Friday, March 30, 2012

Iqbal: plausible to whom?

In re Quaker Oats Labeling Litigation, 5:10-cv-00502-RS   (N.D. Cal. Mar. 28, 2012)
Plaintiffs sued for violation of California’s consumer protection laws on the basic theory that all trans fats are unhealthy, making various Quaker products’ labels false and misleading. 
Initially, Quaker argued that Iqbal/Twombly required dismissal because plaintiffs’ claims were “implausible” in that the FDA disagreed with them.  While this is a terrible argument, it highlights the “plausible to whom?” question that Iqbal/Twombly generates; as it turns out, the answer is “plausible to the judge, not to the FDA.”
More specifically, Quaker argued that plaintiffs were wrong to claim that there was “no safe level” of trans fat consumption, and that the FDA had thoroughly evaluated and rejected this claim.  The court thought that plaintiffs persuasively responded that Quaker substantially overstated the FDA’s stance, but “even if it were the case that the FDA had clearly and specifically found that trans fats are safe in small quantities (notwithstanding possible consequences of cumulative exposure), that would not justify dismissing the complaint under Twombly and Iqbal as ‘implausible.’”  There was no reason to conclude that “the FDA is so infallible that it is wholly implausible for plaintiffs to contend trans fats present a health risk.  Particularly given that scientific understanding of the risks presented by particular substances often evolves over time, the FDA pronouncements on which Quaker relies are insufficient to support dismissing the complaint on implausibility grounds.”
Quaker had more success with its actual preemption argument.  As previous decisions had explained, plaintiffs could only avoid preemption if the material they challenged was not a “nutrient content claim” or “health claim,” or, if it does, that the product effectively was “misbranded” under the NLEA.   The NLEA governs all statements that “expressly or by implication,” “characterize[] the level of any nutrient,” or “characterize[] the relationship of any nutrient . . . to a disease or health related condition . . . .”  Here, plaintiffs argued that the statements didn’t comply with the NLEA and/or FDA regulations, making the products misbranded.  The court was partially persuaded.
The first challenged phrase was “Adds a dietarily insignificant amount of trans fat.”  Plaintiffs argued that Quaker’s recasting of the explicitly permitted statement that its products contain “0 Grams” of trans fats was deceptive.  But the regulations define an “insignificant amount” as an amount that allowed the nutrition label to say zero.  Since the challenged phrase was permissible under the regs, state-law claims of falsity or misleadingness were preempted.
Next, plaintiffs challenged the phrase “Heart Healthy”/images of hearts, combined with the claim that “diets rich in whole grain foods and other plant foods and low in saturated fat and cholesterol may help reduce the risk of heart disease” or “3g of soluble fiber daily as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease.”  These claims were expressly permitted by regulation. Plaintiffs argued that the proces by which Kraft obtained regulatory approval for the first claim was defective, but the question was not whether the claim should be permissible; rather, it was whether the claim was permissible under the regs. Trans fat was not a “disqualifying” ingredient that rendered misleading otherwise truthful nutrition content claims, so plaintiffs’ challenges were preempted.
Third was “Helps Reduce Cholesterol.”  FDA regs allow a health claim associating soluble fiber from whole grain oats with a reduced risk of coronary heart disease, and further allow “optional information” that the reduced risk comes through the intermediate link of cholesterol.  Plaintiffs argued that Quaker went beyond “optional information” by making the cholesterol claim so prominent.  The FDA sent a warning letter about an allegedly similar overemphasis of cholesterol lowering claims made on Cheerios boxes.  At the pleading stage, the court thought it was premature to rule that the Quaker claims were sufficiently different from the Cheerios situation.
Fourth was “All the nutrition of a bowl of instant oatmeal” on the Quaker Oatmeal to Go bar.  The regs allow the phrase “‘contains the same amount of [nutrient] as a [food]’ and “as much [nutrient] as a [food].’”  However, the court found that the regulation plainly contemplates that a specific nutrient will be identified; the FDA’s examples were “as much fiber as an apple,” and “Contains the same amount of Vitamin C as an 8 oz glass of orange juice.”  Quaker argued that if it could identify any one nutrient as equally available from the two products, there was no reason it couldn’t claim all the nutrition.  But the reg requires that the foods being compared qualify as a “good source” of the particular nutrient. Quaker didn’t explain how it could comply with the requirement that instant oatmeal be a “good source” of unspecified nutrients; the reg simply didn’t authorize this kind of statement.
Plaintiffs might not be able to show falsity or misleadingness, since they didn’t allege that there were any nutrients in instant oatmeal not found in the bars or found in lower levels; trans fat isn’t a disqualifying ingredient that would render misleading otherwise truthful nutrient content claims.  But that doesn’t mean there was preemption.
Finally, plaintiffs challenged images of oats, nuts, fruits, and brown sugar. The court previously held that challenges to photos of oats and nuts weren’t preempted because NLEA doesn’t regulate front-of-the-box symbols.  Quaker argued that the regs governed representations relating to product flavors.  But it wasn’t clear whether the challenged imagery would be better characterized as descriptive of flavors or of other characteristics.  At the pleading stage, at least, there was no preemption.
Quaker renewed its puffery argument, even though the prior order found that statements such as “wholesome” and “smart choices made easy” could not be dismissed on the pleadings as puffery.  Quaker argued that it had provided additional context, but the court disagreed.  Quaker might be able to show that the statements were too general or vague to be actionable, but not now.

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