October 14, 2019

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Snack Bar Class Action Powers On After USDA Action and FDA Inaction

Unlike a fine wine, a snack bar does not get better with age. Neither, apparently, does litigation. Last month, Judge William H. Pauley III in the Southern District of New York lifted a years-long stay in a lawsuit against KIND LLC concerning the allegedly false marketing of KIND snack products as “all-natural” and “non-GMO.” In re KIND LLC “Healthy and All Natural” Litigation, No. 15-MD-2645. As we blogged about previously, the “all-natural” claims were originally stayed in 2016 in light of ongoing FDA rulemaking regarding the use of “natural” labeling, and the “non-GMO” claims were subsequently stayed in early 2018 pending the USDA’s establishment of a national disclosure standard for bioengineered food. In December 2018, the USDA promulgated its “non-GMO” rules through the National Bioengineered Food Disclosure Standard, which became effective in February 2019. The FDA, however, is continuing its lengthy deliberative process. In considering this delay, Judge Pauley concluded that “[i]t is time for this multi-district litigation to move forward.”

Plaintiffs filed this lawsuit in 2015, alleging that KIND deceptively marketed certain products as “all-natural” and “non-GMO” even though they purportedly contain synthetic and genetically modified ingredients, in violation of New York and other state laws. In September 2016, Judge Pauley stayed the “all-natural” claims pursuant to the doctrine of primary jurisdiction, to wait for the FDA rulemaking process to run its course and provide guidance on the definition of the term “natural.” In March 2018, the Court also granted KIND’s motion to stay the “non-GMO” claims pending USDA action on a national disclosure standard for bioengineered food, which was expected to occur in July 2018. At the same time, the Court denied plaintiffs’ motion to lift the stay of the “all natural” claims. In doing so, Judge Pauley recognized the “glacial pace” of the FDA in defining the term “natural.” However, because there was a significant interest in litigating the “all natural” and “non-GMO” claims together, the Court continued to stay the “all natural” claims, but only through August 15, 2018—two weeks after the date on which the USDA was expected to promulgate the “non-GMO” standard. In doing so, the Court noted that the justification for lifting the stay on the “all natural” claims would be “substantially stronger” if the FDA failed to provide guidance by this date.

The USDA promulgated its “non-GMO” rules through the National Bioengineered Food Disclosure Standard on December 21, 2018. The Court, therefore, found in its February 2019 decision that there was no reason to continue the stay as to plaintiffs’ “non-GMO” claims. However, all parties were in agreement that the “non-GMO” claims should not proceed without the “all natural” claims, again putting at issue whether the stay of the “all natural” claims should be lifted as well, despite the continued absence of FDA guidance on the definition of the term “natural.” Judge Pauley noted that courts have split on the question of whether to lift similar stays of “natural” claims pending FDA rulemaking: some have declined to do so, others have lifted stays, and some have chosen not to stay these types of claims at all. But citing his prior determination that if the FDA provided no further guidance by August 2018, “the basis for lifting the stay w[ould] be substantially stronger, and that there was no reason to continue to stay the “non-GMO” claims, the Court concluded that the stay of the “all natural” claims should be lifted in this case. As a result, this lawsuit that began in 2015 will now proceed to discovery.

In the meantime, KIND petitioned the FDA last week to update its regulations on nutrient content labeling because, in KIND’s view, current regulations permit manufacturers to use nutrient content labeling in a way that misleads the public by concealing the use of added sugars and trans fats in products marketed as contributing to a healthy diet. Watch this space for further developments in-KIND.

© 2019 Proskauer Rose LLP.

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About this Author

Lawrence I Weinstein, False Advertising and Trademark Copywright Law, Proskauer
Partner

Larry Weinstein is a Partner in Proskauer's Litigation Department. He is co-head of the firm’s Intellectual Property Litigation Group, and also co-head of the firm’s False Advertising & Trademark Practice. Larry is both a distinguished trial lawyer and counselor, whose practice covers a broad spectrum of intellectual property law, including Lanham Act false advertising and trademark cases, consumer class action cases, NAD and FTC proceedings, and trade secret and copyright litigations, as well as sports, art and other complex commercial cases.

212-969-3240
Jennifer Yang, Litigation Law, Proskauer Law Firm
Associate

Jennifer Yang is an associate in the Litigation Department. She is a commercial litigator with a particular emphasis on false advertising and other intellectual property disputes, including Lanham Act and consumer class action false advertising litigation, advertising challenges before the National Advertising Division, as well as trademark, trade secret and copyright litigation. She has experience representing clients in a variety of industries, including medical device companies, consumer products companies, fashion retailers and art foundations.

212-969-3394
Russell Kostelak, Litigation Department  Proskauer Rose, New York,
Associate

Russell Kostelak is an associate in the Litigation Department. He focuses on complex litigation in federal and state courts with an emphasis on intellectual property, including copyright, trademark and advertising law. Russell has handled copyright infringement and ownership disputes on behalf of textbook and music publishing companies; trademark infringement, clearance and prosecution matters; and false advertising cases implicating consumer fraud allegations. He also has experience in securities litigation matters, including shareholder class actions and insider...

212-969-3216