A plaintiff's putative class action against a farm for falsely labeling its herbs "organic" is not preempted by federal law, the California Supreme Court has concluded, reversing a dismissal of the suit in a unanimous opinion.

Michelle Quesada sued Herb Thyme Farms, Inc., challenging the company's marketing of its herbs as organic. According to her complaint, the company sometimes processed its organic and conventionally grown herbs together and sold them using the same "Fresh Organic" label and packaging. She also claimed Herb Thyme passed conventionally grown herbs off as organic.

Relying on the Organic Foods Production Act of 1990, Herb Thyme Farms sought to toss the lawsuit. Both a trial court judge and an appellate panel agreed that Quesada's claims were preempted.

But the state's highest court reversed, ruling that despite the regulatory scheme put in place by the federal statute, consumers can still file suit over the veracity of an organic label.

"When Congress entered the field in 1990, it confined the areas of state law expressly preempted to matters related to certifying production as organic, leaving untouched enforcement against abuse of the label 'organic,'" the court explained. "Moreover, a central purpose behind adopting a clear national definition of organic production was to permit consumers to rely on organic labels and curtail fraud. Accordingly, state lawsuits alleging intentional organic mislabeling promote, rather than hinder, Congress' purposes and objectives."

The Organic Foods Act does not expressly preempt the claims, the court found. While language of exclusivity can be found in the Act with regard to organic production and certification, no similar language of exclusivity is found with regard to enforcement.

"As a matter of express preemption, we have no reason to conclude Congress intended its federal remedies as not only a floor—ensuring that, whatever else state law might provide for, some teeth would back up the new federal regulation of organic labeling—but also a ceiling, with states prohibited from continuing to augment these limited remedies," the California Supreme Court wrote. "On the subject of state consumer-deception laws of general application, the text of the Organic Foods Act offers only silence."

The regulatory framework established by the Act left room for state laws of general application to target fraud and misrepresentation, the court said, citing a similar conclusion from the Eighth Circuit Court of Appeals.

The regulation of food labeling to protect the public "is quintessentially a matter of longstanding local concern," the court noted, with California beginning its regulation of food mislabeling in the 1860s.

"Substitution fraud, intentionally marketing products as organic that have been grown conventionally, undermines the assurances the USDA Organic label is intended to provide," the court said. "Conversely, the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence."

Congress "singled out the very practice alleged here, the deliberate mislabeling of conventional produce as organic, as a major reason why national legislation was needed in the first place," the court wrote. "The Organic Foods Act cannot be interpreted, under the guise of obstacle preemption, as shielding from suit the precise misconduct Congress sought to eradicate...

"In sum: the complaint here alleges Herb Thyme has engaged in fraud by intentionally labeling conventionally grown herbs as organic, thereby pocketing the additional premiums organic produce commands. The purposes and objectives underlying the Organic Foods Act do not suggest such suits are an obstacle; to the contrary, a core reason for the Act was to create a clear standard for what production methods qualify as organic so that fraud could be more effectively stamped out and consumer confidence and fair market conditions promoted. Nor does anything in the text or background of the Act and its regulations indicate Congress intended remedial exclusivity for the enforcement mechanisms it provided. Finding no obstacle to congressional purposes and objectives, we conclude the complaint here is not preempted."

To read the opinion in Quesada v. Herb Thyme Farms, Inc., click here.

Why it matters: Citing the seminal decision in Kwikset Corp. v. Superior Court, the unanimous court emphasized that "labels matter" to consumers. "They serve as markers for a host of tangible and intangible qualities consumers may come to associate with a particular source or method of production," the court wrote. "Misrepresentations in labeling undermine this signifying function, preventing consumers from correctly identifying the goods and services that carry the attributes they desire while also hampering honest producers' attempts to differentiate their merchandise from the competition."