A federal court in California has denied the motion to dismiss filed by The Hain Celestial Group in four consolidated putative class actions alleging that the company deceives consumers by labeling and promoting 10 of its Celestial Seasonings® teas as “100% Natural” when they contain chemical insecticides, fungicides and herbicides. Von Slomski v. The Hain Celestial Group, Inc., No. 13-1757 (U.S. Dist. Ct., C.D. Cal., order entered June 10, 2014). So ruling, the court disagreed that the plaintiffs failed to state a claim or lacked standing, or that the litigation should be dismissed under the primary jurisdiction doctrine.
The company challenged the Eurofins test on which the plaintiffs rely to support their claim that the teas contain “significant levels” of man-made, chemical pesticides. According to the defendant, the plaintiffs failed to provide details about the testing, and the study “was published by ‘an admittedly biased short-seller that admits that it issued the report in hopes of driving down Hain Celestial’s stock price.’” Stating that neither the strength of the evidence nor its alleged bias is proper to consider at this stage of the proceedings, the court concluded “that it is plausible that the teas contain pesticides.”
The court also rejected the company’s argument that the plaintiffs have not plausibly alleged that a reasonable consumer would likely be deceived by the “100% Natural” label. In the court’s view, this was not one of the rare cases where it could find, based on the pleadings, that the labeling was unlikely to deceive a reasonable consumer. The court also ruled that the plaintiffs are not required to allege a specific definition of “natural.” The court was unpersuaded that “unless a product is labeled ‘organic,’ reasonable consumers would understand that the product may contain traces of pesticides,” noting that the evidence may support that theory, but that “based on the allegations, it strikes the Court as plausible that the evidence will favor Plaintiffs.” The court further refused to conclude that “100% Natural” is non-actionable puffery.
Acknowledging that courts have split over whether named plaintiffs have standing as to products they have not purchased, the court decided that the issue was “better dealt with at the class certification stage.” It also declined to rule that they lacked standing to pursue claims based on representations made on the company Website. While it agreed that the plaintiffs had not alleged “that they relied on the representations, . . . that doesn’t result in the dismissal of any claims. Plaintiffs adequately allege reliance on the representations on the product label and have standing to pursue their claims based on those representations.”
As for primary jurisdiction, the court noted the U.S. Food and Drug Administration’s “lack of interest in providing further guidance on the use of the word ‘natural’ in food labeling” made staying or dismissing the case for the agency to do so futile.