Every once in a while you can envision a judge smiling as he writes an opinion – either because the facts are interesting or because the issues provide an opportunity to spin a phrase that is just too good to pass up.  Judge Silverman’s decision yesterday for the Ninth Circuit in Lilly v. ConAgra Foods, Inc., Case No. 12-55921, is one of those opinions.  See  http://cdn.ca9.uscourts.gov/datastore/opinions/2014/02/19/12-55921.pdf.

In Lilly, the Ninth Circuit reversed a district court decision granting a motion to dismiss, and held that the plaintiff’s state-law mislabeling claims based on the failure to include the salt on a sunflower seed shell in its statement of total product sodium were not preempted by federal law. The Plaintiff, Aleta Lilly, alleged that by reporting on its package labeling only the salt from the kernel of a sunflower seed and not the shell, the defendant, ConAgra Foods, Inc., violated California’s Consumer Legal Remedies Act (Cal. Civ. Code § 1750 et seq.), California’s False Advertising Laws (Cal. Bus. & Prof. Code § 17500 et seq.), and California’s Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.).  At the motion to dismiss stage, the district court agreed with ConAgra that Lilly’s claims sought “‘to impose an additional sodium labeling requirement that [was] not identical to the’ Nutrition Labeling and Education Act (21 U.S.C. § 343) and thus her ‘state laws claims [were] expressly preempted.’”

In concluding that the district court erred, Judge Silverman, joined by Judge Hurwitz and over the dissent of visiting Judge Vinson, wryly began his opinion this way:

Some days we are called upon to consider such profound issues as eleventh-hour death penalty appeals, catastrophic threats to the environment, intense and existential questions of civil and human rights, and the most complicated, controversial problems in civil, criminal and administrative law. Today we consider the coating on sunflower seeds.

He went on to explain that Plaintiff’s theory was “that the tasty coating placed on sunflower seed shells is intended to be ingested—and is ingested before the inedible shell is spat out and the kernel eaten; that is what is expected before expectoration.”

Turning to the merits, Judge Silverman explained that while the NLEA (21 U.S.C. § 343-1(a)(5)) “provides that no state may ‘directly or indirectly establish . . . any requirement for the labeling of food that is not identical to’ the federal requirements[,] ” as applied to Plaintiff’s claims, the application of California law would not impose additional obligations or depart from the federal standard. Judge Silverman cited a federal regulation, 21 C.F.R. § 101.9(a), and its requirement that “‘[n]utrition information relating to food shall be provided for all products intended for human consumption[,]” in concluding that as pleaded ConAgra intended that purchasers consume the salt on the shells. He quickly rejected ConAgra’s reliance on 21 C.F.R. § 101.12(a)(6), and its requirement that calculating the amount of sodium in food be “based on only the edible portion of food, and not bone, seed, shell, or other inedible components[:]” 

ConAgra’s argument simply ignores the fact that while the shell themselves are inedible, the coatings put on top of the shells most certainly are not inedible. . . For that reason, the portion of the edible coating on the shell must be accounted for in the calculation of the sodium content. The asserted state law requirements that Lilly seeks to impose here are thus no different from federal law and not preempted.

Judge Vinson dissented, suggesting the majority was going beyond the regulations. He agreed with ConAgra’s reading of 21 C.F.R. § 101.12(a)(6), and would have affirmed the district court’s conclusion that Lilly, by relying on the salt on the shell, sought to go beyond federal law and would require ConAgra to determine the content of its product labels in a way differing from the federal standards, rendering her state claims preempted:  “Although we might prefer a regulation[,]” he explained that “includes the shell’s absorbed salt and to draw a distinction between an edible ‘coating’ and an inedible shell, we are nonetheless bound to apply this unambiguous regulation objectively as it has been written.”

Given the dissent and the conflicting interpretations of what the regulations mean, a petition for rehearing en banc seems likely. Regardless of the outcome of that petition, Lilly sets an important precedent. The past year has seen an explosion in claims alleging the mislabeling of food.  A critical question in those cases is the preemptive effect (sometimes nuances and sometimes blunt) of federal labeling law.