Challenge to “Natural” HFCS Beverage Claims Not Preempted by Federal Law
The Third Circuit Court of Appeals has determined that federal food labeling law does not preempt the state law-based claims filed by a consumer who challenged Snapple’s designation of beverages containing high fructose corn syrup (HFCS) as “natural.” Holk v. Snapple Beverage Corp., No. 08-3060 (3d Cir., decided August 12, 2009). The appeals court reversed a lower court ruling dismissing the claims on the basis of implied preemption.
The complaint, originally filed in state court, but removed to federal court in 2007 under the Class Action Fairness Act, initially asserted that Snapple products were not “All Natural” because they contained HFCS; they were not “Made from the Best Stuff on Earth”; and Snapple falsely labeled some beverages, naming them after fruit-juice varieties that were not actually in the beverages. The plaintiff alleged unjust enrichment and common law restitution, breach of express and implied warranties and violations of the New Jersey Consumer Fraud Act.
By the time the litigation reached the Third Circuit, the only claim remaining was that Snapple products containing HFCS were deceptively labeled “All Natural.” The district court dismissed the claim, because it found that the Food, Drug, and Cosmetic Act and the Food and Drug Administration’s (FDA’s) implementing regulations established a detailed and extensive regulatory scheme, and state limitations and requirements would “create obstacles to the accomplishment of Congress’s objectives.” The district court referred to the FDA’s informal policy on use of the term “natural” as evidence that the agency “has in fact contemplated the appropriate use of the term.”
The Third Circuit approached the issue with a strong presumption against preemption and rejected the applicability of both field and implied preemption. Specifically, the court found (i) no “‘clear and manifest’ expression of Congressional intent to occupy the field”; (ii) indications in the law that “Congress was cognizant of the operation of state law and state regulation in the food and beverage field”; (iii) the FDA has specifically stated that it does not intend to occupy the field of food and beverage labeling; (iv) FDA’s “informal policy” about use of the term “natural” does not support preemption because the agency declined to undertake a rulemaking to establish a definition and it was announced before public review and comment, thus lacking a formal, deliberative process.
According to the appeals court, the FDA’s informal “natural” policy and letters the agency sent to some food or beverage manufacturers asking them to remove their “natural” labels for violating that policy do not establish a policy with which state law requirements could conflict. The case was remanded for further proceedings. The district court will have to consider issues not addressed when it issued its preemption ruling, that is, whether the litigation should be dismissed under the doctrine of primary jurisdiction and that the complaint failed to state a claim under state law.
In a footnote, the Third Circuit observes that Snapple has begun reformulating its line of beverages to replace HFCS with sugar. Additional information about the litigation appears in issue 264 of this Update. A company spokesperson has been quoted as saying in response to the ruling, “We believe Snapple is all-natural and we’re confident we’ll ultimately prevail.” See Bloomberg.com, August 13, 2009.