Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Primary jurisdiction doctrine did not apply in “all-natural” labeling cases, (Oct 14, 2013)

By Jody Coultas, J.D.

The federal district court in San Francisco has denied motions to stay filed by General Mills, Inc. in two separate cases brought by consumers claiming the company falsely advertised its Nature Valley products as “all natural” (Janney v. General Mills, Inc.; Bohac v. General Mills, Inc., October 10, 2013, Orrick, W.).

The consumers allegedly relied upon representations that Nature Valley was 100% natural when deciding to purchase the products. Both consumers argued that the presence of processed sugar substitutes not found in nature rendered the all-natural advertising false and misleading. One of the consumers also based his claims on the inclusion of genetically modified organisms, which he argued were not natural.

General Mills sought to stay both cases, arguing that the U.S. Food and Drug Administration (FDA) had primary jurisdiction over the term “natural” and other courts have stayed their cases pending a response to a referral to the FDA of the question of whether products with bioengineered ingredients may be labeled “natural.”

The primary jurisdiction doctrine applies where there is the need to resolve an issue placed by Congress within the jurisdiction of an administrative body having regulatory authority pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme that requires expertise or uniformity in administration.

Because there was little risk of invading the FDA’s jurisdiction, the court declined to apply the primary jurisdiction doctrine to the cases. Most judges in the district have repeatedly declined to invoke the primary jurisdiction doctrine in cases concerning whether the term “natural” was false or misleading. Food labeling is within the expertise of the FDA, but the definition of “natural” was not an issue of first impression or one that has not been addressed by the FDA. The issue of whether General Mills’ use of the term “natural” was false or misleading was fully within the court’s province, and did not require the FDA’s expertise. The views expressed by the FDA would likely be taken into account, thus negating the risk of usurping the FDA’s interpretive authority and undermining the FDA’s considered judgments.

The court also declined to exercise its power to stay the case. In determining whether to stay a case, courts look at the possible damage a stay would create, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay. General Mills sought a three-month stay, which it argued would not harm any party. The court was skeptical that the FDA would timely respond to a substantially similar case referred to it. Balancing the potential cost to General Mills of commencing discovery against the delay caused by a stay and the likelihood that the FDA would not definitively and timely resolve the question presented to it, the court declined to exercise its discretion to stay this case.

The cases are Nos. 12-cv-03919-WHO and 12-cv-05280-WHO.

Attorneys: George Richard Baker (Baker Law PC) for Judith Janney. Kim E. Richmond (Reese Richmond LLP) for Sean Bohac. Breena Michelle Roos (Perkins Coie LLP) for General Mills, Inc.

Companies: General Mills, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews