Going Au Naturel: New York Federal Judge’s Recent Decision Represents the Increasing Class Action Litigation Risks of “Natural” Product Labels

by Eversheds Sutherland (US) LLP
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Sutherland Asbill & Brennan LLP

In today’s competitive food and beverage industry, product labeling plays a significant role in marketing. Labels touting a product’s “natural” ingredients or health benefits allow manufacturers to charge a premium for their product and capture market share. Natural product labels have caught the attention of the class action bar, evidenced by a run of putative class actions alleging that claims that a product is “natural” and “non-synthetic” are false and deceptive. Although the initial efforts of the plaintiffs’ bar were largely stymied, similar lawsuits have started to gain traction recently. 

A recent case in California illustrates this trend. In February 2016, the U.S. Court of Appeals for the Ninth Circuit reversed a California district court’s dismissal of a putative national class action against the manufacturer of a line of personal care products, Alba Botanica.1 The Ninth Circuit held that plaintiffs had stated a plausible claim for relief that Alba Botanica’s label of “natural” may be deceptive to a reasonable consumer, where the product also contains some synthetic ingredients. The court further found that the inclusion of the synthetic ingredients on the label was insufficient as a matter of law to correct the alleged misrepresentation.

Similarly, this week, a federal court in the Eastern District of New York found that a putative national class action against Nature’s Bounty, Inc. regarding its Black Cohosh menopause supplement survived a motion to dismiss.2 The class plaintiff brought claims under the New York deceptive trade practices and advertising laws, and similar consumer protection laws of other states. The class plaintiff also alleged breach of warranty under both New York law and the federal Magnuson-Moss Warranty Act.3

The plaintiff claimed, among other allegations relating to the product’s effectiveness, that the product was not a “natural” supplement as labeled by Nature’s Bounty because it contained synthetic ingredients. The class plaintiff also alleged that Nature’s Bounty deceived consumers by stating that the product contained “only the finest herbs and spices,” when it contained at least trace amounts of lead. 

Nature’s Bounty moved to dismiss all of these claims, arguing that consumers were on notice that the supplement contained synthetic ingredients because these ingredients were listed on the product label. Nature’s Bounty further argued that it complied with FDA regulations, which do not require the company to include lead on the label based on the small amount in the product. 

The court found these arguments unpersuasive. First, the court found the plaintiff had adequately pled facts to support claims under New York consumer protection and trade practices law, and had standing to pursue a putative national class action on these grounds. The court held that under the facts alleged, a reasonable consumer could have relied on the “natural” and “only finest herbs and spices” statements on the label and been misled by the alleged misrepresentations. Like the Ninth Circuit, the court found that including the synthetic ingredients in the list of ingredients was insufficient alone to overcome this legal standard, and that meeting the FDA standards was irrelevant to the consumer’s reliance on the label. The court determined that the allegations raised questions of fact pertaining to the accuracy of these claims on the label in denying the motion to dismiss.

In refusing to dismiss the state and federal warranty claims, the court found that if a reasonable consumer could rely on the product labels in purchasing the product, then those labels could create an express written warranty under New York law. Doing so, the court expressly rejected the reasoning of many California courts which have found that labels are mere product descriptions and cannot form the basis of a breach of warranty claim.4

The evolving legal precedent regarding “natural” product labeling and advertising from federal courts around the country could have major legal implications, not just for the vitamin and supplement industry, but also for the food and beverage industry. The ability to survive motions to dismiss will likely lead to more labeling and advertising cases being brought on behalf of nationwide classes and raises the stakes for the food and beverage industry. Companies need to be aware of this growing trend and consider steps they can take to limit the legal exposure they may face when using similar labels or touting the health benefits of their products.

                                           

1See Balser v. Hain Celestial Grp., 640 Fed. App’x 694 (9th Cir. 2016) (holding that the plaintiffs’ allegations were “sufficient plausibly to allege a reasonable consumer’s understanding of ‘natural’ as used on Hain’s packaging, and are adequate under California law.”). 
  
2 For more information on this order, see Sitt v. Nature’s Bounty, Inc. and NBYT, Inc., No. 15-CV-4199 (E.D.N.Y. Sept. 26, 2016).
  
3 The Magnuson-Moss Warranty Act allows a plaintiff to recover damages, costs and attorney’s fees for breach of warranty claims cognizable under state law. See 15 U.S.C. § 2301, et. seq.

4See, e.g., De Keczer v. Tetley USA, Inc., No. 5:12-CV-02409 (N.D. Cali. Aug. 28, 2014) (dismissing claims for breach of express warranty because food labels are merely “product descriptions rather than promises that [a food product] is defect-free, or guarantees of specific performance levels.”)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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