Consumer claims that Odwalla, Inc. and The Coca-Cola Company used misleading labels to describe evaporated cane juice (ECJ) as juice rather than sugar were allowed to proceed. A California district court found no support in the food companies’ argument that federal law preempted a state law incorporating federal labeling requirements for sugar based on agency guidance documents related to ECJ. Subsequent agency guidance only further clarified existing federal regulations and did not remove the companies’ liability for failing to adhere to the regulations initially (Reese v. Odwalla, Inc., February 13, 2017, Rogers, Y.).
Background. The consumer’s originally alleged claims under California law regarding the food companies’ use of the term evaporated cane juice (ECJ). The consumer further alleged that the ingredient labeled as ECJ fell not within a "juice" designation but rather under the definition for "sucrose." Thus, the consumer argued, the use of the term "juice" to describe ECJ was false and misleading. The district court at the time stayed the action on primary jurisdiction grounds, pending the FDA’s review of the usage of ECJ on labels (see Evaporated cane juice labeling case stayed due to recent FDA action, March 27, 2014). The court did not reach the issue of preemption. After the FDA issued its guidance on ECJ, the court dissolved the stay.
In general, food is misbranded under 21 U.S.C. §343(a)(1) if "its labeling is false or misleading in any particular." Importantly, the court noted that federal law completely displaces any non-identical requirements in the areas covered by the federal requirements. As such, the operative statute is the FDC Act.
Odwalla and Coca-Cola moved to dismiss the complaint on the following grounds: (1) the California food law incorporates only binding FDA food labeling regulations, of which there was none at the time of the alleged violations; (2) federal law expressly preempts actions seeking to impose requirements that federal law did not impose at the time of the purchases; and (3) the consumer’s claims for injunctive relief should be dismissed because the food companies have already ceased the behavior in question.
Draft guidance. Under current federal regulations, defining when certain terms can and cannot be used in describing ingredients on food labels, sucrose is defined by its chemical composition. Per 21 C.F.R. Sec. 184.1854, sucrose is obtained by crystallization from sugar cane or sugar beet juice that has been extracted by pressing or diffusion, then clarified and evaporated.
The food companies contended that the consumer predicated her claims on an ECJ draft guidance, which was, by definition, not binding. As such, the consumer had no claim because the state law, which was based on the FDC Act, did not incorporate the ECJ draft guidance. The court disagreed, finding that the consumer’s claims were based on previously promulgated regulations that already made it illegal for food companies to label the ingredients in their product as ECJ, rather than as sugar. Whether the 2009 Draft Guidance is incorporated into the state law is irrelevant.
Sugar vs. juice. The food companies argued that because the FDA’s guidance on the use of the term ECJ only became final only August 2016, there were no laws prohibiting its use prior to the issuance of the 2016 final guidance and any retroactive imposition of such prohibition would amount to an imposition of non-identical labeling requirements and would therefore be preempted. The district court disagreed.
The court noted that the FDA published the 2009 draft guidance noting that it was FDA’s policy that sweeteners derived from sugar cane syrup should not be declared as ECJ because it falsely suggested that ECJ was juice. The FDA further stated that it considered the use of ECJ as "false and misleading" under the FDC Act because the nature of the food and its characterizing properties were not supported.
The court found it would be odd if at any time the FDA issued statements or guidance that liability for corporations which violated the regulations prior to the issuance of the guidance would be erased. Instead, such results were limited to situations in which the regulated industry lacked any guidance as to the meaning of ambiguous statutes or regulations. The 2016 final guidance merely confirmed that ECJ met the definition for sucrose already in the federal regulations, and thus, Odwalla and Coca-Cola had to abide by the labeling requirements set forth for sucrose. Thus, the court found that the consumer’s were not preempted by the FDC Act.
The case is No. 13-cv-00947-YGR.
Attorneys: Ben F. Pierce Gore (Pratt & Associates, LLC) for Robin Reese. Gary T. Lafayette (Lafayette & Kumagai LLP) for Odwalla, Inc. and The Coca-Cola Co.
Companies: Odwalla, Inc.; The Coca-Cola Co.
MainStory: TopStory CaseDecisions FDCActNews AdulterationNews FoodNews FoodStandardsNews LabelingNews PreemptionNews CaliforniaNews
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