California Court Finds Opening in 9th Circuit Preemption Ruling

A federal court in California ruled last month that certain mislabeling claims against the Hershey Co. were not preempted by federal law. Khasin v. Hershey Co., 2012 U.S. Dist. LEXIS 161300 (N.D. Cal. Nov. 9, 2012).

In Khasin, a putative class representative brought California state-law claims against Hershey for alleged misrepresentations on the label of some Hershey products.

The defendants moved to dismiss and argued that the state-law claims were preempted by the FDCA, largely relying on the Ninth Circuit’s recent decision in Pom Wonderful LLC v. Coca-Cola Co. 679 F.3d 1170 (9th Cir. 2012). But U.S. District Judge Edward Davila of the Northern District denied Hershey’s preemption bid and found that the plaintiff’s state-law claims should not be dismissed.

A few months back, the Ninth Circuit’s Pom Wonderful decision was seen as a major victory for the food and beverage industry. In Pom Wonderful, the plaintiff claimed that the defendant violated the Lanham Act because it misled consumers with the naming and labeling of its juice product. The Lanham Act “broadly prohibits false advertising,” and authorizes a lawsuit by anyone who believes that she will be damaged by the false advertising.

The Ninth Circuit concluded, however, that there was a potential conflict between plaintiff’s claims under the Lanham Act and the FDCA, because the FDCA comprehensively regulates food and beverage labeling.

Because of this conflict, the court held that the FDCA trumps the Lanham Act and therefore barred both the name and labeling aspects of plaintiff’s Lanham Act claim. The court reasoned that private parties should not able to use a Lanham Act claim to undermine the FDA’s judgment with regard to food labeling. The court did not decide, however, whether plaintiff’s state-law claims were preempted and instead remand them to the district court for reconsideration of a standing issue.

That remand was the opening that the Khasin plaintiff tried to use to avoid preemption. In moving to dismiss, Hershey first argued that plaintiff’s state law claims were preempted by federal law because the FDCA explicitly precludes private actors from enforcing this federal law and FDA regulations.

The defendant cited Pom Wonderful, but the court rejected this argument, noting that Pom Wonderful decision only recognized the FDCA’s preemption of other federal claims and remanded the state-law claims for determination of a standing issue. Although the FDCA has a provision that explicitly leaves its enforcement to the United States, the Khasin court found the plaintiff’s claims appropriate because they were seeking to enforce state, not federal statutes.

The court relied on the medical device parallel violation exception language from the Supreme Court’s Riegel decision, which held that similar provisions of the FDCA “do [] not prevent a State from providing a damages remedy for claims premised on a violation of the FDA regulations; the state duties in such a case ‘parallel,’ rather than add to, federal requirements.” Riegel v. Medtronic, Inc., 552 U.S. 312, 330 (2008).

Defendant’s also argued that the express preemption language from the FDCA acts as a bar to Plaintiff’s state-based claims. Id. at 16. The express preemption clause states:

. . . no State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect as to any food in interstate commerce—(1) any requirement for a food which is the subject of a standard of identity established under section 341 of this title that is not identical to such standard of identity or that is not identical to the requirement of section 343 (g) of this title . . .

21 U.S.C. §343-1(a)(1) (emphasis added). But the court held that plaintiff’s claims sought to enforce state-law standards that were identical to the FDCA, and therefore the court found no preemption. Going forward, the Khasin strategy will certainly serve a blueprint for future food-labeling plaintiffs as they attempt to survive preemption arguments at the dismissal stage. But both plaintiffs and defendants should note that this does not guarantee all state-law claims will survive dismissal.

First, many courts have favored dismissal in similar cases (e.g., Lateef v. Pharmavite LLC, 2012 U.S. Dist. LEXIS 152528 (N.D. Ill. Oct. 24, 2012)) and Khasin‘s narrow reading of Pom Wonderful might not widely adopted by other courts.

Additionally, the Ninth Circuit could still get the chance to explain why the Khasin court misinterpreted their Pom Wonderful decision. What we do know is that reasoning in Khasin leaves future motions to dismiss up the air until higher courts address whether identical state-law claims are preempted.

This article was prepared by Brandon Crisp (bcrisp@fulbright.com / +1 512 536 2422) from Fulbright’s Litigation Practice.