Manufacturers and retailers of organic food products should take note that the United States District Court for the Southern District of New York has held that federal law governing the certification of organic and natural products does not preempt consumer state law claims challenging “organic” and “natural” product labels. This decision highlights a growing split among the courts on this important issue and may make the Southern District an appealing venue for plaintiffs targeting the organic and natural food market, at least for now.
In Segedie v. Hain Celestial Group, Inc., No. 14-CV-5029 NSR, 2015 WL 2168374 (S.D.N.Y. May 7, 2015), the District Court declined to dismiss a putative class action alleging that the labels describing certain food and personal care products as “organic” and “natural” are deceptive and misleading under California and New York consumer protection laws. The District Court rejected defendant’s argument “that once a [federal] certifying agency has passed on a product’s organic status, a state-law verdict may not deem the sale or labeling of that product as ‘organic’ false or misleading” and concluded that the Organic Foods Production Act of 1990, 7 U.S.C. §§ 6501–6523 (OFPA) and the USDA’s National Organic Program (NOP) regulations do not preempt consumer claims under California and New York consumer protection laws. Segedie, at *7. OFPA establishes uniform national standards for the production and handling of foods labeled as “organic” and prohibits the sale or labeling of any product as “organic” unless it has been certified as such by an accredited certifying agent.
Five years ago, in In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Practices Litig., 621 F.3d 781 (8th Cir. 2010), the United States Court of Appeals for the Eighth Circuit held that claims against an organic-certified milk producer under Colorado consumer protection laws for purportedly mislabeling milk as “organic” were impliedly preempted by OFPA. 621 F.3d at 796. The Eighth Circuit concluded that such claims would permit litigants to use state-law causes of action to second guess and interfere with the process Congress established to regulate sellers of food products labeled “organic.” Id. at 795. In Segedie, the District Court acknowledged that the putative class claims fell squarely within the ambit of the Eighth Circuit’s holding, but nevertheless expressly declined to follow the Eighth Circuit, which “appears to be the first and only circuit court to have addressed the preemptive scope of the OFPA in relation to state consumer protection claims.” Segedie, at *4. The District Court explained that it found the Eighth Circuit’s rationale for “implied obstacle” preemption unpersuasive because the named plaintiffs’ claims against the defendant did not “present a sharp conflict with congressional purposes that rises above the level of mere tension.” Id. at *6 (internal citations omitted).
In reaching its conclusion that the plaintiffs’ “organic” claims were not preempted by OFPA or the NOP regulations, the District Court in Segedie noted that it was “joining in those courts that have reached a similar conclusion” citing two Northern District of California opinions from 2012 (see Jones v. ConAgra Foods, Inc., 912 F. Supp. 2d 889, 895 (N.D. Cal. 2012); Brown v. Hain Celestial Grp., Inc., No. C 11-03082 LB, 2012 WL 3138013, at *17 (N.D. Cal. Aug. 1, 2012)). But the District Court failed to recognize that the law in California on this issue is far from settled. In 2013, a California appellate court explicitly acknowledged that it was reaching the opposite conclusion from the federal district court in Jones and held that consumer lawsuits based on product mislabeling of foods as “organic” are subject to implied obstacle preemption and that there is no private enforcement of OFPA or the California Organic Products Act (COPA), which codified California’s federally approved state organic program. Quesada v. Herb Thyme Farms, Inc., 166 Cal. Rptr. 3d 346, 349 (Cal. App. 2d Dist. 2013).
Given the disagreement among California state and federal courts on the issue of preemption, the California Supreme Court recently granted review of the Quesada decision to resolve “[w]hether [OFPA] preempts state consumer lawsuits alleging that a food product was falsely labeled ‘100% Organic’ when it contained ingredients that were not certified organic under [COPA].” Quesada v. Herb Thyme Farms, 323 P.3d 1 (Cal. 2014) (internal citations omitted).
Manufacturers and retailers of organic food products should stay tuned both for the California Supreme Court’s decision in Quesada and for additional decisions from federal courts wrestling with these issues. It is likely to be some time yet before we learn if courts will follow the Eighth Circuit’s approach and preempt private causes of action based upon OFPA and NOP regulations, or whether the more permissive view of the Southern District of New York in Segedie will prevail.