Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: FDCA did not preempt seafood mislabeling claims against Bumble Bee Foods, (Dec 3, 2015)

By Michael Menzhuber, J.D., LL.M.

A putative class action claim, that a food manufacturer violated the Illinois Consumer Fraud and Deceptive Practices Act (ICFA) by making qualitative claims regarding nutrients on certain of its seafood products, was not preempted by the Food, Drug and Cosmetic Act (FDCA), according to the federal district court in Chicago. The court also denied the manufacturer’s motion to dismiss a claim of unjust enrichment and its request for a stay of the proceedings (McMahon v. Bumble Bee Foods, LLC, December 2, 2015, Tharp, J.).

Background. Joseph McMahon, on behalf of himself and all other similarly situated, brought an action against Bumble Bee Foods LLC (Bumble Bee), in which he alleged that Bumble Bee engaged in deceptive conduct when it sold various seafood products with labels that indicated that they were an “excellent source of Omega-3”. The putative class action sought recovery under the: (1) ICFA; (2) the Illinois Food, Drug and Cosmetic Act (IFDCA); and (3) various common law claims, including unjust enrichment.

The FDCA permits food manufacturers to make a qualitative statement that a product is an “excellent source of” a nutrient if the product contains at least twenty percent of the recommended daily intake (RDI) or the daily reference value (DRV). If the Food and Drug Administration (FDA) has not established an RDI or DRV for a particular nutrient, then food manufacturers cannot make a qualitative statement about that nutrient unless they submit a notification to the FDA and the FDA either grants their approval or takes no action within 120 days.

Neither a RDI nor a DRV has been established for Omega-3. Three manufacturers, but not Bumble Bee, submitted applications to the FDA to make qualitative statements about Omega 3. In support, they claimed that a report by the Food and Nutrition Board of the Institute of Medicine (IOM) qualified as an authoritative statement concerning the RDI for Omega-3. After the FDA took no action within 120 days, it became permissible for those manufacturers to use their proposed labels. Although Bumble did not submit an application, it began making “excellent source of” qualitative claims regarding certain of its seafood products.

Despite is earlier acquiescence to the manufacturers’ applications, the FDA published a proposed rule in which it rejected the IOM report as an authoritative statement. It concluded that, going forward, food manufacturers could not make qualitative statements about the content of Omega-3s in their products (Omega-3 rule). However, due to manufacturers’ concerns about the costs associated with phasing-out food labels that were permissible under their previous applications, the FDA delayed implementing the rule until January 1, 2016. The FDA did not, however, indicate that civil actions enforcing current law were stayed pending the rule’s implementation.

Bumble Bee filed a motion to McMahon’s IFDCA claim on preemption grounds. It also contended that McMahon’s unjust enrichment claim was not a viable cause of action under Illinois law. In the alternative, Bumble Bee moved to have McMahon’s case stayed until January 1, 2016, the effective date for the Omega-3 rule.

Preemption. Bumble Bee contended that the FDCA expressly preempted McMahon’s state law claim because it was an attempt to use state law to impose different and additional food labeling requirements than the FDA. The court disagreed. It began by noting the Bumble Bee did not, and could not contend that the McMahon’s IFDCA claim was substantively different than an FDCA claim because the state law under which McMahon brought the claim, the IFDCA, expressly adopts the FDCA and the accompanying rules promulgated by the FDA.

The court then considered Bumble Bee’s argument that McMahon’s state law claim was preempted because he was bringing an enforcement claim under current law rather than waiting until January 1, 2016, when the Omega-3 rule would become effective. It determined that the argument did not withstand scrutiny because nothing in McMahon’s complaint indicated that he was seeking to enforce the Omega-3 rule. Rather, the complaint alleged that Bumble Bee was not authorized to make statements about Omega-3 because it failed to submit an application to the FDA to do so.

The court also noted that, although not argued by Bumble Bee, there was no basis for inferring that the FDA’s decision to delay the effective date of the Omega-3 rule signaled an intention to invalidate the existing regulatory requirements governing Omega-3 statements.

Stay. The court denied Bumble Bee’s request to stay the case until January 1, 2016, the effective date of the Omega-3 rule. In doing so, it rejected Bumble Bee’s argument that its efforts to fully comply with the law would be complicated if McMahon were awarded injunctive relief because: (1) under existing regulations, Bumble Bee was not authorized to include Omega-3 statements on its product labels; and (2) the court had the power to enjoin Bumble Bee from selling more misbranded products.

As a practical matter, the court determined that it was unnecessary to stay the case because any injunction relating to Bumble Bee’s compliance with current labeling requirements would not be entered before the Omega-3 rule would come into effect.

Unjust Enrichment. Bumble Bee contended that unjust enrichment is not cause of action under Illinois law but, rather, a theory of recovery if a plaintiff proves other unlawful conduct. The court determined that whether an unjust enrichment claim can stand alone was of no consequence in the present case because: (1) McMahon’s unjust enrichment claim was derivative of his claim that Bumble Bee violated the ICFA; and (2) Bumble Bee did not move to dismiss McMahon’s ICFA claim.

The case is No. 14 C 03346.

Attorneys: Robert A. Clifford (Clifford Law Offices, PC) for Joseph McMahon. Forrest A. Hainline, III (Goodwin Procter, LLC) and Louis David Bernstein (The Bernstein Law Firm, LLC) for Bumble Bee Foods, LLC.

Companies: Bumble Bee Foods, LLC

Cases: Advertising StateUnfairTradePractices IllinoisNews