Note: This is the first in a series of columns by OMelveny & Myers attorneys, focusing on key legal issues specific to a variety of U.S. industries.
In recent years, food manufacturers have been peppered by class action lawsuits based on the alleged mislabeling of their products. Plaintiffs attorneys have seized on consumers health consciousness and the surge of products catering to this trend: foods that advertise antioxidants, no sugar added, all natural, 0g trans fat, and no artificial colors, flavors, or preservatives. If you are a food maker, you have likely faced (or will at some point) a claim that you are misleading consumers and violating federal regulations with these representations on product labels and accompanying websites.
Such claims are often brought under state consumer protection statutes, including Californias Unfair Competition Law, Consumers Legal Remedies Act, and False Advertising Law. In the Northern District of California alone, more than 25 food-labeling cases have been filed in just the past nine months. Rather than wishing this trend away, companies should craft a defense. If faced with a food-labeling lawsuit, what will be your first steps?
1. Responding to the Demand Letter
Before filing suit, a consumer or attorney may send a demand letter to the company, alleging violations of particular laws or regulations and requesting certain relief. In fact, to pursue a damages claim in a class action under Californias Consumers Legal Remedies Act, a potential plaintiff must send a written demand letter at least 30 days before bringing any claim for damages. While the demand letter and response may not change a plaintiffs decision to file suit, a company may be able to gain some legal advantage with a well-considered response.
Specifically, the company should point out that it guarantees its product and offers any consumer a refund if he or she is unsatisfiedthereby obviating the need for litigation, much less a class action. The companys response is also an opportunity to explain to the potential plaintiff why litigation in this case is a risky and expensive avenuenot one to be pursued lightlyparticularly because of scientific substantiation or other defenses the food maker may have.
While the plaintiff may decide not to abandon his claim, the company may be able to reach a resolution and save the costs of litigation. Its at least worth a try.
2. Jurisdiction: Federal or State Court?
If your response to the demand letter did not stave off a class action lawsuit, you will need to consider the jurisdiction in which your company has been sued. The vast majority of recent food-mislabeling cases have been brought in federal court, and many of those in the Ninth Circuit. If your company has been sued in state court, you should consider removing the case to federal court if possible, especially if you are facing a putative nationwide class.
Given the number of mislabeling case filings in federal courts, those courtsespecially in Californiaare more likely to have handled such a case before and be familiar with the issues, including the federal regulations involved. In addition, your company will obtain the benefit of key class action decisions such as Mazza v. American Honda Motor Co., a Ninth Circuit decision last year that vacated class certification of a nationwide class of consumers alleging violations of Californias consumer protection statutes.
3. Moving to Dismiss
Because food-mislabeling cases relate to the federal Food, Drug, and Cosmetic Act (FDCA) and its accompanying food regulations, the defendant should explore a potential preemption defense. Section 343-1(a) of the FDCA expressly preempts state-law claims that seek to impose requirements not identical to the requirements set forth in certain regulations and code provisions. Food makers have had some success arguing preemption, particularly for claims relating to artificial and natural flavoring, including fruit flavoring and 0g trans fat. (By contrast, defendants such as Ben & Jerrys have had less success with preempting certain natural claims.) Beyond preemption, the defendant should consider making a primary jurisdiction argumentnamely, that the issue of food labeling is within the special competence of the FDA, and it should be left to the FDA to determine and enforce its own regulations.
Even if the defendant cannot dispose of the entire case on preemption or primary jurisdiction grounds, it should consider moving to dismiss the complaint for failure to plead with particularity under Rule 9(b) of the Federal Rules of Civil Procedure. The food-labeling complaints that have been filed are often vague in terms of (1) what representations the plaintiff actually read and relied on; (2) what specific statements the plaintiff claims to be misleading; (3) which products the plaintiff actually purchased; (4) when the plaintiff purchased those products; and (5) where the products were purchased.
Acquiring this information is important for limiting the scope of the complaint. Once the defendant has these details, it should consider moving to dismiss all claims in the complaint relating to products that the plaintiff did not purchase and representations that the plaintiff did not read or rely on. The goal is to narrow the claims at issue, often substantially, and thereby limit the scope of discovery.