Thursday, November 04, 2010

Clever arguments fail to defeat preemption, standing requirements

Red v. Kroger Co., 2010 WL 4262037 (C.D. Cal.)

Plaintiffs filed a putative class action, alleging violations of the CLRA, FAL, and UCL, as well as false advertising under the Lanham Act, based on certain Kroger products sold as containing “0g Trans Fat per serving,” which is allegedly false because such products contain various hydrogenated oils and the process of hydrogenating oils creates artificial trans fats. Plaintiffs further alleged that Kroger misleadingly labels certain margarine products as "a Cholesterol Free Food," even though they contain substantial and dangerous levels of artificial trans fat that increase LDL cholesterol and decreases HDL cholesterol levels.

Kroger argued that the phrases at issue are identical to those defined by FDA regulations, and thus state law claims are preempted under the NLEA, 21 U.S.C. § 343-1(a)(5), which only allows state law requirements that are identical to federal requirements. Red responded that all nutrient content claims are nevertheless subject to 21 C.F.R. § 101.13(i)(3), which permits such claims only to the extent they are "not false or misleading in any respect." Defendant's statements are allegedly misleading because they falsely suggest Defendant's products are healthy; thus there's no preemption. 

The court began with the fact that FDA regulations have expressly defined the terms "cholesterol free" and "0g Trans Fat" per serving and articulated the circumstances in which they may be used on a product label outside of the Nutrition Facts box. Plaintiffs didn’t allege that the products at issue failed to meet the federal definitions. Thus, Kroger’s compliance with the specific definitions couldn’t be deemed false or misleading. “Plaintiffs cannot escape the fact that they seek to enjoin exactly what federal law expressly permits.”

As for the (non-preempted) Lanham Act claim, plaintiffs lacked standing, which in the 9th Circuit requires (1) a commercial injury based upon a misrepresentation about a product and (2) that the injury is "competitive" or harmful to the plaintiff's ability to compete with the defendant. Individual consumers lack standing, even if they're only seeking injunctive relief.

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