In a 30-page ruling on Wednesday, a three-judge panel of the 3rd U.S. Circuit Court of Appeals revived a New Jersey statewide class action against Snapple (pdf), finding that federal regulation does not pre-empt consumer fraud claims involving Snapple's "All Natural" labeling.
The case began when a New Jersey woman named Stacy Holk bought two bottles of Snapple on May 4, 2007, paying the "premium price" of $1.09 for each. Holk was apparently surprised and distressed to discover that her Snapple, which was labeled "All Natural," contained high-fructose corn syrup. Represented by Wilentz, Goldman & Spitzer and Tunney & Halbfish, she filed a class action in New Jersey state court, alleging consumer fraud and breach of warranty. (Holk also at first made claims involving Snapple's "Made from the best stuff on earth" slogan, but she later dropped them.)
Snapple's lawyers at Baker Botts had the case removed to federal court, where Trenton federal district court judge Mary Cooper dismissed it, ruling that Holk's claims were pre-empted by FDA regulation of food and beverage labeling. (Loyal Litigation Daily readers may recall that several juice companies raised the same pre-emption defense against Pom Wonderful's false advertising claims).
The 3rd Circuit disagreed. The appellate court found that FDA policy (and legal precedent) left room for state regulation in food and beverage labeling. It also concluded that the FDA's informal policy on the use of the phrase "all natural" did not pre-empt Holk's claims. "The FDA doesn't regulate the phrase," said Wilentz partner Daniel Lapinski, who argued for Holk at the 3rd Circuit. "When consumers are willing to pay a premium price for products that say they're 'natural' or 'all natural,' the use of the phrase is significant."
Baker Botts partner Van Beckwith, who argued for Snapple, responded in an e-mail. "Snapple has always followed FDA labeling rules and this is no different," he wrote. "Last July, the FDA specifically spoke to the issue and said that it would not object to labeling [high-fructose corn syrup] as natural. This makes perfect sense considering it follows 15 years of FDA pronouncements and the sweetener has the same basic ingredients as table sugar -- glucose and fructose. Plus, Snapple's labels tell the individual consumer everything he or she needs to know in making an individual buying decision and fully discloses all of the beverage's ingredients."
Holk has already gotten part of what she wanted when she filed suit; Snapple revised its formula in late 2008, replacing high fructose corn syrup with sugar. But Lapinski told us the class action, which is now on remand to Cooper, also seeks disgorgement of Snapple's profits from its allegedly false labeling.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.