By now, class action suits over foods using the term “natural” are old news following the age old American story: class action plaintiff meets product, product assures plaintiff it is all-natural, plaintiff finds something in product that it doesn’t think is natural, lawsuit ensues. Over the course of the last few years, cases challenging “natural” and “all-natural” claims have proliferated in the absence of a clear federal definition of natural, while cases involving “organic” claims have remained rare in light of detailed federal laws and regulations laying out a standard and a certification process for products labeled as organic. On May 7th, the United States District Court for the Southern District of New York (S.D.N.Y.) issued a ruling on a motion to dismiss in Segedie v. Hain Celestial Grp., Inc., allowing a consumer class action alleging false and misleading “organic” claims to move forward, finding that these claims under state consumer protection laws were not preempted by federal organic laws and regulations.
Plaintiffs in this case allege that they purchased various “Earth’s Best” brand foods and other products sold by Hain Celestial. The complaint identifies 62 food products and 12 body care products labeled as “organic,” and seven foods products and eight body care products labeled “natural” or “all natural”, alleging that these claims were false and misleading because the product contain ingredients that they allege are synthetic or are not permitted in organic products under the National Organic Program (NOP) regulations, even if the products were certified organic by a USDA accredited certifying agent. Plaintiffs assert their claims under several state consumer protection statutes as well as the California Organic Products Act.
While the court allowed the “natural” claims to progress after a short consideration of the plausibility of the plaintiff’s definition of “natural” and theory of deception, the vast majority of the opinion focused on whether the “organic” claims should be dismissed. The defendant argued in its motion to dismiss that the plaintiff’s organic claims under state consumer protection statutes are preempted by the Organic Foods Production Act of 1990 (OFPA) and corresponding NOP regulations. The court held that federal law did not preempt the state cause of action regarding the organic claims and denied the motion to dismiss with regards to those claims.
- Court’s Reasoning: The court ruled out express and field preemption in this case, and after a more extensive discussion also ruled out impossibility or conflict preemption. The court reasoned that there was no preemption because the organic claims in this case were “not premised on a ‘reasonable consumer’ theory that diverges from the national organic standards.” Therefore, a court interpreting these claims would be interpreting the same standards imposed by the USDA, with appropriate deference given to USDA regulations and interpretations, rather than establishing a standard for organic products that was in “sharp” conflict with the federal standard.
- Distinguishing Other Cases: In this ruling, the court directly disagreed with the 8th Circuit holding in In re Aurora Dairy Corp. Organic Milk Mtkg. & Sales Practices Litig., 621 F.3d 781 (8th Cir. 2010), which found that state consumer protection claims alleging misleading organic claims were preempted because they conflicted with the federal organic regulatory scheme. In holding opposite of the 8th circuit, the S.D.N.Y. relies on the Supreme Court’s decision in Wyeth v. Levine, 555 U.S. 555 (2009). In Wyeth, the Supreme Court held that a state court claim of action alleging that warnings on a drug label were inadequate, were not preempted by the Food, Drug and Cosmetic Act, even though the FDA approved the label.
- Scope of this Decision: This ruling essentially allows for a private right of action under state consumer protection laws to seek redress for alleged violations of federal organic standards. However, importantly, the court in this case expressly states that “[i]f Plaintiffs were seeking to enforce a definition of “organic” based on something other than federal regulatory compliance, then this Court might find such a state cause of action to be in conflict with congressional objections.” This is based on a theory that allowing claims to move forward that asserted a definition of organic other than that which is established under the OFPA and NOP regulations, could cause different definitions of “organic” to emerge in different jurisdictions, which conflicts with the purpose of the OFPA to establish a national standard for the marketing of organic products.
So is “organic” the new natural? Does this ruling open the door for a natural-esque deluge of class actions? We’ll have to see, but we found the decision troubling. The court’s willingness to allow plaintiffs to second-guess the decision by an NOP certifying agent that a product qualifies as organic may indeed open the door to a flood of class actions and seems to be the type of conflict that the preemption doctrine was meant to avoid. If a marketer cannot rely on that certification, doesn’t that gut the certification program that Congress created? Hain has sought leave to take an interlocutory appeal, and this issue seems ripe for that type of review. A circuit split may be in store on the preemption issue.