On December 3, 2015, the California Supreme Court held that a claim for intentionally mislabeling produce as “organic” is not preempted by the federal regulatory regime for certifying organic growers. Quesada v. Herb Thyme Farms, Inc., No. S216305, 2015 Cal. LEXIS 9481 (Cal. Dec. 3, 2015). This decision may tend to increase exposure to companies endorsing products as “organic” under California state law false advertising, unfair competition, and other consumer protection claims based on alleged misuse of the term “organic.”
In Quesada, Defendant Herb Thyme Farms, Inc. (“Herb Thyme”) owned several farms, one of which had been certified “organic” pursuant to the federally-approved California regulatory scheme. Id. at *3-4, 10. In packaging herbs under the “Fresh Organic” label, however, Herb Thyme packaged herb blends containing both organically and conventionally grown herbs as well as some packages with herbs that had been entirely conventionally grown. Id. at *4. Plaintiff filed a putative class action for false advertising and unfair competition under California state law on behalf of a class of individuals who purchased the products at a premium price based on the belief that the herbs were organic. Id. Herb Thyme sought judgment on federal preemption and primary jurisdiction grounds. Id. The trial court found the claims were both expressly and impliedly preempted. Id. at *5. The Court of Appeal affirmed, but found only implied obstacle preemption. Id. The California Supreme Court reversed. Id. at *3.
In the Organic Food Production Act (“OFPA”), 7 U.S.C. § 6501, et seq., and the corresponding USDA regulations, Congress addressed the production, labeling, and sale of organic products. State certification programs are permitted and, once federally approved, assume primary responsibility for certification and non-compliance proceedings. 7 U.S.C. § 6507; 7 C.F.R. § 205.6689(b). California has promulgated an approved organic program, see Food & Agr. Code §§ 4600-46029; Health & Saf. Code, §§ 110810-110959, which incorporates by reference the federal regulations, see Food & Agr. Code, § 46002, subd.(a). The few courts to address the issue have been split on the issue of whether this federal regulatory scheme preempts all state law claims premised on the “organic” label. See, e.g., In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Practices Litig., 621 F.3d 781, 796 (8th Cir. 2010) (finding preempted class claims that the defendant sold a product labeled as “organic” when it was not, and should not have been certified as, organic); Segedie v. Hain Celestial Grp., Inc., 2015 U.S. Dist. LEXIS 60739, at *19 (S.D.N.Y. Oct. 7, 2015) (finding that organic consumer protection claims were not preempted).
In Quesada, the California Supreme Court took on both the express and implied preemption issues. Joining every other court to address the express preemption issue, the Court held that the OFPA does not expressly preempt state law claims because it does not address enforcement issues, instead only establishing: (1) which processes qualify as organic; and (2) the certification process. Quesada, 2015 Cal. LEXIS at *13-20. Splitting from the Eighth Circuit, however, the Court reasoned that there was no implied preemption because the regulation of labeling food products was traditionally a state concern and permitting state law enforcement actions would promote the OFPA’s goals of “reassuring consumers and enabling fair competition.” Id. at *23, 28-32.
Although courts remain split on the issue of preemption, the recent decision in Quesada which permits plaintiffs to pursue state claims on the alleged misuse of the term “organic” provides a potential avenue for plaintiffs to bring consumer class actions in California and perhaps other states.
If you are in the business of manufacturing or selling organic products, in California or elsewhere, you should: