By Jeffrey H. Brochin, J.D.
District court erred in dismissing complaint for failure to state a claim where Wesson Oil label reading "100% Natural," despite containing genetically modified organisms (GMO), might lead the reasonable consumer to believe that the oil was GMO-free.
A federal appeals court for the First Circuit has reversed the decision of a district court that dismissed a consumer complaint brought against Conagra Brands, Inc. (Conagra) alleging that the company violated Massachusetts's prohibition against unfair or deceptive trade practices when it labeled its oil as "100% Natural" and did not disclose the presence of GMOs. Although the district court determined that the label did not constitute "unfair" labeling, it was also required to determine whether the labeling was "deceptive" under Chapter 93A of the state statute, and this it failed to do. The FDA has implicitly acknowledged that it has not yet ruled as to whether GMO food products may be defined as "natural" (Lee v. Conagra Brands, Inc., May 7, 2020, Howard, J.).
Allegedly deceptive labeling. A Massachusetts consumer who purchased Wesson brand vegetable oil (Wesson Oil) that was advertised as being "100% Natural" sued Conagra, the manufacturer, on her own behalf and on behalf of other purchasers after learning that the oil contained GMOs, which she regarded as quite unnatural. She alleged that Conagra violated Massachusetts's prohibition against unfair or deceptive trade practices. The district court dismissed the lawsuit, finding that the label was not "unfair" under Mass. Gen. Laws ch. 93A (Chapter 93A), and the consumer appealed.
District court’s rationale. The appeals court began its review by examining the district court’s rationale for dismissing Lee's complaint, and noted that the district court only analyzed whether Wesson Oil's label was "unfair" within the meaning of Chapter 93A, but it did not cite or discuss the standard for whether the label was "deceptive." Chapter 93A bars unfair or deceptive acts or practices (emphasis added by the appeals court), and because the statute is disjunctive, the district court should have separately addressed whether the complaint alleged sufficiently that Wesson Oil's label was deceptive.
FTC deferral to FDA. When deciding whether conduct is deceptive under Chapter 93A, Massachusetts courts are to be guided by interpretations of "deceptive" as found in the analogous Federal Trade Commission Act 15 U.S.C. § 45(a)(1), which interpretations direct that a food product label generally qualifies as deceptive in violation of Chapter 93A when it has the capacity to mislead consumers, acting reasonably. However, pursuant to an agreement between the agencies, the FTC defers to the FDA's determinations as to whether food product labeling is deceptive, and therefore, the appeals court looked to FDA guidance in analyzing whether the allegations would survive dismissal.
No affirmative GMO disclosure sought. While the consumer asserted that the labeling could have misled a reasonable consumer into buying the product under the false impression that it contained no GMOs, Conagra countered that a GMO disclosure obligation would contradict the FDA's views that: (1) GMO products may be advertised as natural; and (2) the unannounced presence of GMOs in a product never causes the product's label to mislead a reasonable consumer. The appeals court disagreed, stating that Conagra mischaracterized the complaint and the FDA's views. The complaint sought damages resulting from Conagra's alleged misrepresentation, but it did not request a specific, court-ordered label; and, in addition to damages, she sought a limited injunction that would bar Wesson Oil's allegedly "false and deceptive marketing, branding, and labeling." If a court were to issue such an injunction, Conagra would not be required to disclose affirmatively whether Wesson Oil contains GMOs.
No FDA ruling on GMOs. The court further found that granting the consumer’s requested relief would not contradict the FDA's guidance, because the FDA has not said that GMOs are natural and may be advertised as such, and in fact, Conagra did not cite any binding FDA guidance defining "natural," nor could it – according to the appeals court—because such guidance does not exist. The FDA has merely noted its policy that a product may not be labeled as "natural" if it contains anything artificial or synthetic (including all color additives regardless of source). Furthermore, the fact that the FDA recently requested comment as to whether GMOs are natural, implicitly acknowledged that the agency has not yet ruled that they are. The FDA has not yet forged the regulatory "safe harbor" that Conagra believed applied in the instant case.
Plausible allegation sufficient. The appeals court clearly annunciated that they were declining to wade into the debate over the best definition of "natural," but rather, at the current stage, were only deciding whether the consumer had plausibly alleged that a reasonable consumer might think that "100% Natural" means that a product contains no GMOs, and then base her purchasing decision on that belief. The court ruled that the consumer met that low threshold and that her claim may proceed. The district court’s decision was reversed, and the matter remanded for further proceedings consistent with that ruling.
The case is No. 17-2131.
Attorneys: Edward F. Haber (Shapiro Haber & Urmy LLP) for Margaret Lee. Angela M. Spivey (Alston & Bird LLP) for Conagra Brands, Inc. Kevin M. Duddlesten (McGuireWoods LLP) for Roche Bros. Inc. and Stop & Shop Supermarket Co. LLC.
Companies: Conagra Brands, Inc.; Roche Bros. Inc.; Stop & Shop Supermarket Co. LLC
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