California claims against false use of “organic” not preempted

Quesada v. Herb Thyme Farms, Inc., 2015 WL 7770635, No.
S216305 (Cal. S.Ct. Dec. 3, 2015)
 
Labels matter to consumers, and misrepresentations on labels
hurt consumers in their search for information and also disadvantage honest
producers attempting to differentiate themselves.  Thus, the Supreme Court of California concluded,
federal law didn’t preempt claims against allegedly intentional
misrepresentations of organic status by an herb grower.  Congress only preempted state law on matters
related to certifying production as organic, rather than also reaching out to
preempt action against abuse of the “organic” label.  Such state claims further Congress’ purpose
of having a clear national definition of organic production, allowing consumers
to rely on organic labels.
 
According to the complaint, Herb Thyme has multiple
conventional farms and one farm that is properly certified as organic by a
registered certifying agent. When it comes time for distribution and marketing,
however, Herb Thyme allegedly brings its conventionally grown and organic herbs
to the same packing and labeling facility, processes them together, and sends
blended conventional and organic herbs out under the same “Fresh Organic” label
and packaging. Herb Thyme also allegedly packages and labels as organic some
herbs that are entirely conventionally grown.

The trial court and court of appeals found preemption of the state-law consumer
protection claims based on the Organic Foods Production Act of 1990.  The Supreme Court recounted the history
behind OFPA: the rise of consumer demand for “organic” food, but the
persistence of consumer confusion and deception in the absence of uniform
standards.  States reacted first, but
created inconsistent standards.  Congress
responded by creating national standards for the production, labeling, and sale
of organic products. Producers may label products as organic only if they comply
with an approved organic plan; approval must come from either state officials
or private certifying agents.
 
California became the first state to have its own organic
program approved.  Approved state
programs take principal responsibility for certifying growers and instituting
administrative proceedings for noncompliance with the governing standards.
California’s state program authorizes anyone to file a complaint about
noncompliance, and various state authorities may bring enforcement actions and
impose penalties.
 
Express preemption applies to federalize (1) the term
“organic”—a state can’t allow something the feds don’t, and (2) certification
for growers, which must be carried out only by certifying agents who themselves
have been federally accredited.  Whether
production processes qualify as organic is to be measured “only … in
accordance with” the provisions of OFPA. 
However, no such language of exclusivity appears in the provisions
governing sanctions for misuse of the organic label.  There was no reason to conclude Congress
wanted these sanctions to be a ceiling as well as a floor, especially since the
law permits states to adopt more stringent standards governing “organic”
production. Other courts to consider the issue have found no no express
preemption of state consumer protection lawsuits.
 
Herb Thyme argued that obstacle preemption applied.  There’s a presumption against preemption, and
the longstanding interest of the states in protecting consumers against
deception in food labeling makes preemption especially unlikely.  Even if the minority on the Supreme Court who
advocate for removing the presumption against preemption were in charge, it
wasn’t clear that they’d apply a presumptionless test in matters of obstacle
preemption.  State consumer fraud
lawsuits promote Congress’ goals of avoiding consumer deception, building
consumer trust in a standard definition of “organic,” and protecting legitimate
organic producers from having their prices undercut by sharp dealers.  Indeed, the USDA’s final rule adopting
implementing regulations emphasized that a standard definition of “organic”
would aid state enforcement of consumer fraud laws by providing a clear
benchmark.  Because OPFA has no private
right of action, implied preemption “would render organic labeling uniquely
immune from suits for deception because of legislation Congress passed, in
part, to prevent food from being ‘deliberately mislabeled as “organic.”’”  It seems unlikely that Congress intended to do
so. 
 
The Eighth Circuit preempted only consumer protection claims
asserting the defendant dairy should not have been permitted to sell milk as
USDA Organic because its production methods were not actually consistent with
federal regulations—“that is, claims making a frontal assault on the validity
of the organic producer’s government certification.” Nor could consumers sue
the certifying entity on the grounds that it erred either in initially granting
certification or in not revoking certification. But that case expressly
distinguished state law claims that merely challenged the truth of facts
relating to certification.  Herb Thyme
argued that the claims here went to split operations involving both
conventional and organic produce, which are required by regulation to institute
precautions against inadvertent commingling, and thus allowing the case to
proceed would conflict with organic regulations.  If the claim was that Herb Thyme’s
anti-commingling protocols were inadequate for “true” organic production, notwithstanding
the plan’s approval by a federal certifying agent, that might well be
preempted.  But that wasn’t the argument
here: the complaint accepted Herb Thyme’s certification and compliance with
federal regulations on its certified
organic farm
.  It claimed intentional
mislabeling of conventional herbs as organic. “The Organic Foods Act cannot be
interpreted, under the guise of obstacle preemption, as shielding from suit the
precise misconduct Congress sought to eradicate…. [T]hese claims do not
contest Herb Thyme’s ability to do anything its federal certification actually
permits it to do.”
 
Further, the overall scheme was inconsistent with Herb
Thyme’s claim that only one “umpire”—the federal government—should have a say,
since it already delegated lots of decisions to certified growers, state and
local officials, and certifying agents.
 

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