The Supreme Court of California ruled last week that consumers could assert claims under California consumer protection statutes for intentionally mislabeling products as “organic.”  In a unanimous opinion, the court reversed a lower court’s ruling that the plaintiff’s claims were preempted by the federal Organic Foods Production Act (Organic Foods Act).  See Quesada v. Herb Thyme Farms, Inc., No. A216305 (Cal. Supreme).

Businesses should take note of the court’s position that private lawsuits are an important means of enforcing California’s consumer protection lawsuits, reiterating in the opinion that “labels matter”.  According to the court, where a company has mislabeled its products, “the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.”

As a result, businesses operating in California should conduct thorough due diligence and work with counsel to ensure their labeling and advertising practices are compliant with federal and state law.  Thorough review of product labels and advertising copy to verify that they are truthful, accurate and not misleading is essential.

Quesada Background

The defendant in Quesada is a large herb-growing operation with multiple farms around California.  The plaintiffs alleged that most of the defendant’s farms use conventional growing methods, but one farm uses properly certified organic processes.  However, the plaintiffs alleged, the defendant would process conventionally farmed herbs with organically farmed herbs, package them together, and sell the combined herbs under the “Fresh Organic” brand.  Further, according to the complaint, the defendant packages and labels herbs that are entirely conventionally grown as organic.

The plaintiffs filed suit, alleging violations of California’s Consumer Legal Remedies Act, the Unfair Competition Law and the False Advertising Law.  After the trial court dismissed the complaint, the court of appeal affirmed, finding the plaintiff’s claims were impliedly preempted by the Organic Foods Act, holding that the U.S. Department of Agriculture had exclusive authority to regulate the labeling and marketing of organic products.

Labels Continue to Matter

A unanimous California Supreme Court held that the Organic Products Act, which regulates the farming methods used to grow produce marketed as organic and establishes state and federal certification schemes for organic producers, did not prohibit consumers from suing over the truthfulness of an organic label:

[A] state law claim that produce is being intentionally mislabeled as organic is not preempted.  When Congress entered the field in 1990, it confined the areas of state law expressly preempted to matters related to certifying production as organic, leaving untouched enforcement against abuse of the label “organic.”  Moreover, a central purpose behind adopting a clear national definition of organic production was to permit consumers to rely on organic labels and curtail fraud.  Accordingly, state lawsuits alleging intentional organic mislabeling promote, rather than hinder, Congress’s purposes and objectives. 

This ruling continues the California Supreme Court’s recent line of cases establishing its view that “labels matter” and consumers have an important role in policing product labels.  As the court noted in its opinion , allowing consumer suits where a product label falsely claims to meet the federal “organic” standard advances the federal interests served by the Organic Products Act:

Substitution fraud, intentionally marketing products as organic that have been grown conventionally, undermines the assurances the USDA Organic label is intended to provide.  Conversely, the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.

In the aftermath of Quesada, there may be a renewed urgency in the food industry to conduct a thorough review of product labels and advertising copy to verify that they are truthful, accurate and not misleading to reduce the risk of litigation. 

© 2015 Perkins Coie LLP