Monday, February 26, 2018

Sanderson can't chicken out of false advertising claims

Organic Consumers Assoc. v. Sanderson Farms, Inc., 2018 WL 922247, No. 17-cv-03592 (N.D. Cal. Feb. 9, 2018)

OCA sued Sanderson, a poultry processor, over ads that allegedly mislead consumers about the nature of Sanderson’s chicken products and farming practices. OCA and co-plaintiffs FoE, and CFS are non-profit organizations that “work to safeguard the rights and promote the views and interests of socially responsible consumers and farmers.”  OCA challenged claims that Sanderson’s chicken is “100% Natural,” has no “hidden ingredients,” and that “at Sanderson Farms, being 100% natural means there’s only chicken in our chicken.” In TV ads, two men wearing Sanderson Farms baseball caps make comments such as, “no antibiotics to worry about here” and “good, honest chicken.” But USDA testing found 49 instances in which Sanderson’s products tested positive for antibiotics, pharmaceuticals, and other unnatural substance residues, causing the plaintiffs to undertake efforts to warn customers and educate the public about the true nature of Sanderson’s products and chicken raising practices.

The court found organizational standing under the UCL and FAL, which is available where there is  “(1) frustration of [the plaintiff’s] organizational mission; and (2) diversion of its resources” to combat the challenged actions by defendant. OCA’s research into Sanderson’s farming practices and advertising, preparation of internal memoranda, strategy meetings, and coordination of a multi-organization consumer outreach plan diverted resources and staff time away from OCA’s policy and consumer education work on other issues.  So too with the other organizational plaintiffs.

The court also rejected Sanderson’s argument that state law claims challenging its advertising were impliedly preempted by the Poultry Products Inspection Act (PPIA) and Federal Meat Inspection Act (FMIA), given the congressional intent to provide uniform national standards for monitoring food producers and ensuring they do not mislead consumers as to the contents of meat products. Also, the USDA approved the “100% Natural” language.

But consumer protection laws “are within the historic police powers resting with the states and are therefore subject to the presumption against preemption.” There was no manifest purpose to displace them, and avoiding misleading advertising was consistent with the federal statutes’ aims to ensure quality and proper labeling. And USDA approval wasn’t enough to avoid misleadingness: “Label language is reviewed for technical and scientific accuracy. Yet common sense suggests even ‘language that is technically and scientifically accurate on a label can be manipulated in an advertisement to create a message that is false and misleading to the consumer.’”  Also, Sanderson’s ads included “images, representations, and language that go beyond what is included on the USDA approved label.”

Plausibility: Sanderson argued that a reasonable consumer wouldn’t interpret “natural” as stringently as the plaintiffs propose or be surprised to learn that Sanderson’s products have trace amounts of synthetic materials like antibiotics.  The court disagreed: Plaintiffs alleged the existence of surveys indicating a majority of consumers believe: a) a “natural” poultry product is produced without the use of antibiotics or other drugs at any point; and b) it is important to reduce antibiotic use in food production and improve the living conditions of animals. The allegations were plausible.

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