Sunday, April 18, 2010

OASIS gets no respite from organic litigation

All One God Faith, Inc. v. Organic and Sustainable Industry Standards, Inc., --- Cal. Rptr. 3d --, 2010 WL 1450925 (Cal. App. 1 Dist.)

The federal government has mandatory standards for “organic” food and agricultural products, but only voluntary and permissive criteria for “organic” personal care products. Defendant OASIS seeks to develop a beauty/personal care product-specific standard that would allow its members to use an “OASIS Organic” seal. Plaintiff (d/b/a Dr. Bronner’s Magic Soaps) sued OASIS and some of its members for unfair competition and misleading advertising. OASIS moved to strike pursuant to the anti-SLAPP statute, and the trial court denied the motion. The appellate court affirmed.

Dr. Bronner’s products are labeled either “Made with Organic Oils” or “Organic” under USDA’s voluntary criteria under the National Organic Program (NOP). The NOP regulations don’t apply to personal care products that call themselves organic but don’t purport to comply with NOP and don’t carry or imply that they carry the USDA organic seal. Under NOP criteria, “Organic” products must contain at least 95 percent organically produced ingredients (excluding water and salt) and remaining ingredients must consist of approved nonagricultural substances or nonorganically produced agricultural products that are not commercially available in organic form. Furthermore, a personal care product labeled “Organic” or “Made with Organic [ingredients]” can’t contain any cleansing or moisturizing agents made of synthetic petrochemicals or petrochemical compounds. Hydrogenation and sulfation are not permitted to produce such agents.

Dr. Bronner alleged that OASIS is a commercial trade association and that it is an agent for its members, who include many of the other named defendants, who sell competing personal care products. In order to promote its members’ sales, it allegedly issued a new standard that would allow an “Organic” label for products that contained cleansing agents made from nonorganic material that has been hydrogenated and/or sulfated, and preserved with synthetic petrochemicals. Defendant Estée Lauder allegedly plans imminently to label its products as certified Organic in accordance with this standard. Dr. Bronner asked for a permanent injunction against OASIS certification of any product that doesn’t comply with the NOP criteria.

OASIS moved to strike the claims against it, arguing that it was being sued for exercising its right to free speech: articulating and publishing the OASIS Organic standard. It’s a trade association that doesn’t produce or manufacture any cosmetic or personal care products. Instead, its aims are to set certification standards and educate consumers and members of the health and beauty industry. Its board has ten members, three of whom are affiliated with other defendants in the case. According to its declarations, Estée Lauder doesn’t dominate or control it and didn’t play the leading role in creating or promoting the OASIS Organic standard.

OASIS hadn’t yet completed its standard when it filed the motion to strike, but it had released a series of draft standards for comment, and had received about 50 inquiries from members of the public about the draft standards. OASIS doesn’t plan to certify any products itself; members will have to use third parties to certify that they meet the standards.

Dr. Bronner argued that it had not challenged speech “in connection with a public issue or an issue of public interest,” as required by the anti-SLAPP law. Alternatively, Dr. Bronner argued that OASIS’s commercial speech was specifically exempted from the protections of the anti-SLAPP statute. The trial court ruled in Dr. Bronner’s favor on the first ground, and also held that OASIS’s conduct didn’t fall under the commercial speech exclusion because, though OASIS is a trade group acting on behalf of its commercial members, is not itself “a person primarily engaged in the business of selling or leasing goods or services” as required by the exclusion.

The appellate court agreed that OASIS failed to meet its burden of showing that Dr. Bronner’s claims arose from protected activity under the anti-SLAPP statute. While the act of formulating a proposed organic standard might constitute protected activity, Dr. Bronner wants to enjoin certification of products, which is not protected activity. Nor is certification “conduct in furtherance” of the formulation of the standard, which would also give it protection. Even if a cause of action may arguably have been triggered by protected activity, a reviewing court must focus on the substance of the plaintiff’s lawsuit. The critical point is whether the cause of action itself is based on an act in furtherance of the defendant’s right of petition or free speech. In particular, OASIS didn’t demonstrate that its activity was on an issue of “public interest.” Dr. Bronner’s claims didn’t arise out of the articulation of the OASIS Organic standard in the abstract, but rather on the fact that OASIS will authorize its members to use the OASIS Organic seal on their products that don’t meet the NOP standard, at which point Dr. Bronner alleges it will suffer injury because consumers will be misled.

This certification would not be “in furtherance” of OASIS’s articulation and dissemination of a standard regarding what makes a personal care product truly organic. The articulation of the standard will necessarily be complete before any certification occurs, so adding the seal to any particular product wouldn’t help a debate on the meaning of “organic.” Once it’s on a product, the seal is merely a representation about the product’s ingredients and quality. Though OASIS stated that it would require members using the seal to direct consumers to details of the standard, the record had nothing indicating how that would be achieved. Unlike the draft standards, nothing in the record indicated that actual use on a product would invite comment from the public, or that the standard will necessarily “evolve over time,” as suggested by the dissent. Once affixed to a product, the purpose of the seal is to promote the sale of the product, not the standard or its elements. It’s not necessary for OASIS to certify individual products and authorize use of its seal on products in order for OASIS to express its general opinion about what constitutes an “organic” personal care product.

Although certification provides valuable information, at the point of purchase “[i]t is the marks themselves, as representations of quality, upon which consumers rely in purchasing decisions, and the well-established reputations of the entities which authorize them, not the standards upon which the product certifications are based. We are not persuaded that many, if any, consumers themselves investigate the basis for an Underwriter’s Laboratory label upon a product, or offer comments on the testing protocols used to achieve it.” Thus, that there may be a logical nexus between protected conduct and the ultimate affixation of the seal does not make the affixation itself protected conduct; to do so would expand the anti-SLAPP statute too far.

Moreover, the appellate court concluded that OASIS’s commercial speech was not protected activity on an issue of public interest. OASIS’s purpose is to support its members’ commercial activities and help them sell stuff to consumers. Only paying members will be allowed to use the OASIS Organic seal, and only members who plan to use the seal are eligible to become voting members. Thus, this isn’t true third-party endorsement or criticism, or consumer protection information.

OASIS conceded that its speech was commercial under Kasky. Though Kasky didn’t involve the anti-SLAPP statute, recent cases have drawn on it to conclude that a manufacturer’s advertising statements about a product aren’t protected by the anti-SLAPP law when the specific nature of the speech, “rather than the generalities that might be abstracted from it,” doesn’t involve a matter of public interest. Using the OASIS Organic seal on member products is only about the contents and quality of the product, like any ingredient list. It doesn’t contribute to the debate on the merits of a particular definition of “organic.”

On the other hand, the exclusion for “commercial activity” added to the law in 2003 doesn’t apply. That exclusion exempts from the anti-SLAPP law any cause of action brought “against a person primarily engaged in the business of selling or leasing goods or services … arising from any statement or conduct by that person” if (1) the statement or conduct consists of factual representations about that person’s or a competitor’s business operations, goods, or services (etc.) and (2) the intended audience is an actual or potential buyer or customer or person likely to repeat the statement to same or otherwise influence them (etc.). Though OASIS’s members are primarily engaged in the business of selling goods, and though OASIS acts on their behalf, OASIS is not itself covered by the exclusion. The exclusion does not cover “someone acting on behalf of” a person primarily engaged in the business of selling or leasing goods or services, and it easily could have done so. Indeed, the legislature knew how to write broadly when it covered statements made to people likely to influence potential customers. Indeed, the legislature considered and rejected an exception that would have applied to an entity merely involved in the stream of commerce. Only a subset of commercial speech is covered by the exception. (So, it would seem ad agencies can bring anti-SLAPP motions to strike, but not their clients.)

The court of appeals also rejected, as unsupported, Dr. Bronner’s argument that, once OASIS authorizes its members to use its certification mark, OASIS adopts those goods as its own within the meaning of the law. Because Dr. Bronner failed to raise this argument in the trial court, the court also refused to address Dr. Bronner’s theory that OASIS is primarily engaged in the business of selling its certification services and made the challenged statements in the course of delivering those services.

A dissent argued that the formulation of the OASIS Organic standard was speech in connection with a public issue; indeed, the majority apparently acknowledged this. There’s no consensus on the definition of “organic” for personal care products. Whether the NOP standards should remain voluntary as to such products, and whether better standards exist, is a matter of public interest. The OASIS standard “may influence not only the definition of organic as applied to personal care products, but it also may play a role in the federal government's decision whether to leave the NOP criteria voluntary or to encourage the development of further nongovernmental standards for organic personal care products.”

Further, OASIS’s role in the certification process, the dissent argued, should be deemed protected content. As trademark law recognizes, certification marks provide useful information in a competitive market, providing third-party assurance of some feature. Thus, authorizing the use of a certification mark is protected conduct. The majority’s holding that “consumers do not care about the standards underlying product certifications” proved too much by challenging the underlying rationale for certification marks, which is informing consumers that a product has certain characteristics. The facts of this case show that consumers would be getting important information: if they see one product with a USDA organic seal and another with an OASIS Organic seal, they might have an interest in ascertaining what standard OASIS Organic represents. Because the federal scheme authorizing certification marks serves the purpose of providing useful consumer information, those who disagree with the standard should be subject to the anti-SLAPP standard if they sue the certifier.

(I’m closer to the majority on this: most consumers use certification marks as a shortcut, as they’re supposed to be—consumers trust the certifier rather than investigating the actual standards applied. Consumers are extremely unlikely to be thinking in any detail about what those standards are.)

Furthermore, the dissent argued, the certification process enhances the debate around the formulation of the OASIS Organic standard and promotes the standard itself, thus entitling OASIS to protection because the process is “in furtherance” of protected conduct, which is within the scope of the anti-SLAPP statute. “Furtherance” means helping. (Of course, this can’t be taken too far: earning money is in furtherance of further message-spreading.) Interest in OASIS’s standard is “materially enhanced” because the standard will ultimately be attached to certain products. If the standard, once finalized, were just available on OASIS’s website, it would generate far less consumer attention. The plan to certify promotes interest and participation in the debate over what the certification standard should be. And the certification process creates ongoing interest in the standard—OASIS and its members will have incentive to promote it to convince consumers of its reliability and utility. The majority’s rule, the dissent suggested, impermissibly cabined the scope of the anti-SLAPP statute to speech that was “necessary” to express a view, whereas a better view is that speakers should have the right to choose the means of expression, because different means aren’t fungible.

Though courts have consistently held that promotional statements on products that are designed to sell those products aren’t “in connection with a public issue or an issue of public interest” within the meaning of the anti-SLAPP law. But the OASIS Organic seal does more than promote a product: it advocates for the OASIS organic standard. “OASIS’s interest is in public acceptance of its standard, not the sale of any particular product.”

The dissent concluded that its preferred result wouldn’t immunize OASIS from liability for false or misleading aspects of its certification mark. To survive the motion to strike, Dr. Bronner would just have to show a probability of prevailing on the merits. (Nor did the dissent take any position on whether a manufacturer’s act of applying the seal to its own products would also qualify for anti-SLAPP protection.)

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