Prior
ruling discussed here. Brod tried
again, alleging that Sioux Honey violated the CLRA and UCL and breached express
and implied warranties by selling pollen-free honey in California not labeled
as pollen-free despite state law. The court dismissed the complaint without
leave to amend this time, because California law didn’t do what Brod said it
did. (Leaving me with the question: the
court reads the relevant law as a ban on the sale of pollen-free honey labeled
as “honey.” As a labeling requirement, that’s preempted, but what about as a
flat-out ban of the sale of such a product in the state? Suppose Brod made his claims under the “unlawful”
prong of the California statutes. Would that be a valid claim? My instinct is that a flat-out ban is not
preempted, at least, but from there I’m uncertain (for example, what happens
under general “safe harbor” principles when the state specifically bans selling
a product for which the FDA has labeling rules?).)
The relevant California law says, in part, “no pollen or
constituent particular to honey may be removed except where unavoidable in the
removal of foreign inorganic or organic matter.” Brod’s basic argument was
that, by failing to disclose that its honey was filtered and pollen-free, Sioux
Honey induced him and other putative class members to pay more than they would
have had they known that the honey violated state law.
The court first found, as it had earlier, that Brod had
constitutional standing. He contended that California law made nonsalable any
honey that had pollen removed unless it was sold with a disclosure that it was
filtered or pollen-free, and that he and other class members wouldn’t have
bought the product had they known that it didn’t comply with California law
requiring pollen in honey. These
allegations were sufficient to plead economic injury and thus Article III
standing. Whether or not a court might objectively view two products as
functionally equivalent, if the consumer was deceived into buying a product
that she otherwise wouldn’t have, she’s suffered economic harm. Sioux Honey cited cases from other
jurisdictions, which were neither binding nor on point, since they involved
alleged failures to disclose the presence of a substance that made a product “indiscernibly
dissimilar” from what consumers believed they were buying, whereas Brod alleged
that the product here was different enough that he and others wouldn’t have
bought it (or paid as much for it). Rivera
v. Wyeth-Ayerst Laboratories, 283 F.3d 315 (5th Cir. 2002), involved a product
that delivered the medical benefits consumers expected, and there was no
allegation that they paid more than they would have if the alleged risks had
been properly disclosed. Here, by
contrast, Brod claimed not to have received the benefit of his bargain.
Sioux Honey then argued that the complaint should be
dismissed because it labeled its honey properly, thus preventing Brod from
suffering an injury in fact. The court
succinctly rejected this standing-as-garbage-can argument:
Sioux Honey's argument misconstrues
the scope of assessing constitutional standing, conflating it with the merits
of the legal claims asserted. For the
purpose of evaluating Brod's standing to sue, it is enough that he alleges
Sioux Honey had a duty to label Sue Bee Honey in a way that discloses the
removal of pollen to potential consumers.… Whether or not Brod's complaint
properly construes California's Food & Agricultural Code, and whether or
not Sioux Honey's alleged conduct violated those provisions, are not part of an
inquiry into Plaintiff's Article III standing.
Sioux Honey then renewed its preemption argument, which the
court then rejected (though not to Sioux Honey’s ultimate detriment). Sioux Honey read federal labeling
requirements too broadly. There’s no
federally prescribed “standard of identity” for honey, which means that under
federal law it will be misbranded “[u]nless its label bears (1) the common or
usual name of the food, if any there be, and (2) in case it is fabricated from
two or more ingredients, the common or usual name of each such ingredient ...” The court previously held that the common
name of the product was “honey” even if all pollen had been removed. However, this didn’t bar a disclosure
requirement. Federal law expressly
preempts any state law requiring a food to be labeled with something other than
its common or usual name, so California couldn’t require filtered honey to be
labeled something other than “honey.” But, given the presumption against
preemption and states’ traditional role in health and safety issues, California
could impose a separate disclosure requirement without running afoul of the
federal common name rule.
However, Brod still lost because that’s not what California
had actually done. By its terms, state
law required that any product labeled as honey had to contain pollen to be
lawfully sold in California. It didn’t
require disclosure of pollen removal, and a ban is different from a disclosure
rule. Indeed, even if Sioux Honey had
disclosed the removal, it would still have been in violation of the relevant
state law. Plus, the legislature knew
how to write a disclosure rule about honey: several other provisions of the
relevant law required disclosures about other things.
Given all this, Brod didn’t show that Sioux Honey failed to
comply with California law insofar as he meant that Sioux Honey failed to
disclose the absence of pollen. Could this nonetheless be an independent misrepresentation
of the quality, characteristics, and/or ingredients of the products, which
would also violate the CLRA, UCL, etc.? Broad’s
misrepresentation theory required a showing that a reasonable consumer would be
likely to be deceived by an allegedly misleading statement. The reasonable consumer is the ordinary
consumer acting reasonably under the circumstances; she need not be “exceptionally
acute and sophisticated.” Brod didn’t
plead sufficient facts to plausibly show that a reasonable consumer would be
misled into believing that Sioux Honey’s product contained pollen. “It is
certainly possible that a particularly sophisticated consumer might consider
pollen to be a valuable component of honey, such that the non-disclosure of its
removal from Sue Bee Honey would likely result in deception to him or her.
This, however, does not establish that the reasonable consumer would expect
honey to contain pollen.”
Looking at
many state statutes and dictionary definitions of honey, none identified pollen
as necessary “or even notable.” “California's
own statutory definition of honey omits any reference to pollen, and has done
so since at least 1967.” California
specifically requires disclosure of the addition of pollen, but not of its
removal. Plus, the Department of Agriculture considered honey “Grade A” when it
was free from pollen, air bubbles, and fine particles for much of the latter 20th
century. Thus, the situation strongly
suggested that “pollen has not traditionally been considered a constituting
element of honey such that its undisclosed removal would likely be considered
deceptive by the reasonable consumer.”
Plaintiff’s counsel described the claim this way: “We are
alleging that the reasonable consumer expects if there is a law governing their
foodstuffs that they go to buy, that that law has been complied with. And if
it's not complied with, it should be disclosed.” But the honey labeling requirement was
preempted by the FDCA and was without force “to the extent that it purports to
ban Sue Bee from labeling its honey as ‘honey.’” Plus, even if consumers had constructive
notice of state law, they’d also have constructive notice of the meaning of “Grade
A,” which includes being free from pollen, which means that the lack of pollen
was constructively disclosed on the label.
This was the rare case in which deceptiveness could be resolved on a
motion to dismiss.
In addition, Brod failed to plausibly plead materiality to a
reasonable consumer, for the same reasons. There were no facts alleged in the complaint
showing that the presence or absence of pollen plays a substantial part in a
reasonable consumer’s decision to purchase honey, given the federal “Grade A”
standards and the dictionary/state law definitions of honey.
For much the same reasons, the warranty claims failed. California’s implied warranty of
merchantability doesn’t impose a general requirement that goods precisely
fulfill buyers’ expectations, but rather provide for a minimum level of
quality. Given Sioux Honey’s compliance
with the FDCA’s common or usual name requirement, that was satisfied; Brod didn’t
successfully plead facts showing that the honey wasn’t fit for the ordinary
purposes for which it was used.
As a result, Sioux Honey’s Dormant Commerce Clause challenge
to California law was rendered moot, and the complaint was dismissed with
prejudice.
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