Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Kraft may be liable for labels that did not conform to FDA requirements, (Jul 1, 2013)

By Jody Coultas, J.D.

A purchaser stated California Unfair Competition Law (UCL) claims against Kraft Foods Global, Inc. for allegedly mislabeling its nut mix and cheese blend products, the federal district court in San Jose has held (Ivie v. Kraft Foods Global, Inc., June 28, 2013, Whyte, R.).

The purchaser alleged that the "natural lemon [lemondade] flavor" claims on the Crystal Light products, the nutrient content claims "good source" and "wholesome" on Planter's Nut-trition Wholesome Nut Mix, and the fat-related nutrient content claims on Kraft's Mexican Style Four Cheese Blend were false and deceptive.

Express preemption. The Federal Food, Drug, and Cosmetic Act (FDCA) and Food and Drug Administration’s (FDA) regulations expressly preempted the state law claims based on the Crystal Light products, according to the court. The purchaser alleged that the Crystal Light products contained artificial flavors. Kraft argued that the food labels complied with federal law, and a judgment in favor of the purchaser would impose different or additional requirements than those of the FDCA. Although the product may contain artificial ingredients, nothing in the FDA regulations suggests that these ingredients were flavors, artificial or otherwise. Allowing the state law claim to proceed would mean reading California's Sherman Laws to impose an additional or different regulatory requirement.

The purchaser’s other two claims based on the nut mix and cheese blend were not expressly preempted, according to the court. The products were allegedly misbranded because the disclosure statement concerning the nutrient content claims did not comply with FDA regulations concerning typeface and placement. The court held that Kraft violated the FDA's placement requirement, and that reasonable consumers would not necessarily look beyond the front of the packaging to discover the requisite disclosure statement. Because the purchaser sought to impose requirements identical to the federal requirements, the claims were not preempted.

Implied preemption. The purchaser’s claims were not impliedly preempted, according to the court. Kraft argued that the claims were impliedly preempted because they were based solely on alleged violations of the FDCA, and conflict with the FDCA's enforcement scheme. However, the claims were based on state laws that paralleled federal requirements. There was no conflict between state and federal law that might interfere with FDA regulatory authority.

Standing. Purchase of a product that the purchaser would not otherwise have purchased but for the alleged unlawful label was sufficient to establish standing, according to the court. Kraft argued that the labels were unlikely to deceive a reasonable consumer, and because the purchaser could not have known about the FDA's regulations regarding the font size and placement of the disclosure statements, she could not have relied on or been deceived by the alleged violations. The court found that the purchaser sufficiently established an economic injury and was not required to know of the FDA or state law regulations in order for violations thereof to cause an economic injury.

The purchaser lacked standing to bring claims based on products she had not purchased, according to the court. Courts have extended a plaintiff's standing to products nearly identical to the claims for the purchased product. However, the purchaser’s claims did not provide sufficient detail regarding the non-purchased products' nutritional contents and ingredients to allow the court to find standing.

The case is No. C-12-02554-RMW.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Susan Ivie. Dean N. Panos (Jenner and Block LLP) for Kraft Foods Global, Inc.

Companies: Kraft Foods Global, Inc.

Cases: StateUnfairTradePractices CaliforniaNews