Antitrust Law Daily Wrap Up, ADVERTISING NEWS—N.D. Cal.: Court defers to future FDA guidance on evaporated cane juice labeling, (May 21, 2014)

By Greg Hammond, J.D.

A consumer’s claim that a yogurt manufacturer violated California’s Unfair Competition Law by using the term “evaporated cane juice” (ECJ) on its product packaging was dismissed. The federal district court in San Jose determined that the doctrine of primary jurisdiction was applicable, as the FDA has not settled the issue of using the term ECJ on food labels and intends to provide future guidance (Avila v Redwood Hill Farm and Creamery, Inc., May 19, 2014, Davila, E).

Putative class action. Glen Avila purchased four flavors of Redwood Hill Farm and Creamery, Inc.’s Green Valley Organics yogurt products: strawberry, vanilla, blueberry, and peach. After discovering that the yogurts’ packaging used the term ECJ, he filed a putative class action lawsuit, alleging that the labels were false, violated labeling requirements under the Food, Drug, and Cosmetic Act (FDCA) (21 USC 301 et seq.) and California Sherman Food, Drug, and Cosmetic Law, and violated California’s Unfair Competition Law. The case was before the district court on Redwood’s motion to dismiss.

Primary jurisdiction. In his complaint, Avila argued that Redwood’s various yogurt labels violated state and federal law because they used the term ECJ instead of the common or usual name of that ingredient, and he would not have otherwise purchased the products had he known they were illegal to sell and possess. According to the court, the issue it had to decide was whether Avila’s ECJ claims were barred by the doctrine of primary jurisdiction, which allows a court to defer to an agency when the agency is in the process of making a determination on a key issue in the litigation.

Previously, the court had declined to extend the doctrine of primary jurisdiction on ECJ claims, finding that the FDA did not view the issue as unsettled. However, since its previous related decisions, the FDA has reopened the comment period for the “Draft Guidance for Industry on Ingredients Declared as Evaporated Cane Juice; Reopening of Comment Period; Request for Comments, Data, and Information” (79 FR 12507) and has expressed its intent to revise the draft guidance. Consequently, the district court found that the issue at bar requires the expertise of the FDA, and a decision that is contrary to the FDA’s formal position would disrupt the application of the FDA’s regulatory rules. The court applied the doctrine of primary jurisdiction to defer to the FDA’s future determination and dismissed the case without prejudice.

The case is No. 5:13-CV-00335-EJD.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Glen Avila. Robert Edward Aune (Aune & Associates) for Redwood Hill Farm and Creamery, Inc.

Companies: Green Valley Organics, LP; Redwood Hill Farm and Creamery, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews