The Food and Drug Administration’s (FDA) June 17, 2015 final determination regarding partially hydrogenated oils (PHOs), the primary source of trans fat, has done nothing but fan the flames of the already existing trans fat class action litigation in California federal courts. Although in its final determination, the FDA declared that manufacturers may use trans fat in food products until June 2018, class attorneys have run amuck with the final determination, claiming it supports their position that trans fat is “unsafe” and consumers have been duped into buying “unhealthy” food products containing trans fat. On December 18, 2015, Congress fought back, seeking to end the “frivolous” litigation through the Consolidated Appropriations Act for 2016. Class attorneys remain undeterred, and only time will tell whether Congress is successful in ending the costly class action litigation. A full understanding of the evolution of trans fat class action litigation, the decisions to date, and the questions yet unanswered is essential to successfully defending plaintiffs’ seemingly never-ending quest to formulate a dismissal-proof class action complaint regarding trans fat in packaged food products. It also provides valuable insight into how other consumer class actions develop.
In the Beginning … There Was a Settlement
The trans fat class action litigation started as most recurring class actions start: with a large class action settlement. In 2005, McDonald’s paid $8.5 million to settle two class actions alleging it misled consumers about trans fat levels in its food. Similar suits followed against KFC Corporation and Wendy’s International Inc. in 2006 and 2007. After that, class attorneys started salivating over trans fat – the next big prospect for small class payouts and large attorney fee awards – and switched their focus to packaged food. Since 2009, more than 45 class action lawsuits have been filed in California federal district courts against various manufacturers, seeking the eradication of trans fat from packaged food products and exorbitant class damages.
The Original Theory: Mislabeling & False Advertising Claims
From 2009 through 2012, the theory was relatively consistent and simple: The plaintiffs alleged that packaged food manufacturers falsely and misleadingly marketed, advertised, or labeled their products as “healthful” even though they contained PHOs, a source of artificial trans fat, which allegedly can cause myriad health risks. The lawsuits reused allegations and named plaintiffs and attacked any packaging or marketing statements that even hinted at healthiness, such as “Fruit Flavored,” “Naturally Flavored,” “Low Fat,” “[Number of] Calories,” “Good Source of Vitamin C,” “Gluten Free,” “Made With Real Fruit,” “0g Trans Fat,” “Nutritious,” and “All Natural,”claiming the representations were false or misleading in light of the products’ trans fat content.1 In other words, if a manufacturer’s packaged product contained any amount of PHOs and the manufacturer made any statement regarding the product’s nutritional value, the product – and the manufacturer – became a target. The lawsuits centered on labeling and advertising, asserting claims for false and deceptive advertising under both federal and California state law.
Although the plaintiffs had some success in overcoming the tidal wave of motions to dismiss, they could not fully escape two glaring and prominent defenses: preemption and puffery. With respect to preemption, for example, in Carrea v. Dreyer’s Grand Ice Cream, Inc.,2 the plaintiff brought a putative class action alleging that the defendant misrepresented that its ice cream products contained “0g Trans Fat.” The court held that the Federal Food, Drug and Cosmetic Act (FDCA), as amended by the Nutrition Labeling and Education Act (NLEA), preempted the plaintiff’s claim.3 Specifically, when a product contains less than 0.5 grams of trans fat per serving, federal regulations require manufacturers to express the amount of trans fat as zero.4 Therefore, the plaintiff’s claim seeking to impose a requirement not identical to the regulations was expressly preempted.5 The court rejected the plaintiff’s argument that his claim was not preempted because he was attacking the representation on the product packaging and in marketing materials, not on the nutrition label, reasoning that “the distinction between Nutrition Facts and statements made on product packaging does not remove Plaintiff’s claims from the preemptive scope of the federal regulations….”6 The Ninth Circuit Court of Appeals affirmed.7
Further, to state a misleading or false advertising claim under California law, a plaintiff is required to prove that a “reasonable consumer” likely would be deceived by the packaging, and that he actually relied on the packaging and was deceived.8 Several courts determined, as a matter of law, that the advertising statements or product abels the plaintiffs attacked would not likely deceive reasonable consumers into thinking the product was healthy.9
The New Theory: “Use” Claims
In January 2013, plaintiffs’ attorneys advanced a new theory: the “use” theory. On January 21, 2013, a putative class action was filed against California Pizza Kitchen, Inc. and Nestle USA, Inc., alleging that the sale of packaged frozen pizzas containing trans fat is unlawful.10 The plaintiff did not claim any false or misleading
[Text Box: SUMMER 2016] advertising or that she relied on such advertising in purchasing the products. Rather, she claimed that just the use of trans fat in the products was unlawful. The district court granted the defendants’ motion to dismiss, holding that the plaintiff lacked Article III standing because she did not sufficiently plead an increased risk of harm or an economic injury.11 The court further held that the sale of packaged food containing trans fat was not unlawful.12
Adding Fuel to the Fire: The FDA’s Preliminary & Final Determinations Regarding PHOs
By November 2013, more than two dozen class actions relating to trans fat had been filed. On November 8, 2013, the FDA added fuel to the fire by issuing a preliminary determination regarding PHOs and a request for comments and scientific data and information. In the preliminary determination, the FDA “tentatively” determined that PHOs, the primary source of trans fat, “are not generally recognized as safe (GRAS) for any use in food based on current
scientific evidence establishing the health risks associated with the consumption of trans fat….”13
In line with the new use theory in Simpson and now fueled by the FDA’s preliminary determination, the plaintiffs shifted focus from claims relating to allegedly false and misleading advertising to a legally inaccurate claim that a determination that a food additive is non-GRAS is equivalent to a determination that the food containing that additive is adulterated and thus illegal to sell. In reality, a determination that an additive is non-GRAS simply
means that manufacturers must seek and obtain FDA pre-approval to use the non-GRAS food additive.14
Packaged-food manufacturers became victims of unfortunate industry phrasing, and the number of lawsuits again spiked. Many of the cases contained a hybrid of both the false advertising and use theories and some asserted only the use theory, as in Simpson.
If the FDA’s preliminary determination added fuel to the fire, its final determination regarding PHOs caused a raging inferno. On June 17, 2015, in its final determination, the FDA declared that “there is no longer a
consensus among qualified experts that” PHOs “are generally recognized as safe (GRAS) for any use in human food.”15 While many commenters requested an immediate compliance date (i.e., the immediate removal of PHOs from products without FDA pre-approval), the FDA set a three-year compliance date of June 18, 2018 to:
provide manufacturers sufficient time to submit, and the FDA to review and approve, the use of PHOs; (2) minimize market disruptions by providing sufficient time to identify suitable replacements for PHOs; (3) permit
manufacturers to exhaust existing product inventories; and (4) allow time to reformulate and modify labeling of affected products.16
The FDA’s final determination became the focus of new class action complaints and the defendants’ motions to dismiss them. The plaintiffs used the FDA’s determination that PHOs are non-GRAS as a sword to support their (legally inaccurate) claim that food containing PHOs is adulterated and therefore unlawful. The defendants, on the other hand, used the FDA’s final determination and three-year compliance period as a shield, arguing that the plaintiffs’ use claims, which seek to make it immediately unlawful to sell food containing trans fat: (1) are barred by conflict preemption and California’s safe harbor doctrine; (2) are subject to dismissal under the primary jurisdiction doctrine because the determination of the safety of PHOs is best left to the FDA; and (3) fail because
11 Id. at 1022-1023.
12 Id. at 1025-1026.
13 78 Fed. Reg. 67169 (Nov. 8, 2013).
14 21 C.F.R. § 171.1; see also 78 Fed. Reg. 67169 (Nov. 8, 2013).
15 80 Fed. Reg. 34650 (June 17, 2015).
16 Id. at 34668-34669.
[Text Box: SUMMER 2016] the FDA’s three-year compliance period allows the sale of food containing trans fat until at least June 18, 2018 without FDA pre-approval.
Although the plaintiffs’ allegations under the use theory have remained relatively unchanged, being only slightly tweaked when prompted by a court decision on a motion to dismiss, the California district courts have come to inconsistent decisions regarding the viability of the plaintiffs’ use claims, and the FDA’s final determination has only served to confuse matters further.
Water on the Fire: Congress Seeks to Put an End to the “Frivolous” Litigation
In December 2015, Congress sought to end the trans fat litigation, at least insofar as it relates to the plaintiffs’ use theory. On December 18, 2015, President Obama signed the Consolidated Appropriations Act for 2016 (H.R. 2029) (“2016 CAA”) into law, explicitly providing that “[n]o [PHOs] … shall be deemed unsafe…. and no
food … that bears or contains a [PHO] shall be deemed adulterated … by virtue of bearing or containing a [PHO] until” June 18, 2018.17 The purpose of this section was to “amend an FDA policy relating to the regulatory treatment of [PHOs] to prevent frivolous lawsuits.”18
Only one court has ruled on the preemptive effect of the 2016 CAA. In Backus v. Nestle USA, Inc.,19 the plaintiff brought a putative class action alleging that the defendant’s sale of coffee creamer products containing trans fat is unlawful. The court granted the defendant’s motion to dismiss on the ground that the plaintiff’s use claims are preempted by the FDA’s final determination and the 2016 CAA, reasoning that the plaintiff’s use claims, “which would impose an immediate prohibition on the use of [trans fat] in all foods under all circumstances would stand as an obstacle to the fulfillment of the FDA’s objectives … and conflict with Congress’s decision not to deem [trans fat]
unsafe, or the food containing them adulterated.”20 The plaintiff appealed, and the appeal is not yet briefed.
Venturing Further Into the Land of the Unknown: Class Certification
For those actions that have survived motions to dismiss, class certification remains an open question. There are three cases pending before the Ninth Circuit Court of Appeals regarding class certification in food misbranding cases: Jones v. ConAgra Foods, Inc., No. 14-16327 (9th Cir. filed July 14, 2014), Brazil v. Dole Packaged Foods, No. 14-17480 (9th Cir. filed Dec. 17, 2014), and Kosta v. Del Monte Foods, No. 15-16974 (9th Cir. filed
Oct. 2, 2015). In each case, the district court ultimately denied the plaintiffs’ request for class certification.21
Among the issues before the Ninth Circuit are whether the classes are ascertainable, individual issues predominate over common questions, and a reliable damages model can be formulated. Two of the appeals, Jones and Brazil, are fully briefed, but oral argument has not yet been scheduled. The Kosta appeal is not yet
17 Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, § 754, 129 Stat. , (2015).
18 Legislative Digest, Dec. 18, 2015, Republican Policy Committee, available at https://policy.house.gov/legislative/legislative-
digest/friday-december-18-2015 (last visited Jan. 19, 2016); see also FY 2016 Omnibus Summary – Agriculture Appropriations, House Appropriations Committee, available at http://appropriations.house.gov/uploadedfiles/12.15.15_fy_2016_omnibus_-_agriculture_-
_summary.pdf (last visited Jan. 19, 2016).
19 No. C-15-1963-MMC, 2016 U.S. Dist. LEXIS 29669 (N.D. Cal. Mar. 8, 2016).
20 Id. at *13 (internal quotations omitted).
21 Jones v. ConAgra Foods, Inc., No. C 12-01633 CRB, 2014 U.S. Dist. LEXIS 81292 (N.D. Cal. June 13, 2014); Brazil v. Dole Packaged
Foods, LLC, No. 12-CV-01831-LHK, 2014 U.S. Dist. LEXIS 157575 (N.D. Cal. Nov. 6, 2014); Kosta v. Del Monte Foods, Inc., 308 F.R.D. 217 (N.D. Cal. 2015).
[Text Box: SUMMER 2016] fully briefed. A number of district courts have stayed trans fat class actions pending the outcome of the appeals in Jones, Brazil, and Kosta.22
So What’s Next?
If you are following the trans fat class action litigation, there are several things to watch out for in 2016 and 2017:
The outcome of the appeal in Backus v. Nestle USA, Inc.,23 which held that the plaintiff’s use claims are preempted by the FDA’s final determination and the 2016 CAA. The outcome of the appeal in Hawkins v. The Kroger Co.24 Hawkins is a hybrid case in which the
plaintiff asserted both false advertising and use claims relating to the defendant’s sale of bread crumbs that allegedly contain trans fat. The district court granted the defendant’s motion to dismiss, holding that the plaintiff’s false advertising claims relating to the “0g Trans Fat” label were expressly preempted. Further, the court held that the plaintiff’s use claims could not survive dismissal because the plaintiff failed to plausibly allege an economic injury as required by California statutory law. The plaintiff appealed, and the appeal is not yet briefed.
The outcome of the appeals in Jones v. ConAgra Foods, Inc., Brazil v. Dole Packaged Foods, and Kosta v. Del Monte Foods. These cases likely will set the stage for class certification in any trans fat class action that survives dismissal. The outcome of pending motions to dismiss. Several motions to dismiss are fully briefed and awaiting decisions. Particularly of interest will be whether the courts follow the lead of the court in Backus v. Nestle USA and hold that Congress’ declaration has – once and for all – put an end to the trans fat class action lawsuits, at least to the extent they are based on a use theory.
Only time will tell whether the courts finally put an end to the trans fat class actions. What is known is that the plaintiffs’ attorneys will not be deterred. Despite the Ninth Circuit’s ruling in Carrea v. Dreyer’s Grand Ice Cream, Inc.,25 at least eight more lawsuits asserting claims based on “0g Trans Fat” representations nonetheless have
been filed. And at least two more lawsuits asserting claims under the use theory have been filed since Congress declared that no PHOs “shall be deemed unsafe” and no food “that bears or contains a [PHO] shall be deemed adulterated” until the June 18, 2018 compliance date set forth in the FDA’s final determination. Therefore, unfortunately for packaged-food manufacturers, there is no end in sight.