MDL Court Dismisses Aurora Dairy Litigation with Prejudice
The multitdistrict litigation (MDL) court in Missouri before which nearly 20 putative class actions against Aurora Dairy Corp., an accredited organic certifying agent and several retailers had been consolidated for pre-trial proceedings, has dismissed the lawsuits with prejudice finding that federal organic food laws preempt the claims. In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Practices Litig., MDL NO. 08-1907 (E.D. Mo., decided June 3, 2009).
Relying on a U.S. Department of Agriculture (USDA) investigation that found the dairy in violation of national organic program requirements relating to pasturing and organic management, the plaintiffs alleged violations of various state consumer protection laws, breaches of express and implied warrantees, negligence per se, negligent misrepresentation, and unjust enrichment. The court discusses at length the program under which Aurora Dairy conducted its operations with the overall supervision and control of USDA. While the court found that the litigation claims were not expressly preempted by federal law, it did find conflict preemption, that is, the implied preemption that exists when an actual conflict exists between federal and state law.
According to the court, the plaintiffs’ state law claims sought to prohibit dairy producers from using “organic” terms or seals “even if a producer’s certification has not been revoked or suspended” under the federal program. “As a result, for Plaintiffs’ claims to succeed, the Court would have to invalidate the regulatory scheme established under the [Organic Foods Production Act] and [National Organic Program]. These state claims ask that the Court find that the certification determinations under that scheme were invalid and insufficient under these various state laws.”
Finding this result “directly contrary to congressional intent,” the court ruled that the plaintiffs were barred “from recovering for conduct that was absolutely in compliance with federal law.” Because the USDA had not suspended or revoked Aurora Dairy’s certification, the court dismissed the claims against all defendants with prejudice and denied plaintiffs’ motion for leave to file an amended class action complaint.
