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California "Organic" Labeling Decision: A Blueprint for More Class Actions of FDA Regulated Products?

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In December 2015, the California Supreme Court issued a ruling in Quesada v. Herb Thyme Farms, Inc., which may affect many companies subject to FDA regulation, but particularly those that advertise and sell products as "organic." Significantly, the court held that California state law mislabeling claims were not preempted by the federal Organic Foods Production Act of 1990, thereby opening the door to state law based class actions.

Michelle Quesada brought a putative class action against Herb Thyme Farms, alleging the company fraudulently mislabeled its herb products as "organic" when in actuality the herbs were blended with other non-organic, conventionally grown herbs, or simply were not organic at all. Quesada brought the lawsuit in California state court, claiming violations of California's consumer protection laws, including the Consumers Legal Remedies Act, Unfair Competition Law, and False Advertising. California's consumer protection statutes often have provisions which make California an attractive venue for class action lawyers.

Initially, Herb Thyme Farms secured judgment in its favor, arguing the state claims were preempted by federal law – specifically, the Organic Foods Production Act of 1990 – and therefore, barred. On appeal, the trial court's finding of preemption was affirmed, leading to Quesada's appeal to the California Supreme Court. That court reversed, holding that Quesada's state law claims alleging that Herb Thyme produce was intentionally mislabeled as "organic" were not preempted, and instead, were consistent with congressional goals underlying the Organic Foods Act. The California Supreme Court concluded that the act only preempts states' abilities to enact laws governing the definition of "organic" and states' abilities to create organic certification programs for growers/farmers.

The court held that there is no express language in the Act suggesting that the federal remedies set forth in the Act were intended to be exclusive. Therefore, state law remedies for deception, false advertising, or unfair competition could properly be brought. The court further determined that California consumer protection laws were completely consistent with the intent of the Act, which was to create clear standards for what production methods qualify as "organic" in order to prevent fraud, increase consumer confidence, and promote fair competition in the organic food industry. In effect, the California Supreme Court held that its state law remedies complement federal law regulating organic products.

The Quesada decision may foreshadow class action suits against companies with "organic" labeling or similar claims in California and elsewhere, but the case has implications far beyond organic labeling. The decision provides a blueprint for consumer class actions challenging exclusive FDA regulation of "natural" foods, herbal products, traditional medicines, and many other kinds of personal care products. The case may also be cited as authority urging courts in other states to adopt similar measures.

It is not known whether Quesada will be appealed to the U.S. Supreme Court. In any event, Baker Donelson will continue to monitor Quesada and similar cases, particularly as they relate to state consumer protection laws. Companies subject to FDA regulation who sell or distribute products that find their way to California are advised to confer with counsel about what exposure might exist moving forward.

For more information about how this issue may affect your business or related matters, please contact the authors of this alert, Kyle Diamantas and Nathan Wittman, or any member of the Firm's FDA Group.

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