One thing everyone can agree on when it comes to plaintiffs and plaintiffs’ attorneys – they are persistent.  Here at the Product Liability Monitor we have been following plaintiffs’ repeated attempts to gain traction in their claims against food and beverage companies in cases alleging deceptive labeling.  The current tactic is to claim that use of the term “evaporated cane juice” (“ECJ“) as an ingredient is illegal because the “common or usual name” of ECJ is “sugar.”  In using the term “evaporated cane juice” on labels, plaintiffs allege that companies are misleading consumers by attempting to make their products appear healthier than other products that contain “added sugar” rather than ECJ.  Food and beverage companies have argued these cases should be dismissed under the primary jurisdiction doctrine because Congress has vested the Food and Drug Administration (“FDA”) with the authority to interpret and enforce food labeling regulations.

On March 5, 2014, the FDA issued a Notice indicating it is considering “Draft Guidance for Industry on Ingredients Declared as Evaporated Cane Juice” (the “March 5 Notice”).  In that Notice the FDA indicated it has not reached a final decision on the common or usual name for the ingredient that companies have labeled as ECJ and that it is “reopening the comment period to request further comments, data, and information about the basic nature and characterizing properties of the ingredient sometimes declared as [ECJ], how this ingredient is produced, and how it compares with other sweeteners.”  The reopened comment period closed on May 5, 2014, and the FDA is currently considering the issue.  Based on the March 5 Notice – which impacts directly on the consumer claims related to the use of the term ECJ on product labels – two California federal courts recently dismissed putative class actions under the primary jurisdiction doctrine.  The primary jurisdiction doctrine is a prudential doctrine under which a court “determines whether an otherwise cognizable claim implicates technical and policy questions that should be addressed in the first instance by the agency with regulatory authority over the relevant industry rather than by the judicial branch.”  Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008).  Courts applying the primary jurisdiction doctrine look to four factors:  (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration.  Id. at 1115.

In Swearingen, et al. v. Attune Foods, Inc., the plaintiffs claimed that Attune unlawfullymisbranded various of its food products, including various chocolate products and fruit-flavored cereal products with the ingredient ECJ or “Organic Evaporated Cane Juice.”  Plaintiffs allege that these labels violate FDA regulations, which require products to be labeled with the “common usual name” of ingredients.  According to plaintiffs, the common or usual name for ECJ is sugar, and Attune allegedly uses ECJ in an attempt to mislead consumers into thinking that their products are healthier than products that contain “added sugar” as an ingredient.  Attune moved to dismiss the complaint on various grounds, including the primary jurisdiction doctrine, arguing that the FDA was vested with the authority to regulate food labels and, as indicated in the Notice recently issued (which the Court took judicial notice of), had not reached a final decision on the propriety of usingECJ on food labels.  The plaintiffs acknowledged the FDA’s Notice regarding its consideration of the use of ECJ, but argued that this did not require the Court to invoke the primary jurisdiction doctrine because the FDA had consistently considered the use of the term ECJ to be unlawful and the FDA did not indicate that it was likely to change its position notwithstanding its position that no final decision had been reached.  Noting that numerous other courts had dismissed or stayed similar suits under the primary jurisdiction doctrine, Judge Saundra Brown Armstrong granted Attune’s motion to dismiss.  Judge Armstrong held that “[f]ood labeling is within the special competence of the FDA, the FDA has not resolved the issue of whether ECJ is the common or usual name of the ingredient involved in [the] case, the FDA is engaged in active rulemaking on this issue, and deferring to the FDA for resolution of this issue will allow courts to benefit from the FDA’s expertise on food labeling and will ensure uniformity in administration of the FDA’s regulations.”

In Swearingen et al. v. Yucatan Foods, L.P., the plaintiffs argued that Yucatan’s use of the term ECJ instead of sugar in its guacamole products was unlawful and misleading and that Yucatan used this misleading term in an effort to woo health-conscious consumers.  Initially, Judge Richard Seeborg denied Yucatan’s motion to dismiss, holding that the primary jurisdiction doctrine did not apply because the draft guidelines issued by the FDA in 2009 applied to terms closely related to ECJ, including “sugar,” “juice,” and “cane syrup.”  As a result, the case did not represent an issue of first impression, and the FDA’s constant issuance of warning letters to companies consistent with the 2009 draft guidance suggested that the FDA did not view the issue as unsettled.  Judge Seeborg also noted that numerous other courts had refused to dismiss suits relating to the use of the term ECJ based on the primary jurisdiction doctrine, but did note the inconsistency of the results of such cases.

Following issuance of the FDA’s March 5 Notice, Yucatan filed a motion for reconsideration, which Judge Seeborg granted under the primary jurisdiction doctrine.  In granting Yucatan’s motion, Judge Seeborg rejected the plaintiffs’ argument that because the FDA is not engaged in formal rulemaking, even were it to issue final guidance on the propriety of using the term ECJ, this would not be binding on either the agency or manufacturers.  While acknowledging the plaintiffs’ point, Judge Seeborg held that the question of ECJ labeling presents a host of technical issues uniquely within the agency’s expertise and deferring to the FDA for resolution of the issue “will enhance decision-making and efficiency by allowing the court to take advantage of administrative expertise.”  Additionally, the fact that the FDA has indicated that it is actively considering the issue and expects to issue a final decision in the near future alleviated the plaintiffs’ concerns about statute of limitations issues related to the case’s dismissal.

Given the number of cases that have been brought related to the use of the term “evaporated cane juice,” the FDA’s decision regarding its propriety could be critical to the bottom line of food and beverage companies.  The Washington Legal Foundation, a public interest law and policy center in Washington D.C. created a chart showing the Evaporated Cane Juice Litigation pending as of January 22, 2014.  The list is interesting in several respects.  First, the same defendants often appear in multiple cases filed in various courts.  Additionally, the same plaintiffs – including Ms. Swearingen - appear in multiple lawsuits against various companies filed in various courts.  To the extent the FDA issues a final decision against using ECJ on product labels and cases previously dismissed under the primary jurisdiction doctrine are revived, plaintiffs still may face several legal hurdles, including convincing a court that it was reasonable for consumers to assume that certain products – such as chocolate – did not contain sugar, but rather contained some healthier form of sugar called “evaporated cane juice.”  Moreover, notwithstanding plaintiffs’ claims that their true goal is to change labeling practices, as opposed to money, the fact that their chosen route seeking such change is a court room and not petitioning the FDA for regulatory relief would appear to undermine such a position.  We will continue to monitor the ongoing battle over evaporated cane juice and report on any major developments.