Skyе ASTIANA; Tamar Davis Larsen, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. The HAIN CELESTIAL GROUP, INC., Delaware corporation; Jason Natural Products, INC., a California corporation, Defendants-Appellees.
No. 12-17596
United States Court of Appeals, Ninth Circuit
Argued and Submitted Feb. 10, 2015. Filed April 10, 2015.
783 F.3d 753
James M. Schurz (argued) and Lisa A. Wongchenko, Morrison & Foerster LLP, San Francisco, CA, for Defendants-Appellees.
OPINION
McKEOWN, Circuit Judge:
A product labeled “all natural” or “pure natural” likely evokes images of ground herbs and earth extracts rather than chemicals such as “Polysorbate 20” or “Hydroxycitronellal.” This class action alleges that false or misleading product labels duped consumers seeking natural cosmetics into purchasing products that were chock-full of artificial and synthetic ingredients. Although the underlying question of what constitutes a “natural” cоsmetic poses a fascinating question, it is not the one we answer. Instead, this appeal requires us to decide whether federal preemption or the primary jurisdiction doctrine prevents the district court from deciding when a “natural” label on cosmetic products is false or misleading.
We conclude that the Food, Drug, and Cosmetic Act,
Background
The Hain Celestial Group and JASON Natural Products (collectively “Hain“) makе moisturizing lotion, deodorant, shampoo, conditioner and other cosmetics products. Hain labels these products “All Natural,” “Pure Natural,” or “Pure, Natural & Organic.”
Skye Astiana, Tamar Davis Larsen, and Mary Littlehale (collectively “Astiana“) filed a putative nationwide class action claiming that they were deceived into purchasing Hain‘s cosmetics, which contain allegedly synthetic and artificial ingredients ranging from benzyl alcohol to airplane anti-freeze. Astiana claims she likely would not have purchased—and certainly would not have paid the going price for—Hain‘s cosmetics had she been aware of their synthetic and artificial contents. Astiana sought injunctive relief and damages under the federal Magnuson-Moss Warranty Act, California‘s unfair competition and false advertising laws, and common law theories of fraud and quasi-contract.
Hain filed two motions to dismiss the complaint. First, it moved to partially dismiss the suit under
In its second motion to dismiss, Hain asserted that Astiana‘s state law claims are preempted by the FDCA. In the alternative, Hain urged that the suit should be stayed or dismissed under the primary jurisdiction doctrine. The district court found the latter argument persuasive and
Analysis
I. PREEMPTION
Hain argues that the FDCA expressly preempts Astiana‘s state law claims. Although the district court did not address this argument, Hain asks us to do so, citing our authority to “affirm on any grounds supported by the record.” Franklin v. Terr, 201 F.3d 1098, 1100 n. 2 (9th Cir. 2000). We accept this invitation because this purely legal question remains а threshold issue for resolution.
In analyzing express preemption, 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.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). The FDCA proscribes any cosmetics labeling that is “false or misleading in any particular.”
The preemption language of
In Medtronic, the Supreme Court considered whether the FDCA‘s prohibition on state medical device safety “requirements” that are “different from, or in addition to” federal requirements preempted state law product liability claims. 518 U.S. at 481 (quoting
The Court reached a similar conclusion in Bates. There, chemical manufacturers argued that the labeling requirements of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA“),
Hain attempts to escape the dictates of the Supreme Court by arguing that Astiana‘s suit would create a “novel state labeling requirement” under California‘s Sherman Act, Health & Safety Code
Hain also argues that the complaint‘s reference to the FDA‘s informal food labeling policy represents an attempt to create a state regulatory regime where no corresponding federal rules exist. This characterization does not ring true. Astiana referenсed these regulations to demonstrate that Hain knew or should have known its products contained ingredients that would likely be considered synthetic and artificial. Notably, the complaint referenced Hain‘s correspondence with a nonprofit organization for the same purpose.
Hain finally points out that the FDA has never issued regulations regarding the use of “natural” on cosmetics labels. That is true, but Hain then argues that the FDA‘s failure to issue spеcific regulations on the subject is tantamount to a conscious decision by the agency to permit any use of this term a manufacturer sees fit. This argument proves too much. By this logic, a manufacturer could make any claim—wild, untruthful, or otherwise—about a product whose contents are not addressed by a specific regulation. The statute, however, proscribes statements that are “false or misleading in any particular,” not statements that are “prohibited by specific FDA regulations.” Indeed, in a “Small Business Fact Sheet” published on its website, the FDA itself stated that while the agency “has not defined” the word natural, all cosmetics labels must still be “truthful and not misleading.”2 This statement is, of course, consistent with
II. PRIMARY JURISDICTION
We next address whether the district court properly dismissed Astiana‘s claims under the primary jurisdiction doctrine. Before we reach the merits of the district court‘s decision, we consider two procedural points raised by Astiana.
Astiana first urges that Hain waived its right to seek dismissal on primary jurisdiction grounds because this defense was asserted in a pleading titled: “Motion to dismiss for lack of subject matter jurisdiction, pursuant to
Astiana‘s position reads too much into the caption. Just as one can‘t judge a book by its cover, a pleading caption is hardly dispositive of the nature of the pleading. Astiana also overlooks the reality of what occurred in the briefing of the motion. Both Hain and Astiana addressed the merits of the primary jurisdiction argument without reference to the caption. Far from waiver, Hain‘s motion put Astiana on notice of the defense, and Astiana responded to this argument.
Astiana also urges us to acknowledge that its correspondence with the FDA during the pendency of this appeal demonstrates that the agency declined to take primary jurisdiction over this case. In a motion for judicial notice, Astiana asserts that her counsel sent a letter to the FDA in December 2013, four weeks after the district court dismissed her claims. The letter, which was not sent to opposing counsel or the court at that time, asserted inaccurately that there had been a “Referral for
Hain‘s counsel learned of this missive nearly two months later and immediately wrote a letter to the FDA urging it not to respond to Astiana‘s request for administrative guidance. In March 2013, Dr. Linda M. Katz, the Director of the FDA‘s Office of Cosmetics and Colors, responded to Astiana‘s initial request and outlined the procedures for establishing the meaning of the term “natural,” absent a pre-existing definition. The letter noted that “making
The question is what do we do with this private correspondence on appeal? Our answer: nothing. Because any consideration as to the weight or the substantive implications of the letter should be left to the district court on remand, we deny Astiana‘s motion for judicial notice.
We now consider the meat of Astiana‘s claim: whether the district court‘s decision to dismiss the case under the primary jurisdiction doctrine was error. Although the district court properly invoked primary jurisdiction, it erred by dismissing the case without prejudice rather than staying proceedings while the parties (or the district court) sought guidance from the FDA.
Primary jurisdiction is a prudential doctrine that permits courts to determine “that an otherwise cognizable claim implicates technical and policy questions that should be addressed in the first instance by the agency with regulatory authority over the relevant industry rather than by the judicial branch.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). In evaluating primary jurisdiction, we consider “(1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration.” Syntek, 307 F.3d at 781.
Not every case that implicates the expertise of federal agencies warrants invocation of primary jurisdiction. Rather, the doctrine is reserved for a “limited set of circumstances” that “requires resolution of аn issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency.” Clark, 523 F.3d at 1114 (quoting Brown v. MCI WorldCom Network Servs., 277 F.3d 1166, 1172 (9th Cir. 2002)) (internal quotation marks omitted). Without doubt, defining what is “natural” for cosmetics labeling is both an area within the FDA‘s expertise and a question not yet addressed by the agency.
Nonetheless, courts must also consider whether invoking primary jurisdiction would needlessly delay the resolution of claims. Reid v. Johnson & Johnson, 780 F.3d 952, 967-68 (9th Cir. 2015); United States v. Philip Morris USA Inc., 686 F.3d 832, 838 (D.C. Cir. 2012) (“The primary jurisdiction doctrine is rooted in рart in judicial efficiency.“). Under our precedent, “efficiency” is the “deciding factor” in whether to invoke primary jurisdiction. Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1165 (9th Cir. 2007).4
On the record before it, the district court did not err in invoking primary jurisdiction. Determining what chemical compounds may be advertised as natural on cosmetic product labels is “a particularly complicated issue that Congress has committed to” the FDA. See
While the FDA had shown some reticence to define “natural,” Judge Hamilton was not alone in thinking that new guidancе would be forthcoming. In response to a flurry of litigation over food labeling, three other district courts invoked the agency‘s primary jurisdiction to see if the FDA intended to offer further regulations regarding the use of the term “natural.”5 Following these referrals, which occurred around the same time Hain sought to invoke primary jurisdiction in this case, the FDA outlined the complexities of the issue and responded to the courts that “priority food public health and sаfety matters are largely occupying the limited resources that FDA has to address food matters.” Letter from Department of Health & Human Services, In Re Gen. Mills, No. CIV-A-12-249, at ECF No. 94. More specifically, the agency “decline[d] to make a determination” at that time with respect to labeling genetically engineered ingredients as “natural.” Id.
Once a district court determines that primary jurisdiction is appropriate, it may either stay proceedings or dismiss the case without prejudice. When the purpose of primary jurisdiction is for “parties [to] pursue their administrative remedies,” a district court will “[n]ormally” dismiss the case without prejudice. Syntek, 307 F.3d at 782. However, when a court invokes primary jurisdiction “but further judicial proceedings are contemplated, then jurisdiction should be retained by a stay of proceedings, not relinquished by a dismissal.” N. Cal. Dist. Council of Hod Carriers v. Opinski, 673 F.2d 1074, 1076 (9th Cir. 1982).6 In either circumstance, the district court must be attuned to the potential prejudice arising from the dismissаl of claims. Because the Ninth
In dismissing the case rather than staying it, the court did not consider whether the parties would be “unfairly disadvantaged.” Reiter, 507 U.S. at 268. The purpose of referral to the FDA was not for the agency to adjudicate Astiana‘s claims, but to provide expert advice that would be useful to the court in considering this lawsuit. Plus, dismissing the case had the potential to prejudice members of the putative consumer class because of the running of the statute of limitations. In light of these considerations, we reverse the dismissal on primary jurisdiction grounds. On remand, the district court may consider whether events during the pendency of this appeal—including Astiana‘s informal letter, the FDA‘s website publication of a Small Business Fact Sheet regarding cosmetics labeling, and the FDA‘s response to the other courts—affect the need for further proceedings at the FDA or demonstrate that another referral to the agency would be futile.
III. QUASI-CONTRACT
The district court dismissed Astiana‘s quasi-contract cause of action, concluding that restitution “is not a standalone cause of аction in California and is nonsensical as pled in any event.” We part ways with the district court. Astiana‘s pleadings, though inartful, are better read as raising a valid quasi-contract claim seeking the remedy of restitution.
As the district court correctly noted, in California, there is not a standalone cause of action for “unjust enrichment,” which is synonymous with “restitution.” Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 108 Cal. Rptr. 3d 682, 699 (2010); Jogani v. Superior Court, 165 Cal. App. 4th 901, 81 Cal. Rptr. 3d 503, 511 (2008). However, unjust enrichment and restitution are not irrelevant in California law. Rather, they describe the theоry underlying a claim that a defendant has been unjustly conferred a benefit “through mistake, fraud, coercion, or request.” 55 Cal. Jur. 3d Restitution § 2. The return of that benefit is the remedy “typically sought in a quasi-contract cause of action.” Id.; see Munoz v. MacMillan, 195 Cal. App. 4th 648, 124 Cal. Rptr. 3d 664, 675 (2011) (“Common law principles of restitution require a party to return a benefit when the retention of such benefit would unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-contract.’ “). When a plаintiff alleges unjust enrichment, a court may “construe the cause of action as a quasi-contract claim seeking restitution.” Rutherford Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 166 Cal. Rptr. 3d 864, 872 (2014).
Astiana alleged in her First Amended Complaint that she was entitled to relief under a “quasi-contract” cause of action because Hain had “entic[ed]” plaintiffs to purchase their products through “false and misleading” labeling, and that Hain was “unjustly enriched” as a result. This straightforward statement is sufficient to state a quasi-contrаct cause of action. To the extent the district court concluded that the cause of action was nonsensical because it was duplicative of or superfluous to Astiana‘s other claims, this is not grounds for dismissal.
REVERSED and REMANDED.