9th Circuit holds that California's Sherman Act can be enforced by private plaintiffs

Davidson v. Sprout Foods, Inc., --- F.4th ----, 2024 WL 3213277, No. 22-16656 (9^th Cir. Jun. 28, 2024)

In a surprisingly-to-me divided opinion, the majority rejects a theory that private claims under the UCL using California’s Sherman Act as a predicate were impliedly preempted by the FDCA, because the FDCA isn’t supposed to be enforced by private parties. Although the existence of explicit preemption doesn’t always mean that there’s no implied preemption as well, the FDCA’s preemption clause is specific enough to the Sherman Act situation that I would have thought it was obvious that there’s no implied preemption. At least the majority agrees with me!

Anyway, the Sherman Law “incorporates by reference all federal food labeling standards. These include a prohibition against labeling the front of baby food containers with the product’s nutrient content.” That's because babies' nutrient needs aren't the same and the FDA was worried about, e.g., conspicuous low-fat claims. Defendant “nevertheless produced pouches of baby food with labels on the front of the package conspicuously stating the amount of nutrients the pouches contained.”

example pouch making protein, fiber and DHA claims

The district court found preemption; as the majority reasoned, federal law “expressly permits states to enact standards identical to the federal standards and in this case, plaintiffs are attempting to enforce identical standards set forth in a state statute, the Sherman Law. The federal law does not limit the manner in which the state statute is enforced, and private enforcement of that statute does not conflict with federal enforcement of the FDCA.”

Although the Ninth Circuit has found implied preemption where plaintiffs were trying to enforce duties allegedly created by the FDCA, those were drug/device cases, not cases brought under the Sherman Law, a law expressly permitted by the FDCA. “There is no reason we can perceive why Congress would permit states to enact particular legislation and then deny enforcement by their citizens.” Indeed, Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), interpreted a similar preemption provision and held that “[n]othing ... denied [the state] the right to provide a traditional damages remedy for violations of common-law duties when those duties parallel federal requirements.”

The dissent would have found that the exclusion of private suits from the FDCA meant that, at most, states could only create agencies to enforce laws like the Sherman Law, but the majority correctly found that atextual. One provision of the FDCA, § 310(b), allows states to enforce certain provisions of federal law—but that deals only with enforcement of federal law, not enforcement of state law. The dissent (a Trump appointee) would instead have required the state law being enforced to come “independently” from the common law, not from state adoption of federal standards. Conservatives love the common law when it’s used to disable legal remedies, but the majority noted that this jury-rigged standard didn’t make sense. (The dissent concludes that state enforcement of “identical” rules interferes with the FDCA’s scheme only when the common law isn’t involved—it is anti-legislative and allocates all power to courts.)

The presumption against preemption was unnecessary here, but also favored allowing the claim.

However, fraud-based claims were properly dismissed for failure to plausibly allege misleadingness. (I note that, on remand, there might be causation difficulties with the harm story for the pure Sherman Act violation, but then again the plaintiffs can argue that, in a world complying with the law, the products wouldn’t have been available for sale.)

As for those claims, plaintiffs alleged that Sprout’s labels “misled consumers into believing the products provided health benefits to children under two when the products were in fact nutritionally and developmentally harmful.” But they failed to meet Rule 9(b)’s heightened pleading requirement by failing to sufficiently allege why this implied message was false. Plaintiffs alleged that Sprout’s products contain high amounts of sugar and that sugars in pureed, pouch-based foods can lead to health issues such as tooth decay and cited to several articles and reports suggesting that pouch-based foods may lead to long-term health risks and hinder babies’ development. But these allegations were “largely unspecific to Sprout’s products.” They didn’t explain “at what level sugars become harmful or why the levels of sugar in these products, in particular, could cause harm.” Other harm allegations were “largely speculative”: “consumption of pouches may lead to long term health risks”; that if babies are “overly dependent on pouches,” there are “noted delays in [their] motor development”; and that pouches “can be a gateway to bad long-term snacking habits and routine overeating.” Plaintiffs never actually alleged that Sprout’s products cause any of these harms.