Company, Inc.

Companies: Nissin Foods (U.S.A.) Company, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews