Responding to Hain Celestial Group Inc.’s motion for summary judgment in a putative consumer-fraud class action alleging that the company wrongfully markets its Avalon Organics® and Jason brand products as “organic,” the plaintiffs have asked the court to overlook the resolution of an administrative proceeding which concluded that the company’s labels did not represent the products as organic. Brown v. The Hain Celestial Group, Inc., No. 11-3082 (U.S. Dist. Ct., N.D. Cal., opposition filed December 6, 2013).
The matter will be considered during a February 6, 2014, hearing before the court. According to the plaintiffs, Hain failed to disclose to the plaintiffs or court the existence of a state investigation involving its alleged violation of the California Organic Products Act (COPA) until the company argued in its motion that the proceeding bars the plaintiffs’ claims. And even if the court decides to consider the California Department of Public Health (CDPH) letter absolving the company of misconduct, the plaintiffs argue that it does not preclude them from pursuing claims based on more than product labels; the plaintiffs have alleged in addition that the company’s advertising and marketing is false and misleading.
They also contend that the administrative action lacked the procedural safeguards necessary for the agency proceeding to preclude judicial proceedings. The plaintiffs state in this regard, “There were no submissions in opposition to Hain’s letters, no hearing regarding the Products’ compliance with COPA, no discovery, and no sworn testimony (or, for that matter, any testimony). In short, CDPH’s inquiry lacked any of the quasi-judicial protections required for an agency proceeding to bar judicial claims. Moreover, since they were completely unaware of the pendency of the inquiry until after it had concluded, Plaintiffs had no opportunity to participate in CDPH’s investigation and thus cannot have their claims barred by the outcome of CDPH’s investigation.”
The plaintiffs further take issue with the company’s argument during the course of litigation, “while the CDPH inquiry was pending,” that “the United States Department of Agriculture had ‘exclusive jurisdiction’ over organic claims on the Products and that the Products had been sold for nearly twenty years ‘without objection’ by state or federal authorities.” They contend that waiver and equitable estoppel doctrines “are designed to prohibit this type of duplicitous conduct. Moreover, Hain’s repeated violations of its disclosure and discovery obligations regarding its involvement with CDPH warrant barring Hain from relying on the fruits of its misconduct.”