A recent opinion from the Ninth Circuit may cause considerable confusion regarding what food manufacturers may put on their labels outside of the familiar Nutrition Facts Label. In fact, the opinion filed March 13, 2015, is at odds with earlier unpublished decisions from the Ninth and Third Circuits.
Reid v. Johnson & Johnson, No. 12-56726 (9th Cir. Mar. 13, 2015), is part of the wave of food labeling class actions making its way through the Ninth Circuit. That plaintiff alleged a host of consumer fraud claims based on the defendants' Benecol vegetable oil-based spread. Benecol's label prominently states that the product contains "No Trans Fat." In truth, the product contains small amounts of trans fat, which the plaintiff contends is quite harmful to human health.
The difficulty that Reid presents is that FDA regulations require that the Nutrition Facts Label on Benecol state that the product has zero grams of trans fat because it has less than 0.5 gram per customary serving. "If the serving contains less than 0.5 gram, the content, when declared, shall be expressed as zero." 21 C.F.R. § 101.9(c)(2)(ii). The alleged deception is that the label states "No Trans Fat" outside of the Nutrition Facts Label, but federal law requires that Benecol state it has "0 g" of the substance inside it.
In Reid, the panel reversed the district court's dismissal of the false advertising claims relating to trans fat. In large part, the panel rejected a preemption argument based on FDA regulations regarding other label statements regarding fat. That is, FDA regulations permit food manufacturers to make nutrient content claims such as "fat free," "no fat," "zero fat," or "negligible source of fat" if the product contains less than 0.5 gram of fat per serving. There is no similar regulation about "trans fat," though. In fact, the FDA considered authorizing a "trans fat free" statement on labels outside of the Nutrition Facts Label, but decided not to enact it.
So the Ninth Circuit is clear that products with any amount of trans fat may not state "No Trans Fat" on the label even though federal regulations require indicating zero gram of trans fat per serving in the Nutrition Facts Label, right? Not so fast, unfortunately. Nearly three years ago, the court released Carrea v. Dreyer's Grand Ice Cream, Inc., 475 F. App'x 113 (9th Cir. Apr. 5, 2012). There, the court affirmed the dismissal of consumer fraud claims relating to Drumstick ice cream bars. That plaintiff alleged that statements outside of the Nutrition Facts Label that Drumsticks have "0 g Trans Fat" were misleading. That panel of the court stated, "[B]ecause Drumstick contains less than 0.5 grams of trans fat per serving, the Nutrition Facts panel must express this amount as zero. Accordingly, the same rule applies to the statement on the front of Drumstick's packaging." Id. at 115 (citation omitted). The Carrea panel included Chief Judge Alex Kozinski, who also sat on the panel that reached the opposite conclusion in Reid.
To make matters even more confusing, the Third Circuit reached the opposite conclusion regarding the same Benecol product in 2013. In Young v. Johnson & Johnson, No. 12-2475 (3d Cir. May 9, 2013), the Third Circuit agreed that federal law preempts New Jersey and New York consumer fraud claims regarding the "No Trans Fat" label statements. Young is also an unpublished decision.
To say the least, Reid could create headaches for food manufacturers. Considering that federal law requires manufacturers list a food product like Benecol as having "0 g" of trans fat per serving in the Nutrition Facts Label, it seems difficult to conclude that reasonable consumers would be misled by "No Trans Fat" appearing elsewhere on the label. Is the Ninth Circuit concluding that federally-mandated statements in the Nutrition Facts Label likely will mislead reasonable consumers but that is irrelevant because of the statements' placement? Alternatively, could manufacturers list the same statement outside of the Nutrition Facts Label and still face liability? For example, if the Benecol label stated "0 g trans fat per serving," would the claim nonetheless survive a preemption challenge? With the split between Ninth Circuit decisions on this subject and the circuit split between the Ninth Circuit and Third Circuit, this may be an issue that the Ninth Circuit needs to resolve en banc or that the United States Supreme Court needs to address.
James Smith is a partner in the Phoenix office of Bryan Cave LLP.
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