Food labeling cases may finally proceed

Since 2010, scores of consumer class actions challenging the use of terms such as "all natural," "100% natural" and "natural ingredients" as misleading in food and beverage advertising have been filed in California federal district courts. Yet the 9th U.S. Circuit Court of Appeals has not issued a binding decision on these "natural" labeling issues. This is because many of these cases have been stayed due to pending 9th Circuit decisions addressing class certification issues. In addition, courts have stayed these types of actions pending anticipated Food and Drug Administration regulations on use of the term "natural" in food and beverage labeling. However, recent court decisions indicate that these cases are now clear to proceed.

An End to an End Run

The U.S. Supreme Court recently decided Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017), which will affect several pending consumer labeling cases. In an 8-0 decision (heard prior to Justice Neil Gorsuch's confirmation), the Supreme Court decided that a plaintiff's voluntary dismissal does not qualify as a "final decision" within the meaning of 28 U.S.C. Section 1291. Prior to Microsoft, plaintiffs in the 9th Circuit, when denied Rule 23(f) permission to appeal a district court's refusal to grant class certification, would circumvent the court's decision by voluntarily dismissing their case, and thereafter immediately seeking appellate review of the district court's class certification decision. Microsoft forecloses this end run around Rule 23(f), and reiterates that a voluntary dismissal cannot serve as grounds for appeal and consideration of a denial of class certification.

An immediate impact of Microsoft will be felt in two 9th Circuit "natural" labeling cases: (1) Jones v. ConAgra Foods Inc., 14-16327, stayed pending the resolution of Microsoft, which challenged food labels stating "100% Natural," or "Free of artificial ingredients & preservatives," among other statements on a variety of products including hot chocolate, cooking spray and canned tomato products; and (2) Kosta v. Del Monte Food Co., Inc., 15-16974, where plaintiffs alleged that Del Monte used labels indicating that its fruit products contained certain antioxidants and were fresh and natural.

Like Microsoft, plaintiffs in Jones and Kosta voluntarily dismissed their case with prejudice after losing their certification motion, and sought appellate review. In Jones, the 9th Circuit granted an unopposed motion to stay pending the Microsoft decision. Because Jones suffers from the same fatal posture as Microsoft, the 9th Circuit is likely to terminate any appellate court review of Jones.

Additionally, briefing in Kosta is complete and the matter currently awaits a hearing date. Although the case was not stayed pending the Microsoft decision, Del Monte argued that the 9th Circuit lacked jurisdiction, and that the case should be stayed pending the Microsoft decision. Although the matter currently awaits a hearing date, the 9th Circuit (either during consideration of the case or by motion of the defendant-appellee) is likely to dismiss in light of Microsoft. Thus, neither Jones nor Kosta is likely to result in any binding determination of "natural" claims on the merits.

Another 9th Circuit case to address "natural" labeling issues is Brazil v. Dole Packaged Foods, LLC, 660 F. App'x 531 (9th Cir. Sept. 30, 2016). In a memorandum disposition, the 9th Circuit analyzed the phrase "all natural" or "natural," and how a reasonable consumer would interpret the phrase "all natural fruit" on Dole's product labeling. The 9th Circuit observed that the inclusion of synthetic citric and ascorbic acids could allow a trier of fact to find that they were not "natural," and that therefore summary judgment was granted in error. But as one Northern District of California district court judge observed, Brazil is "non-precedential" on these issues. Wilson v. Frito-Lay N. Am., Inc., 12-cv-01586-JST (N.D. Cal. Feb. 10, 2017). Thus, Brazil's discussion of the use of "natural" in food and beverage labeling in its memorandum opinion does not provide district courts with binding clarity on the issue.

At least half a dozen cases in the Northern District of California (aka "The Food Court") have stayed their cases pending decisions in Jones, Brazil and Kosta. These cases include: Ivie v. Kraft Foods Glob., Inc., 12-CV-02554 RMW; Mains v. Whole Foods Mkt., Inc., 5:12-cv-05652-EJD; Ham v. The Hain Celestial Grp., Inc., 3:14-cv-02044-WHO; Thomas v. Costco Wholesale Corp., 5:12-cv-02908-BLF; Park v. Welch Foods, 5:12-cv-06449; and Parker v. J.M. Smucker Co., 13-0690 SC (later dismissed). As Jones, Brazil and Kosta are now likely to result in no binding, published decisions, the 9th Circuit stands to be deluged by a flood of similar and currently stayed cases in their wake.

For example, the Wilson court stayed summary judgment and class certification briefing in light of the pending decisions in Jones and Brazil, noting in particular that the 9th Circuit would consider how reasonable consumers would be deceived by "all natural" labels in Brazil. But in February, the court lifted a stay on summary judgment briefing (but not class certification), because the decision in Brazil "though non-precedential, eliminates the main reason for staying Defendant's motion for summary judgment," that Jones "will provide only minimal guidance" on the summary judgment issues, and moreover, "it could be many months before the 9th Circuit decides Jones" in light of the pending Microsoft decision.

Anticipating FDA Guidance

In March 2016, the 9th Circuit remanded an action involving the allegedly deceptive use of the terms "evaporated cane juice" and "natural" on yogurt labels "with instructions to enter a stay of proceedings under the primary jurisdiction doctrine," due to ongoing FDA proceedings regarding the "delineation of the scope and permissible usage of the terms 'natural' and 'evaporated cane juice' in connection with food products," which "should be addressed in the first instance by the agency with regulatory authority over the relevant industry rather than by the judicial branch." Kane v. Chobani, LLC, 645 F. App'x 593, 594 (9th Cir. 2016) (citations omitted). In relevant part, the 9th Circuit referenced the November 2015 FDA announcement of its initiation of a formal regulatory proceeding by issuing a request for comments regarding the use of the term "natural" in connection with food product labeling, and concluded that, given the ongoing FDA proceeding, a stay was warranted.

The Kane decision led a number of California federal district courts to stay proceedings involving "natural" labeling claims until further FDA guidance was available. See, e.g., Viggiano v. Johnson, CV 14-7250-DMG (MRWx) (C.D. Cal.); In re Hain Celestial Seasonings Prod. Consumer Litig., SACV 13-1757-AG (ANx) (C.D. Cal.); Anderson v. Hain Celestial Grp., Inc., 14-03895 EJD (N.D. Cal.); Smedt v. Hain Celestial Grp., Inc., CV-12-03029 EJD (N.D. Cal.).

However, while the FDA comment period with regard to "natural" labeling closed in February 2016, no guidance on "natural" labeling has been forthcoming. Courts have interpreted this silence to "beg[] the question of whether further guidance is currently contemplated regarding natural food labeling ... , and whether there is any reason to believe that developments will occur in the foreseeable future." Martin v. Tradewinds Beverage Co., CV16-9249 PSG (MRWX) (C.D. Cal. ). The Martin court refused to dismiss claims arising from "100% Natural" labeling on iced tea products on primary jurisdiction grounds, given the FDA's lack of guidance. The Martin court pointed to language in the Kane decision suggesting that "the duration of the stay remains within the sound discretion of the district court" and "[i]f future events render the FDA's apparently imminent resolution of the ... 'natural' issues illusory, such events should inform the district court's exercise of its discretion." The court in In re Hain Celestial Seasonings also lifted its stay after six months had passed, because "relevant administrative guidance" from the FDA "didn't come, and the Court has been unable to find any relevant further action by the FDA."

In conclusion, while myriad "natural" labeling cases have been stalled in 9th Circuit district courts, it appears the dam may have broken at last. Practitioners defending advertising class actions arising from "natural" representations will likely soon see the revival of previously stayed district court cases in the 9th Circuit, and decisions addressing "natural" claims on the merits should not be far behind.