Excellence Beyond Compliance: A new path forward for the dietary supplement i...
Consumer Fraud Class Claims - GMA presentation
1. A Label Of Their Own: Floodgates Opening in Consumer Fraud Litigation? GMA Food Claims & Litigation Conference February 25, 2010 Presented by: Kenneth Odza, Partner, Stoel Rives LLP Scott Rickman, Associate General Counsel, Del Monte Foods
2. Where Are We? Class Claims For: Natural FOP Labeling Health Claims Past Sins
3. “Natural” (HFCS) 2009: Beverages: Holk v. Snapple(3rd Cir.) Pasta Sauce: Lockwood v. Conagra Products with HFCS advertised as "all natural."
5. Ninth Circuit’s Bottom Line "We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations."
8. Frivolous Claims Judge: “reasonable consumer would not be deceived into believing that the Product in the instant case contained a fruit that does not exist.”
9. How did we get here? Preemption Federal Enforcement State Consumer Protection Laws
10. Preemption Fellner v. Tri-Union(3rd Cir) No Preemption Without Rule Making FDA letter merits “a particularly low level of deference” because it is not “the product of an agency proceeding.”
11. Wyeth v. Levine (S.Ct) “Impossibility pre-emption is a demanding defense” No deference to FDA’s preemption finding Preemption(cont.)
12. Federal Enforcement No Private Right Of Action Under FFDCA Private Plaintiffs Plead As: CPA Claims (e.g. Zupnik v. Tropicana) Advertising and Marketing Claims (e.gPOM Wonderful v. Ocean Spray)
13. State Consumer Protection Laws Varied – ABA 50 State Survey WA: Unfair/deceptive act/practice, Trade or commerce, Public interest impact, Business/Property injury, and Causal link
14. Where Are We Going? Federal Enforcement Piggy-Back Class Action Claims Pleading Requirements
15. Increased Federal Enforcement WSJ: “The FDA is showing signs of taking a more aggressive stance toward the companies it regulates . . .” Result: In Re Cheerios Marketing & Sales Practices Litigation, MDL No. 2094 (D.N.J)
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17. Based on the Center for Science in the Public Interest Report
18. What Can Your Company Do About Prevention and Mitigation of These Claims? Successful Motion Practice Scrutiny of Marketing Congruency Between R&D and Marketing FDA Rule-Making
19. Successful Motion Practice: Damages Allegations Wright v. General Mills(S.D. CA) Iqbal/Twombly “Plausibility” Challenge “Defendant caused Plaintiff and other members of the Class to purchase, purchase more of, or pay more for, these Nature Valley products.”
20. Zupnik v. Tropicana (C.D.CA) No Injury-In-Fact No Reliance on Advertising “Got What She Paid For” Successful Motion Practice: Damages Allegations (cont.)
21. Successful Motion Practice: Class Certification Picus v. Walmart(D. Nevada) Individual Issues of Causation and Reliance Predominate No “class-wide inference of reliance” Class Action Not “Superior” B/C 8 State Laws and Differing Issues of Reliance
22. Kennedy v. Nat. Balance Pet Foods Predominance requirement: Rule 23(b)(3) “Understanding which law will apply before making a predominance determination is important when there are variations in applicable state law.” (citing Zinser) Successful Motion Practice: Class Certification (cont.)
23. Scrutiny of Labels and Advertising More Involvement By Lawyers (Unfortunately) Congruency between R&D and marketing claims Simplicity?
P’s also allege common law fraud, unjust enrichment, breach of warrantiesImplied warranty - In order to breach the warranty, a mislabeling must breach "a part of the bargain between the parties." But statute generally the easist and often provides fees, punitive damages ,etc
Statutes vary – standing requirements, injuries and causal link varryA plaintiff need not show that the act in question was intended to deceive, but that the alleged act had the capacity to deceive a substantial portion of the public.Statutes varry in causation and reliance issues – this is important as we’ll see
Cheerios – General Mills Unapproved New Drug – “lower cholestral4% in 6 weeks”Misbranded food- unauthorized health claimsAlso Nestle issues – juicy juice unauthorized nutrient content claims about Juicy Juice Brain Development Fruit Juice Beverage (Apple), Juicy Juice All-Natural 100% Juice Orange Tangerine and Juicy Juice All-Natural 100% Juice Grape.and Nestle's Boost Kid Essentials Nutritionally Complete Drink, in vanilla, chocolate and strawberry flavors, was promoted as a "medical food" but did not meet requirements for that type of claim.
Want a roadmap? Here it isOutline of issues with health claims and nutritional information that CSPI believes are misleading -
Adapted from CSPI report – illustrating “many of the misleading claims that should be stopped by FDA”Like “Where’s waldo” – At least 9 possible claims from this box No preemption, no private right of enforcement (see Zupnik) -
Nature Valley Granola bars, all natural and HFCSRule 8 standards - essentially overrules Conley v. Gibsen (complaint not dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts” entitling him to relief”Iqbal - Must allege more than the mere possiblity of misconductMust plead “factual content that allows the court to draw the reasonable inference that the defendant is liable “ other “more likely” or “obvious alternative explanations”Naked allegations of conspiracy or invidous discrimination without more and where other explanations of conduct exist not enough to “nudge a complaint across the line from conceivable to plausible”Wright court found that for a consumer fraud lableing case that Plaintiffs injury allegation is “based on little more than conclusory and speculative factual content”
Consumer purchased “Tropicana Pure 100% Juice Pomegranate Blueberry Flavored Blend of 5 juices from Concentrate with other Natural Flavors”Paid less than competing Pomegranate juicesStill brought suit – poorly pleadedInteresting preemption issue – area that had been regulated, Tropicana in compliance with those regulations – court said It didn’t matter Theorized that since FDA could sue for “false and misleading label where the label does not violate another more specific statute or regulation” that allowing a private citizen to do so under the CAL Sherman act which is substantively identical to the FFDCA must be okay.Seems create a hole in preemption that you drive a bus through. When will the FFDCA ever preempt?
Challenge over “made in the usa” label on pet foodBecause Zinser seeks certification of a nationwide class for which the law of forty-eight states potentially applies, she bears the burden of demonstrating "a suitable and realistic plan for trial of the class claims." Chin23(a) requirements – numerosity. Commonality, and typicality23(b) requirementsOne of them is Include predominance and superiority - the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. (others are risk of inconsistent outcomes and injuncitve relief b/c party opposing class has acton ground that apply to whole class)
Another pet food caseDiscusses Zinser – originally sought national certification
If making health related claims in particular, make sure that company research backs it up. Worst thing that can happen is if marketing people are ahead of RD . Bad R&D documents = culpability
