Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Trader Joe’s class action stayed pending FDA guidance, (Aug 12, 2014)

By Greg Hammond, J.D.

A putative class action against Trader Joe’s Company, alleging that the specialty retail grocer used misleading labels on its products, was stayed pending the Food and Drug Administration’s (FDA) final guidance on the term “evaporate cane juice” (ECJ). In staying the case, the federal district court in San Francisco determined that the doctrine of primary jurisdiction was applicable and it would be a waste of judicial and party resources to litigate the remaining claims separately (Gitson v. Trader Joe’s Co., August 8, 2014, Chhabria, V.).

Background. Amy Gitson purchased a number of yogurts, milk, and other products from Trader Joe’s. She filed suit against the company, alleging that the products: (1) were unlawfully and misleadingly labeled with the term ECJ or organic ECJ, instead of its common name—sugar; (2) contained added preservatives or artificial flavors, but failed to disclose those ingredients on the products’ labels; and (3) were labeled “milk,” but did not comply with the standardized definition for milk promulgated by the FDA. Gitson stated claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Trader Joe’s moved to dismiss Gitson’s third amended complaint.

Nationwide class claims. According to the court, the remaining issue on Trader Joe’s motion to dismiss was whether consumers were able to pursue their California law claims on behalf of a nationwide class. The court determined that it would not strike the nationwide class claims at the pleading stage, citing the Ninth Circuit’s decision in Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). In Mazza, it was determined that a consumer protection class action could proceed under the laws of multiple states and failure to identify appropriate subclasses at the outset of a case is not necessarily fatal.

Primary jurisdiction. The FDA reopened the comment period on its draft guidance for ECJ in March 2014, noting its intent to publish a final guidance on the issue. Consequently, the court found it appropriate to stay the consumers’ ECJ claims pending the agency’s final guidance. The court also stayed the remaining claims, finding that it would be a waste of judicial and party resources to “carry out this lawsuit piecemeal” without also litigating the ECJ claims.

The case number is 13-cv-01333-VC.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Amy Gitson. Adam Golden Levine (O'Melveny & Myers) for Trader Joe's Co.

Companies: Trader Joe's Co.

Cases: Advertising CaliforniaNews