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From Health Law Daily, September 29, 2017

Claims against Hormel’s Natural Choice products survives dismissal motion

By Jessica Y. Washington, J.D.

The Superior Court of the District of Columbia denied Hormel Foods Corporation’s (Hormel) motion to dismiss the Animal Legal Defense Fund’s (ALDF) complaint, which alleged Hormel’s advertisements describing its Natural Choice products as "natural" and "containing no nitrates or nitrites" are materially false and misleading. In its motion to dismiss, Hormel contended (1) the state law claims alleged in ALDF’s complaint are federally preempted; (2) the court should defer to the primary jurisdiction of the U.S. Department of Agriculture (USDA) over food labeling and advertising claims; (3) the complaint fails to state a claim under the District of Columbia Consumer Protection Procedures Act (CPPA); and (4) ALDF lacks standing. The superior court, finding Hormel’s arguments to be unpersuasive, concluded that ALDF may proceed on its claims (Animal Legal Defense Fund v. Hormel Foods Corporation, September 22, 2017, Kravitz, N.).

Preemption. Hormel argued that two acts that regulate the production and labeling of meat and poultry products—the Federal Meat Inspection Act (21 U.S.C. § 601) and the Poultry Products Inspection Act (21 U.S.C. § 451) (the Acts), expressly and impliedly preempt ALDF’s suit under CPPA. Hormel argued that the court’s determination of ALDF’s CPPA claim would conflict with federal implementation of the Acts, either by making it impossible for Hormel to comply with both federal and state law or by creating an obstacle to Hormel’s ability to comply with federal law. The court noted that Hormel’s characterization of ALDF’s suit as an attack on the labeling of its Natural Choice product line was central to its argument against ALDF.

However, the court clarified that ALDF’s complaint is focused on advertising that it alleges to be materially false and misleading in violation of the CPPA, not the labeling. The Acts’ preemption clauses preclude states from enacting "marking, labeling, packaging, or ingredient requirements…in addition to, or different than, those made under the Acts." Accordingly, the court found that the Acts do not expressly preclude state laws regulating false or misleading advertising of products covered under the Acts. Further, the court found that a ruling favorable to ALDF would not make Hormel’s compliance with the Acts’ labeling requirements impossible, nor would it present an obstacle to compliance, as Hormel claimed. The court suggested that Hormel could, in fact, include qualifying or clarifying language in its advertisements that met federal labeling requirements without misleading consumers.

Primary jurisdiction. Hormel contended that the USDA has primary jurisdiction over ALDF’s claims based on the former’s expertise and its prior approval of Hormel’s use of "natural" and "no preservatives" terminology on its Natural Choice food product labels. The court found, however, that Hormel failed to demonstrate that the USDA has special expertise or authority to regulate the advertisements at issue. Moreover, the court noted that nothing in the record supports Hormel’s belief that the USDA is in a better position than the court to hear false advertising claims under District of Columbia law. Finally, as Hormel did not allege any pending or anticipated actions before the USDA, the court declined to dismiss the action on primary jurisdiction grounds.

Failure to state a claim. Hormel argued the ALDF failed to state a claim that Hormel’s advertisements were false or misleading because federal agencies responsible for applying uniform food labeling standards have approved the use of the terms "natural" and "no preservatives," therefore, those terms cannot be false or misleading, as a matter of law. However, the court found that ALDF alleged facts sufficient to advance a plausible claim that consumers would be mislead by Hormel’s use of those terms in advertising its products. These facts included surveys proffered by ALDF that indicate that the majority of consumers believe "natural" means more than the mere absence of artificial ingredients and that nearly two-thirds of consumers believe that "no nitrates" means no nitrates whatsoever. The court ruled that although federal food labeling standards may be relevant to the ultimate determination of ALDF’s claims, they do not compel a dismissal of the complaint at the pleading stage.

Hormel also argued that ALDF did not sufficiently plead that the company’s advertisements use misleading innuendo or omit the truth about its products. In its counter argument, ALDF pointed to a humorous video ad about "naturalists" who in actuality are nudists, and the use of terms including "clean," "wholesome," "safe," "honest," and "higher standards," which it argues misleads consumers into believing that the animals used in Hormel’s Natural Choice products are raised without hormones and drugs and are slaughtered in a humane and sanitary manner. Further, ALDF argued that the omission of any qualifying statement in Hormel’s ads about the presence of celery juice powder, a natural preservative, is material and misleading. The court found that ALDF’s factual allegations were sufficient to survive Hormel’s challenge.

Standing. The Animal Legal Defense Fund alleged that because of Hormel’s "Make the Natural Choice" ad campaign, ALDF had to devote resources to counter the alleged misinformation. Moreover, ALDF alleged that the need to divert its resources to address these issues compromised its organizational mission by "harming its ability to combat cruelty and evasiveness in the animal agriculture industry."

The court found that ALDF’s allegations were sufficient to establish its standing to bring a CPPA claim against Hormel based on its characterization of its meat and poultry products as "natural" and free of preservatives. The court also ruled that ALDF alleged that Hormel’s advertising practices conflict with ALDF’s mission, which includes consumer education and advocacy, and that ALDF has expended and will continue to expend resources in response to Hormel’s advertising beyond the costs of the present litigation. Accordingly, the court denied Hormel’s motion to dismiss.

The case is No. 2016 CA 004744 B.

Attorneys: Richard M. Volin (Vector IP Law Group) for Animal Legal Defense Fund. Tracy D. Rezvani (The Rezvani Law Firm) for Hormel Food Corp.

Companies: Hormel Food Corp.

MainStory: TopStory CaseDecisions FDCActNews AdvertisingNews FoodNews LabelingNews PreemptionNews DistrictofColumbiaNews

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