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From Health Law Daily, August 17, 2016

Consumers take a crack at Nature’s Way coconut oil product labeling

By Bryant Storm, J.D.

The use of the term "healthy" in product labeling can constitute an implied nutrient content claim, according to a federal district court. The court held that coconut oil products manufactured by Nature’s Way brand and Schwabe North America, Inc., may have been labeled in a misleading and unlawful manner as a result of health claims. The court allowed a consumer class action claim to proceed, reasoning that the consumers sufficiently alleged that the product labeling made unauthorized nutrient content claims and misrepresentations regarding the healthy nature of the products (Hunter v. Nature’s Way Products, LLC, August 12, 2016, Hayes, W.).

Labeling. In each 14-gram serving of Nature’s Way Extra Virgin Coconut Oil and Liquid Coconut Oil there are 14 grams of fat. Additionally, each 14-gram serving contains 13-grams of saturated fat. However, labeling statements on the Nature’s Way coconut oil products market and advertise the products as inherently healthy and healthy alternatives to butter, margarine, and other oils. The labeling also describes the products as being of "premium quality," "non-hydrogenated," and containing "no trans-fat." Nature’s Way also advertises that its products provide "natural energy."

Healthy. The consumers alleged that the labeling is misleading because its recommends the Nature’s Way products as a "healthy" alternative to butter, margarine, or vegetable oils, when, in fact, replacement with the Nature’s Way products increases consumption of saturated fat and decreases consumption of unsaturated fat. The consumers alleged that they made the decision to purchase the products in reliance on the products’ labels because they were misled in believing that the products would reduce their risk of cardiovascular heart diseases and other morbidity.

Misbranded. The consumers brought a lawsuit under a California unfair competition law (UCL), alleging that the Nature’s Way products were false, misleading, and misbranded. Specifically, the consumers asserted that the labeling phrases were designed to make the Nature’s Way products appear healthier than other oils, "to conceal or distract consumers from noticing that their Nature’s Way coconut oils are pure fat." The consumers also asserted that, due to the high fat content, the products lacked a required disclosure statements required under 21 C.F.R. Sec. 101.13(h). Additionally, the consumers argued that "no trans-fat" is an unauthorized nutrient content claim that cannot be used in the labeling of food.

Relief. The consumers sought an order compelling the manufacturers to correct their advertising campaign. Specifically, the consumers sought to have the court order the manufacturers to "destroy all misleading and deceptive advertising materials and product labels and to recall all offending products." The manufacturers moved to dismiss all of the claims.

Misrepresentation. The court agreed with the consumers and reasoned that the consumers sufficiently alleged their misrepresentation claims. The court explained that representations made on the label of the coconut oil products may be misleading and deceptive even though the representations do not directly contradict the ingredients listed on the label.

Nutrient content. The court also held that the consumers sufficiently alleged that the manufacturers impermissibly used the term "healthy" in connection with a nutrient content claim. The court reasoned the assertion the products served "A Variety of Healthy Uses" may have been improper, under 21 C.F.R. Sec. 101.65(d), due to the products’ high fat content. Specifically, the court explained, the use of the term "healthy" as an implied nutrient content claim is only permissible with respect to fat content when a product is defined as "Low Fat."

UCL. The court explained, in order for the consumers’ UCL claims to succeed, the compliant needed to establish unlawful, unfair, or fraudulent business practices. The court reasoned that the consumers presented sufficiently detailed evidence that Nature’s Way engaged in unlawful and fraudulent business practices. However, the court granted the manufacturers’ motion to dismiss the UCL claim in so far as it asserted the manufacturers engaged in unfair business practices. The court did not find sufficient support for claims that the manufacturers’ conduct was immoral, unethical, unscrupulous, or substantially injurious to consumers.

The case is No. 16cv532-WQH-BLM.

Attorneys: Jack Fitzgerald (The Law Office of Jack Fitzgerald, PC) for Sherry Hunter. Kevin W. Alexander (Gordon Rees Scully Mansukhani, LLP) for Nature's Way Products, LLC and Schwabe North America, Inc.

Companies: Schwabe North America, Inc.; Nature's Way Products, LLC

MainStory: TopStory CaseDecisions FDCActNews AdvertisingNews FoodNews FoodStandardsNews FraudNews LabelingNews CaliforniaNews

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