When courts decide to stay actions to await FDA guidance in an area, it’s only natural that our ears perk up. Which has been going on a lot, with cases such as Kane v. Chobani and Swearingen v. Santa Cruz Natural, Inc.
Last week, however, the Ninth Circuit Court of Appeals, which had previously opted to wait for FDA guidance with respect to evaporated cane juice, decided there was no need to wait for FDA to provide further guidance on “natural” claims in Brazil vs. Dole. In 2013, the lower court had granted in part, and denied in part, Dole’s motion to dismiss or strike the first amended complaint. (More about the significance of the 2013 date below.) The Ninth Circuit found that a decision not to stay or dismiss the case under the doctrine of primary jurisdiction was not an abuse of discretion.
The plaintiff had alleged that Dole’s labels for its packaged fruit products were deceptive because they were described as “All Natural Fruit,” despite the products containing synthetic citric and ascorbic acid. The plaintiff cited the label itself; his own testimony that he was deceived; Dole’s consumer surveys prepared for the litigation; and the federal Food and Drug Administration’s informal, non-binding policy on the use of the word “natural” in food labels. (Nothing artificial or synthetic has been included in, or has been added to, a food that would not normally be expected to be in the food.) (Yes, we know that’s rather circular but that’s a story for a different day.)
In addition to FDA’s informal policy, the plaintiff cited more recent FDA warning letters to food sellers who had described their products as “100% Natural” or “All Natural.” The FDA argued that foods that naturally contain citric acid (such as tomatoes) may not be labeled “all natural” if synthetic citric acid is added to them. According to the Ninth Circuit, this evidence could allow a trier of fact to conclude that Dole’s description of its products as “All Natural Fruit” is misleading to a reasonable consumer.
Remember how we mentioned that the district court decided the motion to dismiss in 2013? The decision came down before the FDA’s 2015 request for comments on the meaning of “natural.” As a result, the district court was confronted with a different regulatory situation than the courts face going forward, since at the time of the decision the FDA had given no indication that it would provide guidance on the term.
As is only “natural” in these cases, the Ninth Circuit decided some other important issues. The Ninth Circuit upheld the district court’s decision to decertify the damages class, finding that the lower court correctly limited damages to the difference between the prices customers paid and the value of the fruit they bought (in other words, the “price premium” attributable to Dole’s “All Natural Fruit” labels) and that the plaintiff had failed to demonstrate how such a premium could be calculated on a class wide basis. The Ninth Circuit also rejected the plaintiff’s damages theory of “nonrestitutionary disgorgement” under the same reasoning.
The court’s decision not to await the FDA might signify an increase, or at least no slowdown, of “all natural” lawsuits. But, the standard of review for the Ninth Circuit was “abuse of discretion,” leaving district courts free to continue to make conflicting determinations on whether cases should be stayed in anticipation of FDA guidance. Until the FDA speaks up on the issue, companies have no choice but to wait and see how the cases unfold.