'All Natural' Label Making in California: Are You a Class Action Target?

by Stoel Rives LLP

In recent years, numerous class actions alleging false and misleading labeling and advertising have been filed in California regarding use of the terms "All Natural" or "100% Natural" on a wide range of food and beverage products. The companies sued in these cases range from major manufacturers to small private label suppliers.

These consumer class actions typically allege that the products are falsely marketed as "natural" because they contain synthetic, artificial or processed ingredients. The plaintiffs often file these cases under California's Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act, in addition to general fraud and misrepresentation statutes. Although a few of these cases have been dismissed at an early stage of the litigation, most courts have been unwilling to grant motions to dismiss entire cases and at least some of the claims usually proceed to further litigation or are resolved through settlement. The expense to companies that are sued in these cases is, not surprisingly, substantial, with settlements requiring payments of several million dollars.

Expansion of Lawsuit Targets
Although the focus for several years had been on products in the food and beverage industry, plaintiffs have recently been targeting other industries as well, including personal care products, cosmetics and home cleaning supplies. In addition, while past filings focused on labels that marketed products as "All Natural" or "100% Natural," several cases have been filed against companies regarding products that simply contain the term "Natural" on the label. For instance, a class action was filed against a major cosmetics company for using the term "Naturals" on its cosmetics line, resulting in a $1.8 million class settlement earlier this year.

Types of Ingredients Challenged
Companies that use "Natural" or similar words or phrases on their labels should be aware of the types of ingredients alleged to be synthetic or artificial by plaintiffs, many of which are commonly used. They include:

• alkalized cocoa
• ascorbic acid (vitamin C)
• benzisothiazolinone
• beta-carotene (vitamin A)
• calcium pantothenate (vitamin B5)
• citric acid
• cocamidopropyl betaine
• cocamidopropyl hydroxysultaine
• cyanocobalamin
• dutch cocoa
• folic acid (a B vitamin)
  • fragrance
• gar hydroxypropyltrimonium chloride
• glycerine
• GMOs
• high fructose corn syrup
• lauramine oxide
• laureth-6
• methylisothiazolinone
• niacinamide
• pentasodium pentetate
• potassium carbonate
• potassium sorbate
  • propylene glycol
• pyridoxine hydrochloride
• riboflavin
• sodium benzoate
• sodium citrate
• sodium hydroxid
• sodium lauryl sulfate
• soy lecithin
• soy proteins (from hexane)
• tricalcium phosphate
• xanthan gum
• zinc oxide

Companies that are sued in these cases need not assume that a large settlement payment is inevitable. Indeed, several courts have demonstrated a shift to giving a more thoughtful analysis as to whether a "reasonable consumer" would be misled by the labels, resulting in several favorable rulings for companies in false labeling actions. See Pelayo v. Nestle USA, No. CV 13-5213-JFW, 2013 WL 5764644 (C.D. Cal. Oct. 25, 2013); Hairston v. South Beach Beverage Co., No. CV 12-1429-JFW, 2012 WL 1893818 (C.D. Cal. May 18, 2012).

Motions to dismiss based on the primary jurisdiction doctrine have been successful as well. See Watkins v. Vital Pharmaceuticals, Inc., No. CV 12-09374 SJO, 2012 WL 5902362 (C.D. Cal. Nov. 7, 2013); Astiana v. Hain Celestial Group, Inc., 905 F. Supp. 2d 1013 (N.D. Cal. 2012); see also Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012).

There are often other defenses available in some cases, including lack of standing, challenges to the improper use of certain statutes (such as improper warranty claims) and occasionally, preemption. Further, challenges to class certification have been successful in some matters. See Thurston v. Bear Naked, No. 3:11-CV-02890-H, 2013 WL 5664985 (S.D. Cal. July 30, 2013); Ries v. Arizona Beverages USA LLC, No. 10-01139, 2013 WL 1287416 (N.D. Cal. Mar. 28, 2013).

Despite some favorable shifts in court rulings, consumer class action lawsuits over "natural" labels and advertising are unlikely to cease anytime soon. To the contrary, plaintiffs are expanding the focus of these lawsuits into new industries, are challenging different ingredients, and are bringing claims even when no representation that a product is 100% natural has been made. Accordingly, companies need to reassess statements and claims on their product labels and consider whether they should make changes to minimize the risk of litigation.

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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