Earlier this month, Judge William H. Pauley III in the Southern District of New York stayed a lawsuit against the snack bar maker KIND LLC, styled as a class action, alleging that KIND falsely marketed its products as “all natural” and “non-GMO.” In re KIND LLC “Healthy & All Natural” Litigation, 2018 WL 1156009 (S.D.N.Y. Mar. 2, 2018). The case, which has unfolded against a backdrop of increasing regulatory activity by the USDA, will remain on hold pending the USDA’s establishment of a national disclosure standard for bioengineered food. The disclosure standard is due to be released by July 29, 2018.
The lawsuit began in 2015, with Plaintiffs’ original complaint claiming that KIND deceptively marketed certain products as “healthy,” “all natural,” and “non-GMO” in violation of New York and other state laws. After Plaintiffs voluntarily dismissed their “healthy” claims, Judge Pauley in 2016 stayed litigation of Plaintiffs’ challenge to KIND’s “all natural” advertising in light of ongoing FDA rulemaking regarding the use of “natural” labeling. Judge Pauley also dismissed without prejudice Plaintiff’s challenge to KIND’s “non-GMO” advertising claim as insufficiently pled, prompting Plaintiffs to file an amended complaint that re-alleged its arguments as to why the stayed “natural” advertising claim was false and sought to cure the deficiencies of its challenge to KIND’s “non-GMO” advertising.
KIND moved to dismiss the amended complaint, arguing that Plaintiffs’ challenge to KIND’s “non-GMO” statement was preempted by the USDA’s statutory mandate to formulate a national disclosure standard pertaining to bioengineered food. However, the court found that the only agency-level guidance on the issue corroborated the view that food manufacturers may voluntarily label their foods as non-GMO “as long as such information is truthful and not misleading.” Since Plaintiffs merely sought remedies under state laws against untrue and misleading representations, the court held Plaintiffs’ claims were not preempted.
The court did, however, grant KIND’s motion in the alternative to stay Plaintiffs’ challenge to the “non-GMO” advertising claim pending the USDA’s establishment of the disclosure standard. The court reasoned that the danger of a ruling inconsistent with the eventual guidelines was substantial, since the guidelines might explain whether ingredients from genetically modified crops could be considered “non-GMO.” The risk of delay, on the other hand, was minimized by the fact that the USDA standard must be released by July 29.
In addition, the court denied Plaintiffs’ motion to immediately lift the stay on their challenge to KIND’s “all natural” advertising statement. Plaintiffs argued that FDA rulemaking on the subject had stalled, with no apparent activity since the close of the notice and comment period in May 2016. The court acknowledged the “glacial pace” and uncertain timeline of agency action, but to avoid piecemeal litigation, it continued the stay on the challenge to the “all natural” advertising claim so it could be litigated simultaneously with the “non-GMO” challenge.