Astiana v. Hain Celestial Group, Inc., No. 12-17596 (9th
Cir. Apr. 10, 2015)
As the court of appeals introduced the case:
A product labeled “all natural” or
“pure natural” likely evokes images of ground herbs and earth extracts rather
than chemicals such as “Polysorbate 20” or “Hydroxycitronellal.” This class
action alleges that false or misleading product labels duped consumers seeking
natural cosmetics into purchasing products that were chock-full of artificial
and synthetic ingredients. Although the underlying question of what constitutes
a “natural” cosmetic poses a fascinating question, it is not the one we answer.
Instead, this appeal requires us to decide whether federal preemption or the
primary jurisdiction doctrine prevents the district court from deciding when a
“natural” label on cosmetic products is false or misleading.
It does not. The
district court erred in dismissing the case instead of staying it for potential
agency action. On remand, the district
court was to consider whether post-ruling events made FDA proceedings
unnecessary.
Hain labels various cosmetic products “All Natural,” “Pure
Natural,” or “Pure, Natural & Organic.”
Plaintiffs filed the usual California and warranty claims. The court of
appeals first analyzed Hain’s preemption argument. The FDCA bars states from imposing new or
additional labeling “requirements,” “but is silent with regards to states’
ability to provide remedies for violations of federal law.” Given the
similarity between this situation and that in Medtronic,
the court of appeals concluded, the FDCA doesn’t preempt state laws that allow
consumers to sue cosmetics manufacturers that label or package their products
in violation of federal standards.
Astiana wasn’t asking Hain to modify or “enhance” any aspect
of the labels required by federal law. “Rather,
she claims deception as a result of advertising statements that contradicted
the true ingredients listed on the FDA-mandated label,” a claim consistent with
the 9th Circuit’s ruling in Williams v. Gerber Prods. Co., 552 F.3d
934 (9th Cir. 2008). FDA regulations didn’t require Hain to label its products
as “All Natural” or “Pure Natural,” so if Hain were required to remove those
allegedly misleading statements, that wouldn’t violate the FDCA’s ban on “requirement[s]”
that are “different from,” “in addition to,” or “not identical with” federal
rules.
Hain noted that the FDA has never regulated “natural” on
cosmetic labels. But that is not equivalent to “a conscious decision by the
agency to permit any use of this term a manufacturer sees fit.” Under Hain’s logic,
a manufacturer could make any claim—“wild, untruthful, or otherwise—about a
product whose contents are not addressed by a specific regulation.” But the
FDCA bars statements that are “false or misleading in any particular,” not just
statements that are “prohibited by specific FDA regulations.” That reinforced
the court of appeals’ conclusion that “natural” was not a labeling
free-for-all.
Turning to primary jurisdiction, Astiana pointed to FDA
correspondence during the pendency of the appeal. After the court dismissed the claims, her
counsel sent a letter to the FDA. The letter did not comply with the FDA’s
requirements for initiating a citizen petition; it was never assigned a docket
number, and the FDA’s response was neither posted to its website nor published
in any other capacity. The FDA responded
by outlining the procedures for establishing the meaning of the term “natural,”
absent a pre-existing definition. The letter noted that “making the requested
determination without adequate public participation would not be in keeping
with FDA’s commitment to the principles of openness and transparency.” It also
said that “priority cosmetic public health and safety matters are currently
fully occupying the resources that FDA has available for proceedings on
cosmetics matters” and “proceedings to define ‘natural’ do not fit within [the
agency’s] current health and safety priorities.”
The court of appeals refused to consider this correspondence
on appeal. That was for the district court, which properly invoked primary
jurisdiction but erred by dismissing the case rather than staying it. The definition of “natural” for cosmetics was
clearly an area within the FDA’s expertise and also not yet addressed by the
agency. However, courts also must consider whether invoking primary
jurisdiction would “needlessly delay the resolution of claims,” and efficiency
is the key factor. “Common sense tells us that even when agency expertise would
be helpful, a court should not invoke primary jurisdiction when the agency is
aware of but has expressed no interest in the subject matter of the litigation.”
Obtaining advice from the FDA would help resolve the issue
presented by Astiana. Though the FDA had been reluctant to define “natural,”
the district court here wasn’t alone in thinking new guidance would be
forthcoming; other courts had responded similarly to a flood of “natural”
litigation. In response, the FDA
declined to address the issue, specifically with respect to labeling
genetically engineered ingredients as “natural.”
When a court invokes primary jurisdiction to allow parties
to pursue administrative remedies, dismissal without prejudice is normally
appropriate. But when further judicial
proceedings are contemplated, jurisdiction should be retained by means of a
stay, because the 9th Circuit hasn’t clearly adopted equitable
tolling in such cases. A stay is
justified when there’s a possibility that the statute of limitations could run.
On remand, the district court could consider whether events during the pendency
of this appeal—including “Astiana’s informal letter, the FDA’s website
publication of a Small Business Fact Sheet regarding cosmetics labeling, and
the FDA’s response to the other courts”—affected the claims here or showed that
another referral to the agency would be futile.
The court also reinstated Astiana’s quasi-contract claims
for restitution. California doesn’t have
a standalone cause of action for “unjust enrichment,” which is synonymous with
“restitution.” But those concepts
underpin a claim that a defendant has been unjustly conferred a benefit
“through mistake, fraud, coercion, or request.” So, when a plaintiff alleges unjust
enrichment, a court may construe the cause of action as a quasi-contract claim
seeking restitution.
2 comments:
So what's next? Reinstatement with a stay and awaiting the possibility of FDA rulemaking that won't occur for several years, if at all?
That does seem likely, but the FDA may say it's not going to act earlier than that, which should make the case restart.
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