Last December, my colleague Isabella Lacayo reported that a Northern District of California judge certified two Rule 23(b)(3) classes inBrown v. The Hain Celestial Group, Inc. The classes consisted of consumers who purchased cosmetics produced by The Hain Celestial Group. The plaintiffs alleged that Hain sold two lines of cosmetics whose front labels used the word “organic” despite not containing at least 70% organic ingredients as required by COPA, a California statute regulating organic products. Plaintiffs brought suit under COPA itself, as well as under two California consumer fraud statutes: the Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA).
Plaintiffs brought two summary judgment motions on five issues of California law. The court recently granted these motions in part. Here’s the relevant factual background: Plaintiffs allege that they bought various Hain cosmetic products sold under the brand names Avalon Organics and Jason (which used to carry the front-label tagline “Pure, Natural, and Organic”). The cosmetics in both these lines underwent reformulations during the class period and were also relabeled such that the “Pure, Natural, and Organic” tagline was removed from the Jason products. It’s undisputed that before reformulation and relabeling at least some of these cosmetics were labeled and sold as “organic” without meeting COPA’s organic content requirement.
What’s interesting is that the parties did not agree on, and the court did not decide, which products were considered “cosmetics” and therefore subject to COPA’s organic formulation requirement. Additionally, there was disagreement about which specific products fell short of COPA’s 70% organic ingredient minimum. As the court explained in its summary judgment opinion, the determination of such issues is “immaterial to the present inquiry.” Instead of seeking to establish that any specific product violated COPA, the UCL, or CLRA, the plaintiffs sought to establish some principles of law that would apply to any cosmetic products that were sold/labeled/represented as organic despite not meeting COPA’s 70% organic ingredient requirement. In other words, plaintiffs asked the court to announce a rule that if a product is found to violate COPA, then it would constitute a per se violation of the relevant consumer protection statutes. The court articulated the relevant questions as follows:
- If Hain’s products were mislabeled and thus violated COPA, what doctrinal consequences follow?
- Are the plaintiffs correct that a COPA violation alone establishes materiality and likely deception under the UCL, and reliance under the CLRA?
What’s unusual is that the plaintiffs’ summary judgment motions were abstract, and essentially requested that the court confirm key aspects of California law. The court was not asked to decide liability. As would be expected, Hain was uncomfortable with the court making these legal determinations without having a clear picture of which products and how many products are at issue. The court explained that it could use its power to decide summary judgment motions under Rule 56 to streamline the legal questions at issue so that the ultimate liability questions (which necessitate more fact-intensive inquiries) will be easier to handle at trial.
The court drew several legal conclusions in its opinion. First, it held that the COPA violations alleged by plaintiffs are predicate acts under the UCL’s “unlawful” acts prong. Second, the court drew on prior precedent to conclude that a COPA violation entitles plaintiffs to a holding that the mislabeling was material and likely to deceive reasonable consumers under the UCL, and an inference that absent class members relied on the label for their CLRA claim. Ultimately, the court noted that while its holding is “striking,” it is “not unprecedented.”