Primary jurisdiction

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Our last post talked about carbohydrate-rich Thanksgiving food. Today, we are talking about a putative class action on the labeling of certain diet foods, particularly in regard to “net carbs” and sugar alcohols. This was not planned. Colella v. Atkins Nutritionals, Inc., No. 17-cv-5867 (KAM), 2018 WL 6437082 (E.D.N.Y. Dec. 7, 2018), on the other hand, has all the hallmarks of a case brought for no reason other than to reward the lawyer. The same lawyer brought multiple cases in multiple courts raising the same allegations. The purported class representative in this one claimed to have bought only three of the thirty-one products he sued over and it is hard to imagine how he sustained any harm, let alone a harm that continues. Two of the other cases produced decisions on similar issues, which the Colella court cited frequently, so this was not really new ground. We will just cite those now and cut back on internal cites later: Fernandez v. Atkins Nutritionals, Inc., No. 3:17-CV-1628, 2018 WL 280028 (S.D. Cal. Jan. 3, 2018); Johnson v. Atkins Nutritionals, Inc., No. 2:16-CV-4213, 2017 WL 6420199 (W.D. Mo. Mar. 29, 2017). That will also be the last of our references to dieting, a subject with which we stubbornly deny knowledge.

Plaintiff centered his consumer fraud and warranty claims on the allegations that sugar alcohols in a number of the defendant’s products should count toward any tally of net carbohydrates and their consumption does affect blood sugar levels. Sugar alcohols are used as sweeteners in a number of foods and, as it turns out, FDA has a fairly developed history of addressing them in connection with labeling. Predictably, especially if you have read other posts on lawsuits over food labeling, the defendant’s motion to dismiss the amended complaint teed up express preemption under the FDCA and primary jurisdiction, along with TwIqbal and substantive state law. The end result was that plaintiff lost most of his claims, but will get a third chance to plead a consumer fraud claim as to a portion of his apparent issues with the labeling for defendant’s products. As we have noted before, we do think it is better to assess whether viable state law claims have been supported by factual pleading (with or without the heightened standard applicable for fraud-based claims like the plaintiff here was asserting) before turning to whether express preemption or primary jurisdiction would apply. The Colella court flipped the order of analysis, so something is left at least for now.

We will follow the court’s order of analysis in our discussion after a little more on the claims. The products’ labeling, and the company’s website, made clear that all counts of “net carbs” excluded sugar alcohol (like they excluded fiber). They further touted the low number of net carbs and explained that sugar alcohols could be ignored because they do not impact blood sugar like other carbohydrates that count toward the net carbs total. Plaintiff claimed this was a misrepresentation of the available science and that sugar alcohol consumption did have an impact on blood sugar. He also claimed FDA agreed that sugar alcohol should be counted toward total carbohydrates (but not net carbs). Lastly, he claimed he had relied on the labeling’s statements about net carbs and sugar alcohol in buying three products (once, apparently). Based on this, he wanted a range of damages for a purported class of purchasers of a bunch of products.

The express preemption analysis was fairly thorough and technical, because non-identical state law claims as to nutrient content labeling and health-related claims are expressly preempted but the regulations are complicated on those issues. What was not complicated was the rejection of plaintiff’s call to a presumption against preemption. Bexis should be happy with the quotation of Puerto Rico v. Franklin California Tax-Free Tr., 136 S. Ct. 1938, 1946 (2016), for the proposition that where a statute includes an express pre-emption clause, “[the court] do[es] not invoke any presumption against pre-emption but instead ‘focus[es] on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.’” It was also acknowledged that there is express preemption of “state law requirements regarding nutrient content claims” under the FDCA and POM Wonderful. Statutes and regulations require labeling of nutrients in food, including “[t]otal fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, dietary fiber, and total protein contained in each serving size or other unit of measure.” The regs also spell out how sugar alcohols should be handled and we will just repeat what the Colella court wrote:

Relevant to the instant case, “§ 101.9(c)(6) …. requires that food labels include … a statement of the number of grams of total carbohydrate in a serving, and a statement of the number of grams of total dietary fiber in a serving.” Fernandez, 2018 WL 2128450, at *4. Dietary fibers and sugar alcohols are considered carbohydrates for the purpose of calculating “total carbohydrates,” and the FDA provides extensive guidance regarding the treatment of sugar alcohols. 21 C.F.R. § 101.9(c)(6)(i)-(iv). Disclosure of sugar alcohols and their weights in the nutrition facts panel of a label is voluntary, however, if a claim is made about the grams of sugar alcohol on the label, disclosure must be made in accordance with 21 C.F.R. § 101.9(c)(6). Section 101.9(c)(6)(iv) states: “[a] statement of the number of grams of sugar alcohols in a serving may be declared voluntarily on the label, except that when a claim is made on the label or in labeling about sugar alcohol or total sugars, or added sugars when sugar alcohols are present in the food, sugar alcohol content shall be declared.” 21 C.F.R. § 101.9(c)(6)(iv); see also Fernandez, 2018 WL 2128450, at *4.

Statements about nutrients, however, do not necessarily have express preemption.

Under § 101.13(i)(3), “the label or labeling of a product may contain a statement about the amount or percentage of a nutrient if … [t]he statement does not in any way implicitly characterize the level of the nutrient in the food and it is not false or misleading in any respect.” Thus, “A nutrient content claim governed by § 343(r)(2) is …any claim outside of the nutrition-facts box that the manufacturer has chosen to make about the same kind of nutrients discussed inside the … nutrition information box.” Id.

With that backdrop, the court came to different conclusions about express preemption as to claims based on simply listing the number of net carbs or explaining how calculated them, on the one hand, and claims based on characterizing the number of net carbs as “Only Xg Net Carbs” and discussing the impact of sugar alcohols on blood sugar, on the other. Much of the analysis related to plaintiff’s argument that statements about net carbs cannot be preempted because they are not explicitly mentioned in the regulations. “Plaintiff’s argument that Section 343(q) of the NLEA and its implementing regulations, do not specifically list Net Carbs as a nutrient nor require the inclusion of Net Carbs in the Nutrition Facts panel is unavailing. The broad language in Section 343(r)(1) includes claims regarding nutrients, and relationships of nutrients, ‘of the type’ required by paragraph (q)(1) or (q)(2), obviating the need for specific categorical references to nutrients and nutrient relationships . . . ” The court also did not require that the FDA had to have expressly permitted the challenged labeling language. Here, there was ample evidence that FDA considered the language without prohibiting them. Among that evidence was the rejection of a citizen petition on the net carbs description in one of the products, noting “The agency has not generally objected to the use of ‘net carbohydrate” type information on food labels if the label adequately explains how the terms are used. If [the] FDA determines that such statements or their explanations are false or misleading, we will take appropriate action.” Thus, the court concluded that, “while the FDA may not have considered the exact language addressed …, it had clearly addressed the substance of the claims at issue.”

Statements about the products having “only” a certain number of grams of net carbs and explaining whether sugar alcohols have an effect on blood sugar levels did not have the same record and were not preempted. Implied nutrient claims—the implication of “only” is the net cabs in these products was low—are subject to misbranding unless FDA has set a criteria and it has been met. That has not happened with net carbs yet. As to explaining blood sugar impact, the court did not consider that to be a claim about nutrient content or a health related claim. We get the former, but the explanation of the latter was lacking. At least in the lay sense, saying nutrients in the food do not impact blood sugar does seem like a claim about health.

Getting past preemption did not mean plaintiff was done. Primary jurisdiction was looming. As would be expected, every claim that was preempted was also subject to primary jurisdiction. The net was cast a little broader, though.

Upon consideration of plaintiff’s claims and application of the four factors, primary jurisdiction applies with regard to plaintiff’s Net Carbs figures and calculations, and the “Only Xg Net Carbs” statements, as “[i]t is clear that it is the FDA’s role to decide what calculation methods manufacturers may use, not the courts.” Johnson, 2017 WL 6420199, at *9. Primary jurisdiction does not apply to plaintiff’s claims as to whether the labeling statements on the impact of sugar alcohols on blood sugar are false or misleading, as that is a factual issue within the traditional real of judicial competency.

Boiling it down, the distinction seemed to be that it is for FDA to determine the criteria for low net carbohydrate food, which is closely related to a number of issues it already decides. While there was not much analysis as to the discussion of blood sugar impact, the court clearly felt that was the sort of thing that it could decide as misleading or not without treading on regulatory toes.

Only after addressing preemption and primary jurisdiction did the court turn to whether New York state law claims for consumer fraud and warranty had been stated on the face of the complaint. Consumer fraud was not and it was not very close. Facts were not asserted that the challenged labeling was deceptive in a material way, which should require extra facts under Fed. R. Civ. P. 9(b). Nor did asserted facts establish any injury. Even with a reduced bar for economic injury from an allegedly over-priced product, “plaintiff only conclusorily asserts that Atkins Nutritionals charges a premium for its products and provides no facts regarding what the premium was, what price he paid for the products, or the price of non-premium products.” So, plaintiff did not assert any consumer fraud claim, regardless of what defense might apply.

He also did not have a warranty claim, because New York requires timely notice and that was not alleged. The court declined to adopt an exception to this rule for consumer products. This defect could not be cured with re-pleading. The plaintiff would get a third shot at pleading facts for some consumer fraud claim not subject to express preemption or primary jurisdiction. We have a hard time seeing a claim based solely on sugar alcohols and whether the amounts in these products affect blood sugar levels. Plaintiff can claim this information was material to his decision to buy this manufacturer’s Chocolate Chip Cookie Dough Bar, Sweet & Salty Trail Mix, and Chocolate Peanut Candies over other items at his local Wal-Mart, but it is hard to imagine facts supporting that convenient assertion.

 

We’ve got food on our mind.  Last Sunday, the CBS Sunday Morning show ran its food episode, with segments about, inter alia, a little restaurant in the north of England being rated the best in the world, the Martha Stewart and Snoop Dog cooking show, and the rolled ice cream fad (focusing on Sweet Charlie’s in Philly).  And tomorrow, of course, is Thanksgiving.  We’re looking forward to great food on the table and loved ones around it. We wish the same for you.

Today’s case is about food, and about a legal doctrine we like almost as much as turkey and cranberry sauce: primary jurisdiction.  The case is Rosillo v. Annie’s Homegrown Inc., 2017 U.S. Dist. LEXIS 190130 (N.D. Cal. Oct. 17, 2017).  It is yet another case alleging misuse of the term “Natural.”  Does anyone have a clear idea what that word means? Even if you do think you do know what it means, are you confident that your definition is the same as what resides in the head of the person sitting next to you?  Who knows what any given set of jurors will think about this issue?  We need order brought to this chaos.  That order is much more likely to come from the FDA than from random litigation experiments sprinkled around the country.

In Rosillo, the plaintiffs claimed that the defendant’s salad dressings were not natural because they contained xanthan gum, a thickening agent manufactured via fermentation and treated with a byproduct of isopropyl alcohol.  (One plaintiff bought her salad dressing at a Target store, while another bought hers at Whole Foods.  Now that’s varied distribution.). The plaintiffs brought causes of action under California and New York consumer and false advertising laws, as well as for breach of warranty, misrepresentation, and violation of the federal Magnuson-Moss Warranty Act.  The defendants moved to dismiss the actions on the merits and, in the alternative, to stay the action under the primary jurisdiction doctrine in order to permit the FDA to decide the scope of “natural.”  The court issued the stay, so it did not reach the merits.

Primary jurisdiction is a “prudential” doctrine, under which a court determines that an otherwise cognizable legal claim implicates technical policy questions that would benefit by first hearing from the regulatory authority.  The Rosillo defendants premised their stay request on the FDA’s establishment in November 2015 of a docket to consider the use of the term “natural” on food labels.  The FDA invited comments, and extended the period for taking such comments up through mid 2016.  No decision has yet issued.  Meanwhile, lots and lots of cases have been filed against food manufacturers around the country (though especially in California) alleging phony “natural” labels.

The plaintiffs argued against waiting for the FDA because (1) the issue in their cases is whether reasonable consumers were being deceived, which is supposedly separate from whatever the FDA will decide, and (2) it is unclear whether the FDA will ever actually resolve the “natural” issue, especially given the FDA’s “extended silence” since the closing of the comment period.  The Rosillo court disagreed with the plaintiffs.

First, the FDA’s guidance on whether and when companies can call their products “natural” will inevitably be relevant to how reasonable consumers understand the term.  Indeed, the plaintiffs’ complaint cites FDA regulations and pronouncements.  Second, the FDA’s food labeling regulatory framework undeniably is broad and comprehensive.  Third, the Ninth Circuit Astiana case held that the meaning of “natural” is a particularly complicated issue that Congress committed to the FDA.

What about the FDA’s “extended silence”?  The Rosillo court seized upon a recent Congressional appropriations bill report, which commended the FDA for wrestling with the “natural” issue and directing the FDA to report within 60 days “on the actions and timeframe for defining ‘natural’ so that there is a uniform national standard for the labeling claims and consumers and food producers have certainty about the meaning of the term.”  The appropriations bill is pending, so the 60 day clock has not yet commenced.  Nevertheless, the Rosillo court concluded that it is likely that the FDA will address the “natural” issue in a relatively short period of time.

The result is that the Rosillo case is stayed.  The logic of the Rosillo decision should also apply to the vast array of other cases with similar allegations.  Even more important, let’s hope that the FDA will for once and for all resolve the issue and make these disputes and the surrounding cacophony unnecessary.  That outcome would make us thankful.

We depend on young associates to perform most of the legal research that supports the arguments we make on behalf of our clients.  By and large, those associates do an excellent job.  On those rare occasions when we find ourselves grousing about the quality of research, it usually has something to do with reliance on overly-specific computer searches.  Sometimes it seems as if the lawyers punch a search term into Lexis or Westlaw that would capture only cases that are precisely on point.  The problem with that approach is the possibility of missing cases that support general principles, or offer other oblique ammunition for one’s position.  Today’s case, Canale v. Colgate-Palmolive Co., 2017 U.S. Dist. LEXIS 97506 (S.D.N.Y. June 23, 2017), is an example of that kind of helpful, albeit indirect, authority.  The plaintiffs in Canale filed a class action attacking the defendant for allegedly overstating the whitening power of its toothpaste.  The toothpaste contained hydrogen peroxide, and its advertising bragged of deep whitening – more than three shades.  The plaintiffs asserted that the hydrogen peroxide was not strong enough and was not in contact with tooth enamel long enough to achieve the promised results.  The causes of action were based on breach of warranty and violations of New York’s General Business Law sections 349 and 350, which outlaw deceptive practices and false advertising.

What can this case possibly have to say for drug litigation?  To begin with, the toothpaste’s peroxide content meant that it was both a cosmetic and an over-the-counter (OTC) drug.  A product qualifying as both a cosmetic and drug is subject to the stricter requirements applicable to drugs.  Either way, such a product enjoys the preemption protections in the Food, Drug and Cosmetics Act,  21 U.S.C. sections 379r and 379s.  The FDCA forbids state law (including jury verdicts) or regulations that would impose a requirement on cosmetics or OTC drugs that are “different from or in addition to, or that is otherwise not identical with, a requirement specifically applicable” via the FDCA.  Thus, the defendant filed a motion to dismiss the case in its entirety, and preemption was one of the grounds. The plaintiffs ultimately evaded preemption because the court found no FDA requirement regarding the tooth whitening claim, so there was nothing federal that the state laws against deceptive advertising  contradicted.

Okay, you’re still probably wondering why a drug defense hack would care about this case.  If an associate failed to find this case in her research, who cares?

There are two preemption points in Canale that are valuable:

1. The plaintiffs’ opposition to the defendant’s motion rested solely on implied preemption cases.  That is, the plaintiffs argued that there was no impossibility preemption.  That is, the plaintiffs had completely missed the point.  The defendant was not arguing impossibility preemption.  Rather, the defendant argued that Congress had expressly manifested an intent to preempt state law.  The plaintiffs had confused express preemption with implied preemption, but the Canale court kept the distinction straight.  So should you.

2.  The plaintiffs, predictably, argued that there was a presumption against preemption.  But, consistent with point 1 above, the Canale court held that “where, as here, Congress has expressly manifested its intent to preempt state law, no presumption against preemption arises.”  It is nice to have in your pocket such a clear statement on this issue from SDNY.

Still, as we mentioned, the preemption argument did not carry the day for the defendant.  So was this a win for the plaintiffs?  Not at all.  The issue of whether or not the advertising for the whitening toothpaste was deceptive had already been addressed to the Federal Trade Commission.  The issue was pending. The FTC had at least as much expertise as the court in deciding whether the hydrogen peroxide in the toothpaste had sufficient whitening power (let’s face it, the FTC has more expertise), the FTC is specifically tasked with discretion to police allegedly deceptive labeling, there was a risk of inconsistent rulings, and the FTC had gotten the issue first.  Consequently, the Canale court – after observing that “primary jurisdiction” is something of a misnomer because it isn’t , strictly speaking, jurisdictional – decided to stay the litigation to allow the FTC to do its job and determine whether the toothpaste advertising really was deceptive.

Staying a class action is definitely a good result for the defendant.  Despite the setback on the preemption front, we bet the Canale result put smiles on the faces of the defendant and its lawyers – nice, big, shiny smiles.