Reversing an order from the Southern District of California, the Ninth Circuit has held that state law false advertising claims based on “No Trans Fat” statements on the butter/margarine substitute Benecol are not preempted by federal law.
Robert Reid filed class claims for violations of California’s Consumer Legal Remedies Act, Unfair Competition Law and False Advertising Law, arguing that representations on the labeling of Benecol – among them “No Trans Fat”, “No Trans Fatty Acids” and “Proven To Reduce Cholesterol” – were misleading to consumers because the product did contain trans fat (albeit a very small amount) and that this fat counteracted the cholesterol-reducing benefits of the product.
The lower court granted defendants’ motion to dismiss for several reasons, chief among them that the state law claims were preempted under federal law because 1) defendants’ trans fat and cholesterol reduction statements complied with FDA regulations, making any inconsistent prohibitions under state law unlawful; and 2) defendants’ statements regarding the cholesterol-reducing benefits of plant stanol esters complied with a 2003 FDA letter.
The Ninth Circuit flatly rejected both of these preemption arguments.
The foundation for defendants’ preemption argument is The Nutritional Labeling and Education Act (“NLEA”), an amendment to the FDCA which sets “uniform food labeling requirements” for food products sold in the United States, including representations on the Nutrition Facts Panel. Importantly, the NLEA requires that no state may “directly or indirectly establish any requirement for the labeling of food that is not identical” to federal requirements. “Not identical” means the imposition of standards that are either not the same, or are in addition to, existing federal regulations.
The FDA generally forbids “nutrient content claims” that “expressly or implicitly characterize the level of a nutrient” from being present on food labels. Limited exceptions to this rule exist, such as statements about the amount/percentage of the ingredient which are consistent with labeling regulations (i.e., “less than 3 g of fat per serving”). A nutrient content claim is unlawful if it is false or misleading in any respect.
FDA does allow nutrient content statements inside the “Nutrition Facts” box – meaning that statements of nutrient content “inside the box” on a label are not subject to the same regulations/prohibitions that a statement “outside the box” would be. As the Ninth Circuit put it, “a requirement to state certain facts in the nutrition label is not a license to make that statement elsewhere on the product.”
The FDA Does Not Allow “No Trans Fat” Claims When A Negligible Amount of Trans Fat Is Present
Defendants claimed that, because FDA regulations allow a nutrition label to identify zero grams of trans fat when a product contains less than 0.5 grams/serving, and products may have nutrient content claims “outside the box” like “fat free,” “no fat,” etc. when a food contains less than 0.5 grams of fat/serving, any claim that a “No Trans Fat” nutrient content statement was false because Benecol contains a negligible amount of trans fat was preempted.
The Ninth Circuit disagreed for multiple reasons.
First, it cited two guidance letters from the FDA indicating that “No Trans Fat” is an unauthorized nutrient content claim.
Second, the Court noted that FDA expressly allows “No Fat” and “No Saturated Fat” nutrient content claims for products containing less than 0.5 grams/serving of fat or saturated fat. FDA did not extend the same application to “No Trans Fat” nutrient content claims based on lack of scientific information. Without being an exception to “outside the box” nutrient content claims, the negligible amount of trans fat in the product made the claims “No Trans Fat” false and, therefore, a state law challenging the representation was not preempted.
Third, in an almost throw away comment, the Ninth Circuit rejected arguments that a reasonable consumer was not misled by the statement because they would infer that Benecol contains trans fat because partially hydrogenated vegetable oil is disclosed as an ingredient. The Court held there was no reason to believe that a reasonable consumer had this understanding.
An FDA Letter Does Not Preempt State Law Claims
As to the plant stanol esters, defendants conceded the statements did not meet requirements under formal regulations, but claimed the statements met requirements stated in a 2003 FDA letter that “created [a] federal policy preempting state law.”
In order to have a preemptive effect, any agency pronouncement “must have the force and effect of federal law.” Citing the Supreme Court’s decision in Chevron, the Ninth Circuit said that a key inquiry is whether the agency intended the pronouncement to have such effect.
Here, the Court Found there was no such intent. The 2003 letter was “couched in tentative and non-committal terms,” and does not promise any FDA enforcement. The Court went on to note that giving such a letter preemptive effect would allow the FDA to shortcut law-making, without any requirement for notice and comment.
Preemption Continues To Be A Difficult Defense
Despite the recent favorable decision in Pom Wonderful, the Reid opinion shows that the preemption defense continues to be a hard pill for courts (particularly in the Ninth Circuit) to swallow. Courts will look very hard for reasons why preemption is inappropriate, digging into regulations, statutes, and underlying legislative intent. Unless there is a very clear case of state law contradicting federal law (and not just guidance in, say, an FDA letter) practitioners and clients should not be surprised when courts refuse to credit these defenses.