SHAVONDA HAWKINS, оn behalf of herself and all others similarly situated, Plaintiff-Appellant, v. THE KROGER COMPANY, Defendant-Appellee.
No. 16-55532
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
October 4, 2018
D.C. No. 3:15-cv-02320-JM-BLM
OPINION
Appeal from the United States District Court for the Southern District of California
Jeffrey T. Miller, Senior District Judge, Presiding
Argued and Submitted December 7, 2017
Pasadena, California
Filed October 4, 2018
Before: Marsha S. Berzon and Jacqueline H. Nguyen, Circuit Judges, and Frederic Block, District Judge.*
Opinion by Judge Block
Preemption / Standing / Product Labels
The panel reversed the district court’s
Plaintiff alleged that she purchasеd the bread crumbs by relying on information contained on the face of the label that the product contained “0g Trans Fat per serving.” Plaintiff further alleged that contrary to the claim on the label, the bread crumbs “contained artificial trans fats, and caused heart disease, diabetes, cancer, and death.”
Concerning plaintiff’s claim under California law of reliance on misleading labels, the panel held that plaintiff had standing because she adequately alleged that she relied on the label’s misrepresentations and would not have purchased the product without those misrepresentations. The panel also held that the label statement “0g Trans Fat per serving” was not preempted by federal regulations. Specifically, the panel noted that the federal Food and Drug Administration (“FDA“) regulations at issue involved two categories: rules contained in
Concerning plaintiff’s “use claims” under California law – that it was illegal to include trans fat in products since it was not for human consumption and an unlawful food additive – the panel held that plaintiff had statutory standing for the same reason she had statutory standing tо bring her labeling claims. The panel further held that the issue of whether the claim was federally preempted by a Food and Drug Administration 2015 Final Determination on the subject was not addressed by the district court and not fully briefed on appeal. The panel declined to exercise its discretion to consider the issue, and remanded to the district court to decide in the first instance to what extent, if at all, the state law use claims were federally preempted.
COUNSEL
Gregory S. Weston (argued) and David Elliot, The Weston Firm, San Diego, California, for Plaintiff-Appellant.
Jacob M. Harper (argued) and Nicole S. Phillis, Davis Wright Tremaine LLP, Los Angeles, California, for Defendant-Appellee.
BLOCK, District Judge:
Trans fat has become increasingly recognized as a dangerous substance and a leading cause of numerous serious ailments, including heart disease and diabetes. Food and Drug Administration (“FDA“) regulations govern the information reported within а food product’s Nutrition Facts Panel on the product’s label.1 As for trans fat, FDA regulations provided, at all relevant times, that if the product contained “less than 0.5 gram” trans fat, as it did in this case, it was required to tell the consumer on the Nutrition Facts Panel that it contained 0 grams trans fat, even though it contained this dangerous food additive.
We are asked to determine, inter alia, whether these FDA trans fat regulations governing the contents of the Nutrition Facts Panel preempt California’s unfair compеtition laws proscribing false or misleading advertising elsewhere on a food product’s label. We hold that they do not; accordingly, the plaintiff can challenge the legitimacy of defendant’s product advertising on the face of the label that it contains “0g Trans Fat per serving.” In doing so, we take the occasion to reinforce and apply our holding in Reid v. Johnson & Johnson that “a requirement to state certain facts in the
I
Hawkins’ complaint alleges the following:2 The Kroger Company (“Kroger“) sells Kroger Bread Crumbs (“KBCs“) in stores in California, including the supermarket chain Ralph’s. Hawkins regularly purchased KBCs at several Ralph’s locations between 2000 and 2015. In making the purchases, she relied on the information contained on the face of the label that the product contained “0g Trans Fat per serving.” In August 2015, she discovered that, contrary to the claim on the label, KBCs “contained artificial trans fat, and caused heart disease, diabetes, cancer, and death.”3
The district court granted Krogеr’s Rule 12(b)(6) motion to dismiss, with prejudice, holding that Hawkins lacked standing to bring these claims, and, alternatively, that the labeling claims were preempted by federal law.
The district court reasoned that plaintiff lacked standing to bring her labeling claims because it believed that she did not allege that she read the “0g Trans Fat per serving” label on the face of the label and therefore could not establish reliance or injury. It alternatively held that the labeling claims
Because we disagree with all of the district court’s holdings, we reverse and remand for further proceedings.
II
“We review de novo a district court’s order granting a motion to dismiss on preemption grounds, for lack of standing, or for failure to state a claim upon which relief can be granted.” Reid, 780 F.3d at 958.
A. Labeling Claims
1. Standing
We turn first to Hawkins’s statutory standing to bring her labeling claims. California law requires plaintiffs alleging UCL and FAL claims to show that they “ha[ve] suffered injury in fact and ha[ve] lost money or property as a result of the unfair competition.”
Califоrnia law also requires causation – namely, that the plaintiff relied on the misrepresentation on the label. “A consumer who relies on a product label and challenges a misrepresentation contained therein can satisfy the standing requirement of section 17204 by alleging ... that he or she would not have bought the product but for the misrepresentation.” Id. at 890. “That assertion is sufficient to allege causation [and it] is also sufficient to allege economic injury.” Id.; see also Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 965 (9th Cir. 2018).
Hawkins alleges that she relied upon the label and would not have bought the product without the misrepresentation. For example, paragraph 76 of the complaint states: “Plaintiff relied on Defendant’s ‘0g trans fat’ claim as a substantial factor in her purchases“; paragraph 101 states: “Plaintiff purchased the Kroger Bread Crumbs believing they had the qualities she sought based on the Products’ deceptive labeling“; and paragraph 107 states: “Plаintiff, on at least one occasion, would not have purchased the Kroger Bread Crumbs absent Defendant’s misrepresentation.”
In holding that Hawkins did not plead reliance, the district court misread Hawkins’s complaint. It interpreted the complaint as alleging that she did not read the “0g Trans Fat per serving” product label until August 2015, fifteen years
Because Hawkins adequately alleged that shе relied on the label’s misrepresentations and would not have purchased the product without those misrepresentations, she has adequately alleged standing for her labeling claim.
2. Preemption
We next turn to whether Hawkins’s state law mislabeling claim challenging the statement “0g Trans Fat per serving” is preempted by federal regulations.
a. Preemption Generally
Preemption is guided by two principles: first, “the purpose of Congress is the ultimate touchstone in every pre-emption case,” and second, “[i]n all pre-emption cases, and particularly in those in which Congress has ‘legislated . . . in a field which the States have traditionally occupied,’ . . . we ‘start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.‘” Wyeth v. Levine, 555 U.S. 555, 565 (2009) (alterations in
b. The NLEA
“The Nutritional Labeling and Education Act (‘NLEA‘) amended the Food, Drug, and Cosmetic Act (‘FDCA‘) to ‘establish[] uniform food lаbeling requirements, including the familiar and ubiquitous Nutrition Facts Panel found on most food packages.‘” Reid, 780 F.3d 959 (alterations in original) (quoting Lilly, 743 F.3d at 664). “The ‘NLEA also provides that no state may “directly or indirectly establish any requirement for the labeling of food that is not identical” to the federal requirements.‘” Id. (quoting Lilly, 743 F.3d at 664–65); see also
“The phrase ‘not identical to’ means ‘that the State requirement directly or indirectly imposes obligations or contains provisions concerning the composition or labeling of food that arе not imposed by or contained in the applicable federal regulation or differ from those specifically imposed by or contained in the applicable federal regulation.‘” Reid, 780 F.3d at 959 (quoting, with alterations, Lilly, 743 F.3d at 665); see also
Therefore, if FDA regulations еxpressly permit the claim “0g Trans Fat per serving” on the face of a product’s
c. The Nutrition Facts Panel and Nutrient Content Claims
The FDA regulations at issue here can broadly be separated into two categories. First, there are rules, contained in
Critically, the rules that govern claims made within the Nutrition Facts Panel and the rules that govern nutrition content claims elsewhere on the label are different: “Information that is required or permitted by § 101.9 ... and that appears as part of the nutrition label, is not a nutrient content claim . . . . If such information is declared elsewhere on the label . . . it is a nutrient content claim and is subject to the requirements for [such] claims.”
Without
d. Reid v. Johnson & Johnson
In Reid, we determined that the statement “No Trans Fat” was not allowed outside the Nutrition Facts Panel since the product did contain trans fat, notwithstanding that the Nutrition Facts Panel reported that it contained 0g trans fat. 780 F.3d at 963. As we wrote:
Though the nutritional label clearly contains information about nutrient content, the claims made in it are not considered “nutrient content claims” for the purposes of FDA regulations. See
21 C.F.R. § 101.13(c) . While a required statement inside a nutrition label escapes regulations reserved for nutrient content claims, the identical statement outside of the nutritiоn label is still considered a nutrient content claim and is therefore subject to section 101.13.
“No Trans Fat” was an “expressed” nutrient content claim because it was “[a] direct statement about the level . . of [trans fat] in the food.” Id. at 962 (alterations in original) (quoting
We “bolster[ed]” this conclusion in Reid by noting that under
e. The Present Case
Reid squarely controls here. As in Reid, we have an expressed nutrient content claim that the product does not cоntain trans fat. Also as in Reid, the manufacturer was required to state that the product had “0g trans fat per serving” within the Nutrition Facts Panel. And, just as in Reid, because of
It makes no difference that here the label outside the Nutrition Fact Panel stated that the product had “0g Trans Fat,” whereas in Reid it was “No Trans Fat.” Just as in Reid, a consumer reading the label could be misled into believing that the product was free of trans fat.
Moreover, like in Reid, the regulations also bolster our conclusion in this case. In addition to authorizing “no fat” and “no saturated fat” claims,
We are not the first to note that the FDA’s food regulations promulgated under the NLEA are “inconsistent and incomprehensive“: “A regulatory scheme intended to
In this case, as we have explained, the “rounding rules” applicable to the Nutrition Facts Panel do not apply to the nutrient content claim on the face of the label. And unlike other products, where the distinction may not be inimical to the public health, falsely advertising that a food product does not contain trans fat is a health hazard.9
B. Use Claims
Hawkins also brought a set of claims under the theory that, under California law, it is illegal to include trans fat in products since it is not fit for human consumption and is an unlawful food additive. As noted, these claims were dismissed for lack of standing because the district court viewed the injuries as too speculative. Unlike the labeling claims, the court did not address whether the use claims were preempted.
1. Standing
Hawkins has statutory standing for the same reason she has statutory standing to bring her labeling claims—it is sufficient for a consumer to allege that she bought a product she would not have otherwise bought if she had known the product was harmful. Davidson, 889 F.3d at 965–66.
2. Preemption
Kroger argues, as an alternative ground for dismissal of the use claims, that they are preempted by the FDA’s 2015 Final Determination that PHOs are no longer GRAS because the FDA gave food companies the three-year window before it would begin enforcement of the new determination.10 2015
“Generally, we do not ‘consider an issue not passed upon below.‘” Foti v. City of Menlo Park, 146 F.3d 629, 638 (9th Cir. 1998) (quoting Golden Gate Hotel Ass‘n v. City & Cty. of San Francisco, 18 F.3d 1482, 1487 (9th Cir. 1994)). “This general rule has exceptions, but invocation of those exceptions is discretionary.” Id.
We dеcline to exercise our discretion here. The preemption issue was not fully briefed on appeal by either party. For example, the analysis may be different as to purchases prior to the 2015 Final Determination, between the 2015 Final Determination and the passage of the 2016 CAA, and after the passage of the 2016 CAA. These distinctions were not addressed.
III
Hawkins has established standing for her label and use claims. Her label claims are not preempted. On remand, the district court shall consider whether the use claims are preempted.
REVERSED AND REMANDED.
FREDERIC BLOCK
DISTRICT JUDGE