Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D.N.Y.: Claims of deception in use of “Active Naturals” cosmetics labeling to proceed, (Mar 31, 2014)

By Edward L. Puzzo, J.D.

Claims that “Active Naturals” cosmetic product labels were deceptive, because the products contained primarily synthetic ingredients, were not preempted by federal labeling law, nor did a federal agency have primary jurisdiction, the federal district court in White Plains, New York has ruled (Goldemberg v. Johnson & Johnson Consumer Companies, Inc., March 27, 2014, Roman, N.). The court denied the manufacturer’s motions to dismiss and allowed the claim of deceptive or misleading practices to proceed.

Michael Goldemberg brought an action against Johnson & Johnson on behalf of a purported class for deceptive practices under the New York Deceptive Acts and Practices law. He alleged that, by using the term “Active Naturals” on its Aveeno personal care products, Johnson & Johnson misled consumers into believing its products were made exclusively from natural ingredients, whereas in fact the majority of the products’ ingredients were synthetic.

Preemption. Johnson & Johnson sought to dismiss Goldenberg’s state deceptive practices claims, first arguing that the federal Food, Drug, and Cosmetic Act of 1938 (FDCA) preempted the state law claims. The court explained that the state law must be preempted if its requirement for labeling and packaging is not identical with a specific FDCA requirement.

Goldemberg sought to enjoin Johnson & Johnson from using the term “Active Naturals” on the labeling of Aveeno products with synthetic ingredients. Johnson & Johnson countered that this would differ from FDA regulations, which specified that all ingredients be listed on packaging in descending order of predominance. Johnson & Johnson argued that manufacturer compliance with the FDA ingredient listing requirements preempted claims of misleading use of a brand name.

The court, however, noted that there was no FDA regulation governing the use of the term “natural” on cosmetics labels, nor any federal requirement limiting brand name usage for cosmetics other than a general prohibition against misbranding. Goldemberg was alleging that the term “Active Naturals” was misleading in itself and was not seeking to enjoin the same aspect of labeling as the ingredient list. The court placed the use of the term “Active Naturals” as a potentially misleading or deceptive advertising claim outside the scope of preemption. Accordingly, the court found that Goldemberg claims were not preempted by federal law and declined to dismiss the claims on that basis.

Primary jurisdiction. Johnson & Johnson next sought dismissal of Goldemberg’s claims on the grounds that federal regulatory agencies had primary jurisdiction over cosmetic labeling issues. The court explained that a case-by-case determination must be made as to whether the doctrine of primary jurisdiction should apply. The first factor in this determination was whether the issue was within the conventional experience of judges or if it required technical considerations within an administrative agency’s field of expertise. Here, the court stated, the question of whether the term “Active Naturals” was deceptive or misleading was one that the courts were “eminently well-suited” to address. Although the question of whether a particular ingredient is “natural” in the context of cosmetics may require the FDA’s technical expertise, this case will not turn on that determination, the court stated. Instead, it will turn on whether the fact that most of the ingredients were synthetic would make the use of the term “natural” deceptive.

The second factor in this determination was whether the issue was within the agency’s discretion. The court found that cosmetics labeling was undoubtedly within the FDA’s discretion, so this factor weighed in favor of the application of the primary jurisdiction doctrine, the court stated. The third factor in this determination was whether a substantial danger of inconsistent rulings existed. Johnson & Johnson argued that an increasing volume of litigation over the use of the term “natural” in cosmetics created the potential for inconsistent judicial rulings. But the court noted that the FDA had recently declined to promulgate a rule defining the term “natural’ in cosmetics. Since the agency was not simultaneously contemplating the same issue, and decisions in various district and appellate courts regularly conflict, the court stated, this factor weighed against the application of the doctrine of primary jurisdiction.

The final factor in this determination was whether a prior application to the agency had been made. The court determined that it would be unavailing to defer to the agency since the FDA had recently declined to define the term ’natural” in cosmetics, and further rulemaking on this issue was not within its current health and safety priorities due to limited resources. This factor too weighed against the application of the doctrine of primary jurisdiction. Since most of the factors weighed against the application of the doctrine of primary jurisdiction, the court declined to dismiss the case on that basis.

Deceptive or misleading. Goldemberg alleged that the term “Active Naturals” was deceptive because it conveyed to consumers that the Aveeno products were completely natural, yet the products contained synthetic ingredients. Johnson & Johnson countered that the term only conveyed that that the products contained natural ingredients, not that they were 100% natural with no synthetic ingredients and, in any case, all ingredients were listed on the label. The court found that this case was similar to Ackerman v. Coca-Cola Co., 2010 WL 2925955 (E.D.N.Y. July 21, 2010), where a product labeled “vitaminwater” could mislead consumers into believing that the product contained only vitamins and water, despite an FDA-mandated ingredients list which disclosed the presence of sugar. Although the presence of a disclaimer or other clarifying language may defeat a claim of deception in some instances, the court ruled that it could not, as a matter of law, hold that the product label and website advertisements were not misleading to a reasonable consumer. Consequently, the court declined to dismiss the state Deceptive Acts and Practices law claims on the grounds that they were not misleading as a matter of law.

The case is No. 13-cv-3073 (NSR).

Attorneys: Todd Seth Garber (Meiselman, Packman, Nealon, Scialabba & Baker PC) for Michael Goldemberg. Eileen Miriam Patt (Kramer, Levin , Naftalis & Frankel, LLP) for Johnson & Johnson Consumer Companies, Inc.

Companies: Johnson & Johnson Consumer Companies, Inc.

Cases: Advertising ConsumerProtection StateUnfairTradePractices NewYorkNews NewJerseyNews