Can "all natural" food be bioengineered?

Parker v. J.M. Smucker Co., No. C 13-0690, 2013 WL 4516156 (N.D. Cal. Aug. 23, 2013)

Parker sued Smucker over Crisco Pure Vegetable Oil, made from soybean oil; Crisco Pure Canola Oil, made from rapeseed oil; Crisco Pure Corn Oil, made from corn oil; and Crisco Natural Blend Oil, made from combined rapeseed, sunflower, and soybean oil. She bought the first product.  Her claims were based on the use of “All Natural” next to the oil’s name on the packaging.  Parker alleged that the oils weren’t natural because they were made with genetically modified (“GM” or “bioengineered”) crops, and are also “so heavily processed that they bear no chemical resemblance to the ingredients from which they were derived.” She alleged that the appearance of naturalness deceived consumers into buying/paying more than they would have.

Parker alleged an “array of definitions from industry, government, and health organizations” that
“all characterize bioengineered crops as having been scientifically altered to combine one plant’s genetic material with another’s in ways that do not occur naturally.” Smucker itself states: “Due to expanding use of biotechnology by farmers and commingling of ingredients in storage and shipment, it is possible that some of our products may contain ingredients derived from biotechnology.” Parker also alleged that most of the relevant agricultural sources were GM, and therefore alleged that Smucker had to be using non-natural GM crops in its oils.

Parker’s second claim, that the oils weren’t natural because of extensive processing that removed the source plants’ original chemical properties, was based on distinctions in manufacturing processes.  Extraction methods like coldpressing allegedly “allow the oils to retain the chemical composition occurring in nature,” while Smucker’s more chemical methods modify the oil beyond recognition, including “alkali-neutralization, meant to separate free fatty acids from the neutralized oil; bleaching and deodorizing, meant to lighten the oil’s color and minimize its odor; and conditioning.” This allegedly involved “harsh, potentially harmful chemicals that render the Oils less like natural oils extracted mechanically and more like unnatural chemical composites.”

Parker brought the usual California claims, including warranty claims, and Smucker moved to dismiss.

First, Smucker argued that she failed to plead with particularity or plausibility either that the oils contained GM ingredients or that the processing made the oils non-natural.  As to the first, Smucker only admitted the possibility it was using GM crops, and Iqbal requires “more than a sheer possibility,” but the court found the pleadings sufficiently plausible.  As for the processing, Parker didn’t need to “set out scientifically precise descriptions of how the Oils’ chemical makeup changes. She only needs to describe the who, what, when, where, and how of the allegedly misleading conduct, which she has done: Plaintiff’s FAC describes Defendant’s chemical processing of the Oils, states that this renders them non-natural, and concludes that if the Oils are non-natural then the ‘All Natural’ tag is false or misleading. The truth of this theory remains to be litigated, but it cannot be dismissed on the pleadings.”

The court also found that Parker had standing to bring claims based on all the oils: there was sufficient similarity between the products and they bore the same alleged mislabeling.  They were all the “same kind” of product (despite the different oilseeds).

Smucker argued preemption: the FDA has long rejected a requirement that bioengineered foods must be labeled differently, having determined that there’s no material difference between bioengineered and non-bioengineered foods.  Also, the FDA hasn’t stated any intention to alter its longstanding position not to adopt any regulations governing the term “natural,” regardless of consumers being misled.  Thus, Smucker argued, Parker’s lawsuit sought to impose new and different labeling standards.

Parker rejoined that she wasn’t trying to do that, merely to enforce the ban on false/misleading statements, which in this case includes “All Natural” given the actual contents of the oil.  Smucker could have left “All Natural” off the labels, but its presence was misleading; this wasn’t a preempted claim. Smucker might not be required to disclose its use of GM ingredients, if such exist, but Parker was making a different argument.  (I feel that this conclusion is in some tension with the 9^th Circuit’s reasoning in Pom Wonderful, but then again who knows what that case means?)

Smucker also argued that FDA common or usual name rules preempted Parker’s claims: it would violate the regulations if it labeled its ingredients as, e.g., “bioengineered soy.”  But that wasn’t what Parker was asking Smucker to do, even though she alleged that she wouldn’t have bought any of its oils had they been so labeled.  This wasn’t a nondisclosure case. 

Turning to the sufficiency of the pleadings, Smucker argued that Parker failed to allege that its statements would likely deceive a reasonable consumer, given the FDA’s policies on bioengineered ingredients and the term “natural.”  This wasn’t an appropriate holding on the pleadings.  “[T]he Court cannot as a matter of law conclude, as Defendant urges, that reasonable consumers would all understand that packaged, non-organic foods may contain bioengineered ingredients and that the only way to avoid such ingredients completely is to buy only certified organic products.”  Rather, Parker alleged that “a reasonable consumer would read the ‘All Natural’ label, assume that such a product contains no bioengineered or chemically altered ingredients, and would then be misled if the product did in fact contain such things.”  This wasn’t capable of being resolved as a matter of law.

The express warranty claim survived: Parker alleged that Smucker’s failure to deliver an “All Natural” product constituted a breach of warranty. Smucker argued that the claim was mere puffery and that the parties weren’t in privity.  But California has an exception to the privity requirement that allows breach of express warranty claims arising from affirmations of fact made by manufacturers in labels or advertisements.  And “All Natural” “does not amount to mere puffery because it is not outrageous and generalized.”

Unsurprisingly, the court also declined to apply the primary jurisdiction doctrine.  “[V]arious parties have repeatedly asked the FDA to rule on ‘natural’ labeling, and the FDA has declined to do so because of its limited resources and preference to focus on other priorities. … [R]eferring the matter to the FDA would do little more than protract matters.”