Tuesday, April 02, 2013

Court mostly rejects Dole's fruit salad of arguments, still hands Dole a partial win

Brazil v. Dole Food Co., Inc., 2013 WL 1209955 (N.D. Cal.)

Brazil sued Dole for various violations of the UCL, FAL, CLRA, Song-Beverly Consumer Warranty Act, and the Magnuson-Moss Warranty Act, and for restitution.  The court rejected many of Dole’s arguments but still found the complaint lacking in key respects.  Brazil alleged that he bought misbranded Dole products, including Dole Wildly Nutritious Signature Blends Mixed Berries, Dole Wildly Nutritious Signature Blends Tropical Fruit, Dole Mixed Fruit in 100% Fruit Juice, Dole Blueberries, Dole Fruit Smoothie Shakers, Dole Mixed Fruit in Cherry Gel (Sugar Free), and Dole Tropical Fruit in Light Syrup & Passion Fruit Juice.  He allegedly relied on “‘All Natural,’ fresh, antioxidant, sugar-free and other nutrient content claims,” and wouldn’t have bought them had he known the truth: that the “All Natural” products contained artificial or unnatural ingredients, flavorings, coloring, and/or chemical preservatives; that the “fresh” products were thermal processed, frozen, etc.; that the “sugar free” products contained sugar and/or had more than 40 calories per serving size; that the “low calorie” products had more than 40 calories per serving size; that the “nutrient content” or “antioxidant” claims were made for nutrients lacking a Daily Value or lacking the minimum Daily Value specified for the type of claim made; and that Dole made unauthorized health claims.

Dole first argued preemption because there’s no private right of action to enforce FDA regulations.  But that doesn’t matter, since Brazil only claimed a right to enforce requirements identical to those of the FDA, using California’s Sherman Law and then the UCL/CLRA/FAL to do so.  The Sherman Law expressly adopts federal labeling requirements as its own.  All the alleged misbranding violations here were covered by FDA regulations and policies.  Dole argued that, even though nonidentical requirements are expressly preempted by the FDCA, private rights of action under state statutes were impliedly preempted because the FDCA provides no private right of action.  Not so.  There’s a strong presumption against federal preemption in health and safety matters.  Pom Wonderful LLC v. Coca-Cola Company, 679 F.3d 1170 (9th Cir. 2012), is not to the contrary; it was based on allocating authority between the federal Lanham Act and the FDCA.  While the 9th Circuit reasoned that allowing private lawsuits under the Lanham Act to enforce the FDCA would “undermine Congress's decision to limit enforcement of the FDCA to the federal government,” that didn’t help Dole here.  The Pom ruling was specifically limited to the Lanham Act, not to the California state claims remanded to the district court; it didn’t deal with the presumption against preemption.  The legislative history also indicates that the preemption provision, according to Representative Waxman (who introduced it), “recognizes the importance of the State role: by allowing States to adopt standards that are identical to the Federal standard, which may be enforced in State court; by allowing the States to enforce the Federal Standard in Federal court.” 
Congressional silence on preemption of identical requirements was even more important given Congress’s presumed awareness that virtually every state permits nongovernmental parties to enforce state laws of general applicability barring deceptive or unfair acts or practices. The case for federal preemption is especially weak where Congress was aware of state laws and nonetheless decided to tolerate any tension between state and federal law.  Plus, the express preemption provision states that its preemptive effect “sweep[s] no further than the plain language of the statute itself.” 

And the no-preemption conclusion was consistent with the Supreme Court’s ruling in Medtronic, addressing similar preemption provisions in the context of the Medical Device Amendments, which also bars non-identical requirements (and by implication allows states to enforce identical requirements).  This provision, according to the Supreme Court, “does not prevent states from providing a damages remedy for claims premised on a violation of FDA regulations; the state duties in such a case ‘parallel,’ rather than add to, federal requirements.”  The 9th Circuit, post-Pom, has reaffirmed this conclusion with respect to medical devices (not that it needed to do so given the governing law).  The Supreme Court rejected a position similar to Dole’s here, deeming it not just unpersuasive but implausible, since it would bar state courts from affording state consumers any protection from injuries caused by defective medical devices.  The result would be complete immunity from private liability to an industry that, in Congress’s judgment, needed more rather than less stringent regulation.  The court here found it similarly doubtful that, “in attempting to strengthen and unify nutrition labeling on food, Congress would have intended to eliminate all judicial recourse for those harmed by false and misleading nutritional labels.”

Moreover, at least for purposes of this motion, Dole failed to identify any non-identical requirements Brazil was attempting to impose.  Dole itself claimed that there was no challenged label element not addressed by FDA regulation or policy.

The court likewise declined to apply the primary jurisdiction doctrine. Astiana v. Hain Celestial Grp., – F. Supp. 2d –, 2012 WL 5873585 (N.D. Cal. 2012), applied the doctrine with respect to “all natural,” “pure natural,” and “pure, natural, and organic” claims for cosmetics.  Unlike the situation in Astiana, here the FDA has established requirements for all the terms Brazil challenged.  So there was no risk of undercutting the FDA’s judgment and authority by making independent determinations on issues upon which there were no FDA rulings.  Nor did the case raise particularly complicated issues committed to the FDA.  “As with so many of the other food misbranding cases filed recently within this district, Brazil's case is ‘far less about science than it is about whether a label is misleading.’” Courts decide misleadingness every day.  The primary jurisdiction doctrine doesn’t disable courts as to every claim conceivably within an agency’s purview.

Of course, Dole also challenged standing, arguing that Brazil’s alleged injury came from his allegation that the products he bought were legally worthless, which was merely “a lawyer’s musings.”  He alleged no physical harm.  But he did allege economic injury from buying products he wouldn’t have bought had he known the truth, and paying an unwarranted premium from the misleading labels.  Allegations that he and class members spent money that, absent Dole’s actions, they wouldn’t have spent, were quintessential injury-in-fact.

Dole then argued that Brazil’s claims were implausible and not pled with particularity. The court didn’t find implausibility, but agreed that a number of the claims lacked sufficient particularity, so it granted without prejudice Dole’s motion to dismiss the claims grounded in fraud.

Dole argued that Brazil’s claims were facially implausible because no reasonable consumer was likely to be deceived, and submitted packaging labels as support.  While the court doubted the ultimate viability of some of the claims, plausibility isn’t probability, and deceptiveness is generally a question of fact.

But on particularity, Brazil sufficiently alleged the who and the when, he lacked sufficient detail as to the other elements.  The complaint “provides little more than a long summary of the FDCA and its food labeling regulations, a formulaic recitation of how these regulations apply to Defendants' products, and conclusory allegations regarding Defendants' ‘unlawfulness.’”  It didn’t identify which Dole products were at issue.  Though Brazil alleged purchase of seven fruit-related products, the complaint also apparently alleged violations based on misbranding of products that weren’t necessarily similar, such as vegetables, or unidentifiable “other food products.” The complaint claimed, without alleging specific facts, that the misrepresentations and violations were similar across product lines.  The court noted that the claims were “difficult to decipher and appear to include claims from similar lawsuits filed in this district.”

In addition, the complaint was “filled with vague assertions that, despite general references to multiple categories of state and federal regulations, leave unclear the precise nature of any alleged violation.”  It also didn’t clearly indicate the content of the labels upon which Brazil allegedly relied or the ads/website statements he saw.  Though a plaintiff isn’t required to plead with an unrealistic degree of specificity when a long-term ad campaign is at issue, this complaint lacked even a minimal degree of specificity.

The court also dismissed the Song-Beverly claim with prejudice because the products here were consumables, to which the Act doesn’t apply.  As for the Magnuson-Moss Warranty Act, the Act only confers federal jurisdiction as to products that cost more than $5, and Brazil failed to allege this (though the court noted that under CAFA there might be federal jurisdiction anyway).  More fatally, the allegedly misbranded labels weren’t “written warranties” under the Act since they didn’t promise that the products were defect free as required by the statute—the allegedly violative ingredients were presumably knowingly added (though I don’t see why that matters), and the challenged statements were mere product descriptions.

Unjust enrichment was also dismissed as a separate cause of action, but restitution was available as a remedy.

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