Organic Challenges in California OK
The U.S. Department of Agriculture (USDA) regulates organic production in the United States under the Organic Foods Production Act of 1990 (OFPA). USDA’s National Organic Program (NOP) has promulgated a series of regulations that define the criteria for organic production, labeling, and certification. Thus — unlike in the “natural” claim arena — organic claims are subject to a robust federal regulatory regime. Still, federal organic regulations have not deterred class action lawsuits in state courts where plaintiffs sought to challenge alleged abuses of the use of the term “organic” on product labels. In one such case, a California consumer challenged the truthfulness of organic labeling where a herb producer allegedly commingled its organic products with conventional products prior to sale. Both a state district court and an appeals court dismissed the suit on preemption grounds, and many have awaited the high court’s decision in this matter.
On December 3, 2015, the California Supreme Court overturned the appellate court’s decision and found that federal law does not preempt state law “organic” labeling challenges that involve intentional commingling or fraudulent substitution of conventional for organic produce. Quesada v. Herb Thyme Farms Inc., case number S216305. In a unanimous opinion, the seven justices first rejected the district court’s holding that OFPA expressly preempted state law labeling challenges, finding that the Act’s preemption clause effectively federalizes the organic standards and the certification process, but not state consumer protection lawsuits that seek to hold producers accountable for deceptive or fraudulent organic labeling. Next, the justices rejected the appellate court’s holding that OFPA impliedly preempted state law labeling challenges, finding state consumer fraud actions to be consistent with OFPA’s goals of “reassuring consumers and enabling fair competition.” The Court found no evidence that Congress intended remedial exclusivity for enforcement mechanisms under OFPA.
The California Supreme Court’s ruling paves an easier road to the courthouse for plaintiffs’ class action lawsuits seeking to challenge “organic” claims in the future. Although the substance of the ruling may not surprise many stakeholders, it nevertheless strikes a definitive blow to a potential defense in such suits.