Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Consumer’s evaporated cane juice misbranding claim dismissed under primary jurisdiction doctrine, (Jun 3, 2014)

By Greg Hammond, J.D.

A consumer’s claims that Hain Celestial Group, Inc. engaged in deception and misbranding in violation of California’s Unfair Competition Law (UCL), Consumer Legal Remedies Act (CLRA), and False Advertising Law (FAL) were partially dismissed by the federal district court in San Jose, California. In reaching its decision to grant Hain’s partial motion to dismiss, the court determined that the consumer did not have standing to bring claims for unpurchased products and that it should defer to the FDA’s expertise on whether evaporated cane juice (ECJ) is a common or usual name for sugar (Smedt v The Hain Celestial Group, Inc., May 30, 2014, Davila, E).

Background. Suzanne Smedt brought a putative class action against the Hain Celestial Group, Inc., alleging that the company violated California’s UCL, FAL, and CLRA, by including the following purportedly unlawful and misleading representations on the packaging of various food products: (1) “no trans fat;” (2) “evaporated cane juice;” and (3) “all natural.” Smedt purchased Hain’s Terra Stripes & Blue Sea Salt Potato Chips, Coconut Dream Coconut Drink (Original), and Sensible Portions Sea Salt Garden Veggie Straws. She also alleged that other Hain products were substantially similar and should be included in the “class products.” The case was before the district court on Hain’s partial motion to dismiss Smedt’s unpurchased products and ECJ claims.

Primary jurisdiction. In support of its motion to dismiss, Hain argued that Smedt’s ECJ claims should be dismissed or stayed under the doctrine of primary jurisdiction. To determine whether the doctrine should apply, the court considered: “(1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration.”

The court determined that it was appropriate to apply the doctrine in this case, given the FDA’s recent reopening of the comment period to its draft guidance titled, “Guidance for Industry: Ingredients Declared as Evaporated Cain Juice; Draft Guidance.” Specifically, the court found that it was appropriate to defer to the FDA’s expertise on whether ECJ is the common or usual name of sugar, because it has not resolved the issue yet, it plans on issuing a final guidance on the matter, and any decision made by the court regarding ECJ could disrupt the uniform application of the FDA’s regulatory rules.

Standing. Hain also argued that Smedt did not have standing to sue for products she did not purchase, and that her unpurchased product claims should therefore be dismissed. Although the court noted that claims for unpurchased products have survived motions to dismiss if they are substantially similar to purchased products, Smedt failed to demonstrate that the unpurchased products in her case were substantially similar to the products she did purchase. The court found that because she did not allege similarity with sufficient particularity, she did not have standing to bring claims for unpurchased products.

Consequently, Hain’s partial motion to dismiss Smedt’s ECJ and unpurchased product claims was granted.

The case is No. 5:12-CV-03029-EJD.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Suzanne Smedt. William Lewis Stern (Morrison & Foerster LLP) for The Hain Celestial Group, Inc.

Companies: The Hain Celestial Group, Inc.

Cases: StateUnfairTradePractices CaliforniaNews