Eighth Circuit Allows Parts of MDL Lawsuits Against Aurora Dairy to Proceed
The Eighth Circuit Court of Appeals has affirmed the dismissal of one defendant and several claims in multidistrict litigation (MDL) alleging that a dairy certified as organic and the retailers selling its milk violated state deceptive trade practices laws because the dairy did not comply with national organic program standards. In re: Aurora Dairy Corp. Organic Milk Mktg. Sales Practices Litig., No. 09-2762 (8th Cir., decided September 15, 2010). While finding express and conflict preemption as to those matters dismissed, the court also determined that some claims could survive, depending, on remand, how the district court rules on defendants’ motions to strike the consolidated class complaint and the plaintiffs’ motion to amend that complaint.
Dismissed outright from the 19 consolidated putative class actions was the company that certified Aurora Dairy as an organic supplier. According to the court, “to the extent state law permits outside parties, including consumers, to interfere with or second guess the certification process, the state law is an ‘obstacle to the accomplishment of congressional objectives’ of the OFPA [Organic Foods Production Act].” Because the plaintiffs essentially claim that the certifier should have revoked the dairy’s certification, the court found it would be impossible for the certifier to comply with federal law “which details the process for revoking certifications” and “any additional state law duty and process to revoke certifications.”
Also dismissed as preempted are any claims that the dairy and retailers “sold milk as organic when in fact it was not organic,” because these claims also conflict with federal organic law. According to the court, “The class plaintiffs argue the defendants must be both certified and compliant with the underlying requirements in order to comply with OFPA. Viewed in light of the OFPA’s structure and purpose, compliance and certification cannot be separate requirements. Compliance with the regulations may lead to certification, and failure to comply with the regulations may lead to nonapproval, suspension, or revocation of certification . . . but compliance with the regulations is not a separate requirement independently enforceable via state law.”
The court remanded for further proceedings state law challenges to the facts underlying certification, that is, those state law claims unrelated to the decision to certify or to certification compliance. Noting that “the argument for broad preemption of state consumer protection, fraud, and tort claims finds no support in the OFPA’s express preemption provision,” and finding that Congress “lacked intent to give preclusive effect” to any particular method of satisfying OFPA’s provisions, the court listed the types of claims that could “fall outside the scope of preemption.” Those claims include (i) misrepresentations as to how the dairy’s cows were raised and fed; (ii) suppression or omission of material facts about the company’s milk production, i.e., the dairy cows were not raised at pasture; (iii) false advertisements touting the milk and milk products as antibiotic and hormone free; and (iv) false statements about the cows’ humane treatment.
The court instructed the trial court on remand to first consider the motions that were denied as moot when the lower court granted the defendants’ motions to dismiss the consolidated class complaint in its entirety. Then, the trial court was instructed to “next consider which of the class plaintiffs’ claims survive preemption in accordance” with the appellate court’s opinion.
According to a news source, The Cornucopia Institute, which promotes “family scale farming,” contends that the U.S. Department of Agriculture (USDA) “could probably be challenged in court based on this decision.” The institute reportedly contends that the national organic program has been mismanaged, citing minimal sanctions imposed on the dairy as part of a consent agreement after USDA proposed revoking the company’s organic certification in 2007. A spokesperson for one of the defendants apparently expressed pleasure with the court’s ruling that “the dairy products were properly labeled as organic.” See The Associated Press, September 15, 2010; Cornucopia Institute Press Release, September 16, 2010.
