Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—C.D. Cal.: Partially hydrogenated oil suit dismissed, stayed pending FDA determination, (Dec 30, 2015)

By Greg Hammond, J.D.

Allegations that the manufacturer of instant mashed potato products violated California’s Unfair Competition Law (UCL) by selling products containing partially hydrogenated oils (PHOs) were dismissed and stayed by the federal district court in Los Angeles. The court concluded that the consumer did not suffer economic injury and that the health effects of using PHOs as a food ingredient is a complex issue that should be initially determined by the FDA (Red v. General Mills, Inc., December 29, 2015, Wright, O.).

The consumer claims that PHOs are the main source of trans fat in the American diet, that they cause immediate inflammation of internal organs upon consumption, and that PHOs increase the risk of coronary heart disease, type-2 diabetes, and cancer. After the FDA issued a declaratory order in June 2015, ruling that PHOs were no longer generally recognized as safe, the consumer filed her putative class action lawsuit against General Mills, Inc. and General Mills Sales, Inc. for using PHOs in their instant mashed potato products. General Mills moved to dismiss and to stay the action.

Unfair, unlawful practices. The consumer claimed that she suffered an economic injury because she paid for a safe product, but received a dangerous product containing PHOs. The court noted, however, that allegations the consumer made in three other trans-fat lawsuits demonstrated that she knew that PHOs were unhealthy, knew that food products sold in California contain PHOs, and knew that she could look at the ingredients on the label to determine whether or not that particular product contained PHOs. The consumer therefore could not claim that she sought to purchase PHO-free food unless she alleged that the label on the products at issue did not list PHOs as an ingredient, the court determined. Allegations that it is unreasonable to expect consumers to read the label before purchasing the food were rejected. Rather, the court found that not reading the label is the type of “self-inflicted injury” that the Ninth Circuit and District of Columbia Circuit held does not confer standing. The UCL claim was therefore dismissed with leave to amend.

Stay pending FDA determination. The court also stayed the case, pending the FDA’s determination on whether there are certain uses of PHOs that could still be approved. It reasoned that: (1) the UCL claim raises the issue whether the presence of PHOs in mashed potato products creates a risk to human health that is not outweighed by its utility; (2) Congress granted the FDA authority to comprehensively regulate food safety by requiring the pre-market approval of food additives and exempting foods generally recognized as safe; (3) the FDA determined that PHOs are no longer generally recognized as safe, but withheld judgment on whether there are certain uses of PHOs that could still be approved; and (4) a determination concerning food ingredient safety requires both specialized expertise and uniformity in administration.

The case is No. 2:15-cv-02232-ODW (JPR).

Attorneys: David Elliot (The Weston Firm) for Jennifer Red. David T. Biderman (Perkins Coie LLP) for General Mills Inc. and General Mills Sales Inc.

Companies: General Mills Inc.; General Mills Sales Inc.

Cases: StateUnfairTradePractices CaliforniaNews