Gedalia v. Whole Foods Market Services, Inc., 2014 WL 5315030, No. 4:13–CV–3517 (S.D. Tex. Sept. 30, 2014)
Gedalia sued on behalf of a putative class of people who bought Whole Foods’s private-label 365 Organic and 365 Everyday Value products allegedly falsely labelled as being organic, natural, and/or GMO-free. Plaintiffs brought claims under various state consumer protection laws as well as common-law theories. The claims encompassed hundreds of different products; the court expressed doubt about plaintiffs’ standing to represent consumers of products they didn’t purchase, but didn’t resolve the issue because it ruled on lack of plausible reliance. Likewise, the court was skeptical that plaintiffs could bring claims based on online and in-store representations not present on the actual packages, because they didn’t allege they saw those representations.
The court did reject preemption arguments; the Organic Foods Production Act (OFPA) does not clearly indicate a purpose to occupy the field, nor did it conflict with relevant California law. Nor were “natural” claims impliedly preempted by the FDCA/NLEA. Reliance on the primary jurisdiction doctrine “would likely be unfruitful due to the agency’s long-standing reluctance to officially define the term ‘natural.’”
The sticking point was a misrepresentation that would be likely to deceive a reasonable consumer. This is usually a fact question unsuited for a motion to dismiss, unless “the advertisement itself made it impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived.” Other cases have noted that there’s not much reason to think that consumers know or understand federal definitions of things like “organic” or “synthetic.” Williams v. Gerber, 552 F.3d 935 (9th Cir. 2008), held that consumers aren’t required to read the ingredient label to correct misleading impressions from the front of a package. In particular, a claim to be made with fruit and “other all natural ingredients” could reasonably be interpreted to mean “all the ingredients in the product were natural.” Subsequently, courts have generally held that the definition of “natural” is a question of fact, to be determined based on “contextualized evidence regarding consumer perceptions.” However, courts have also required pleadings to specify which ingredients are unnatural. And some healthy-sounding terms have been held to be puffery.
Here, the allegations were that 365 Brands deceptively include (1) non-organic ingredients in organic products, (2) GMOs and (3) Unacceptable Ingredients. Plaintiffs submitted hundreds of product label images, but none of the labels said “100% organic,” though they did have USDA and third-party certification seals. Plaintiffs alleged that the products include “synthetic ingredients that are not permitted in organic foods” and that “have not been approved to be used in any food at all, much less in organic food.” But they didn’t allege that the certifications were invalid or that the labels violated USDA regulations. OFPA allows non-organic ingredients in “organic” food, depending on the label. There was no reason to believe that “the reasonable consumer would assume 365 Brands organic products are any more organic than what organic certifying agencies require.”
GMOs: many of the labels stated that “365 Everyday Value products are formulated to avoid genetically engineered ingredients.” However, lab test results showed 365 Everyday Value Corn Flakes contained 57% GMO corn. The Whole Foods website directed consumers to buy 365 Everyday Value products if they wanted to avoid GMOs and stated that “[a]ll ingredients derived from plants are sourced to avoid GMOs, and hundreds of those products are verified by the Non-GMO Project.” However, another page on the website distinguished “enrolled” and “verified” non-GMO products. “While the website is not a model of clarity, the lab results and other evidence do not show 365 products were not ‘sourced to avoid’ GMOs, nor that verified non-GMO products contained GMOs.” None of the labels and literature stated that 365 Brands products were “GMO free.” (Really? Because that seems pretty misleading to me; the implicit message is clearly that there aren’t GMOs, even if it’s carefully worded to avoid making that explicit claim.)
As for Unacceptable Ingredients, that came from a list on the Whole Foods website. That list started with a bold disclaimer that Whole Foods reserved the right to change the list at any time, and appeared to be written for producers hoping to sell their products to Whole Foods. Plaintiffs alleged that they bought products containing Unacceptable Ingredients, including “irradiated foods” (cholecalciferol, ergocalciferol), “nitrates” (thiamine mononitrate), “artificial colors,” and “artificial flavors.” Whole Foods disputed the definition of “irradiated foods,” arguing that it targeted “the use of ionizing radiation in meat, produce, seafood and freestanding spice products, not obscure nutrient, vitamin, and mineral ingredients.”
Also, plaintiffs argued that all food coloring was “artificial,” even those made of “natural” ingredients, according to the FDA definition of “color additive.” They alleged that these ingredients didn’t meet the reasonable consumer’s understanding of the term “natural,” which “comports with federal law and Whole Foods’ proffered definition.” Whole Foods elsewhere defined natural foods as “foods that are minimally processed, largely or completely free of artificial ingredients, preservatives and other non-naturally occurring chemicals and as near to their whole, natural state as possible.” The USDA allowed “natural” on meat and poultry labels, as long as the products didn’t contain “any artificial flavor or flavoring, coloring ingredient, or chemical preservative, or any other artificial or synthetic ingredient” and provided that “the product and its ingredients are not more than minimally processed.” Elsewhere, regulations define synthetic as “[a] substance that is formulated or manufactured by a chemical process or by a process that chemically changes a substance extracted from naturally occurring plant, animal, or mineral sources.” While the FDA has no official “natural” definition, as a matter of policy it treats the term “as meaning that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.”
Because the FDA definition incorporated normal consumer expectations, it didn’t help with the reasonable consumer standard. The Whole Foods definition circularly defined “natural” as “not artificial” and “as near to [a] natural state as possible.” The USDA definition was more stringent, but was limited to meat and poultry. Still, Whole Foods didn’t offer an alternative definition that might include all the allegedly “artificial” ingredients plaintiffs challenged. Instead, it argued that the proffered interpretation was “based on arcane and technical regulatory definitions, not what a reasonable consumer would consider the terms to mean.” While whether reasonable consumers would consider an ingredient “natural” is a fact question, plaintiffs weren’t challenging the label “all natural” but were alleging misrepresentations based on the Unacceptable Ingredient list, from a page that plaintiffs didn’t show reasonable consumers would visit or rely on.
Plaintiffs also relied on images of advertising and signage that state, e.g., “Nothing artificial ... ever, ever, ever.” But none of the labels referred to the Unacceptable Ingredient list. The court couldn’t find references to “natural” or “artificial” ingredients on the submitted labels, though it was possible that they existed but weren’t legible on the submitted images. “Based on the images submitted, a reasonable consumer would not consider such drawings to be more than decorative graphics and would not rely on them in purchasing the products.” Plaintiffs argued that Whole Foods’ broad representations on its signs etc. belied the “dizzying array of ingredients” listed on its products. “But that is the purpose of requiring ingredient lists on every product label.”
Plaintiffs’ argument reduced to the idea that, “since Whole Foods has developed a successful brand as a provider of natural foods, it should be obligated to guarantee every molecule in every product it sells under its in-house brand is natural,” and likewise with “organic,” in spite of OFPA’s tiered labeling regime. Although the court commented that there’s an argument that organic labeling is inherently misleading, plaintiffs didn’t show how Whole Foods’ use of the term was any different from that of other organic producers, and the same was true of “natural.”
“Natural” cases allowing claims to proceed required “contextualized evidence regarding consumer perceptions,” but the claims here were far too broad. “The only common representation on the actual labels of 365 Products is a logo stating ‘365 EVERYDAY VALUE.’” This didn’t plausibly suggest natural ingredients, but rather suggests that the products were less than premium quality.