On May 5, the First Circuit reversed a lower court’s dismissal of a putative class action brought against Conagra alleging violations of Massachusetts’s deceptive trade practices act. In reversing, it found that a company’s compliance with FDA labeling guidance does not necessarily preclude liability under state law.

• Plaintiff Margaret Lee’s suit claimed that Conagra falsely represented that its Wesson brand vegetable oils were “100% Natural” when, in reality, they contained genetically modified organisms (“GMOs”). The complaint further alleged that consumers are willing to pay a premium for all-natural products and that many scientists and consumers do not consider products that contain GMOs to be “natural.”
• After removing the case to federal court, Conagra moved to dismiss the complaint for failure to state a claim. The district court granted the motion, agreeing with Conagra that the label was not unfair as a matter of law because it did not violate the FDA’s labeling policy, which (i) permits companies to label products as “natural” so long as they do not contain anything “artificial or synthetic” and (ii) does not require the affirmative disclosure of GMOs’ presence in a product.
• On appeal, the First Circuit concluded that the district court erred by not analyzing whether the label was “deceptive” under the relevant standard. Rather, the court’s analysis focused entirely on whether the labeling was “unfair,” despite the Massachusetts statute’s prohibition on practices that are unfair or deceptive.
• Applying the relevant standard, the First Circuit found that the plaintiff plausibly alleged that the label could have deceived a reasonable consumer into purchasing the product under the false impression that it contained no GMOs.
  • The court stated that FDA’s informal guidance on the term “natural” should not be conflated with a binding rule defining the term. Because FDA had previously requested comment as to whether GMOs are “natural”—and still had not issued a formal definition nearly four years after the close of the comment period—the First Circuit observed that “FDA has not said that GMOs are natural and may be advertised as such.” Thus, the court held that no regulatory safe harbor had been created by FDA that could immunize such “natural” claims from liability under Massachusetts’s deceptive trade practices act.
  • The court further concluded that, while FDA has stated that food labelers have no “general freestanding duty” to disclose whether a product contains GMOs, this does not mean “that labelers never need to disclose whether their products contain GMOs, even when those labels might otherwise violate generally applicable consumer protection laws.”
  • Moreover, the First Circuit rejected Conagra’s reliance on a final rule enacted after oral argument by the U.S. Department of Agriculture, which Congress tasked with creating regulations for disclosing “bioengineered” ingredients in food products. According to the court, even assuming that the final rule relieved Conagra from any obligation to disclose the presence of GMOs in its cooking oil, the rule did not speak to whether label claims suggesting the absence of GMOs could be misleading.
• The case is Lee v. Conagra Brands Inc., No. 17-2131 (1st Cir.). Read more here.