Earlier this month, a Judge in the Northern District of California handed down a decision on Hain Celestial Group Inc.’s (“Hain”) motion to dismiss a class action against the company that focuses on the “all natural” labeling of one if its waffle products. The suit, brought by a plaintiff who claims to have been misled by this labeling, includes allegations brought under the California Consumers Legal Remedies Act and Unfair Competition Law, of common-law fraud, breach of contract, breach of express warranty, and unjust enrichment.
Regarding the allegations of deceptive advertising, Hain argued that the ingredient at issue, sodium acid pyrophosphate (“SAPP”), is on the Food and Drug Administration’s (“FDA”) list of ingredients allowed for foods that are “certified organic” by the US Department of Agriculture, and that the organic standard is much more strict than the “natural” standard, given that organic labeling is directly regulated by the federal agencies. While Judge William Orrick acknowledged that this assertion may be correct, he wrote that it does “not make it implausible that a reasonable consumer would believe that SAPP is not an ‘all natural’ ingredient.”
In the order, which denied the motion to dismiss as to the allegations of deceptive advertising practices and consumer fraud, Judge Orrick wrote that a reasonable consumer might not expect to find SAPP, which is a synthetic leavening agent, in a product labeled as “all natural.”
Hain did prevail on its request to dismiss some of the common law claims. Judge Orrick dismissed the plaintiff’s breach of contract claims because there is no privity between Hain and the plaintiff. Judge Orrick also dismissed the plaintiff’s unjust enrichment cause of action because, under California law, unjust enrichment is a restitution claim rather than a cause of action. Finally, Judge Orrick stated that the plaintiff did not have standing to seek injunctive relief, noting that the plaintiff is now aware that the products contain SAPP and therefore is not in danger of being misled in the future.
With recent settlements over “all natural,” “100% natural,” and “nothing artificial” labeling totaling in the millions of dollars, the industry is concerned that a litigious Pandora’s box has been opened. Indeed, in the last year, over two hundred lawsuits have been filed challenging the use of the word “natural” or “all natural” on products that contain ingredients that plaintiffs allege are not natural, such as SAPP, GMO ingredients, and high-fructose corn syrup.
Given the increase in this type of litigation, the FDA is under increased pressure to define the labeling term “natural,” but has stood behind its prior statement that the agency “understands and appreciates that consumers depend on accurate labeling when making food choices. That’s why [it has] clearly defined certain terms that have public health implications, like ‘low-fat’ or ‘light.’ Defining ‘natural’ represents additional challenges when food has been processed and is no longer the product of the earth.” The FDA has explicitly stated that it has “not developed a definition for the use of the term natural or its derivatives,” meaning that the industry is operating under no guidance on the issue.
Pending legislation, The Safe and Accurate Food Labeling Act, would require the FDA to set regulations for “natural” claims made on food packaging. The Act was introduced in the House and then referred to committee in April of this year. However, if litigation over the matter continues, “natural” labels could disappear regardless of whether the FDA promulgates regulations or guidelines. New, ambiguous-yet-health-implying terminology is already popping up on health food labels – which may now be labeled as “simple” or “wholesome.”