A federal court in California has denied the motion to dismiss filed by guacamole maker Yucatan Foods, L.P. in a putative class action alleging violations of labeling laws based on the company’s use of “evaporated cane juice” instead of “sugar” on product labels. Swearingen v. Yucatan Foods, L.P., No. 13-3544 (U.S. Dist. Ct., N.D. Cal., San Jose Div., order entered February 7, 2014).
So ruling, the court rejected Yucatan’s arguments that (i) the “home state” exception of the Class Action Fairness Act should apply and divest the federal court of jurisdiction because a nationwide class of consumers cannot be certified given that California law cannot regulate conduct unconnected to the state—the court found that resolution of this issue was not appropriate at the pleadings stage; (ii) federal law preempts the plaintiffs’ state law-based claims—the court determined that the claims rise and fall on the defendant’s compliance with federal law, thus the requirements the plaintiffs seek to impose are identical to federal requirements; (iii) primary jurisdiction should apply because the Food and Drug Administration (FDA) does not yet have a final position on the use of “evaporated cane juice” on labeling—according to the court, FDA has draft guidance and continues to issue warning letters consistent with that position, suggesting that “the agency does not view the issue as unsettled”; (iv) the named plaintiffs lack standing, particularly as to products they did not purchase—the court rejected Yucatan’s argument “for the most restrictive view of standing”; and (v) the plaintiffs failed to state a plausible claim for relief—the court ruled that the pleadings were sufficient under the theories alleged.