When Robert Reid visited Albertsons in Oceanside, California, he spotted something different on the condiment shelf. There was a package with a picture of a heart-shaped, buttery spread resting on a toasted English muffin. The spread looked a lot like margarine. This was no ordinary margarine though—it was Benecol. The packaging left the impression that Benecol is not only tasty, but a health food. “Proven to Reduce Cholesterol” it read. “No Trans Fat” and “No Trans Fatty Acids.” Reid bought the marketing and bought Benecol not once, but several other times.
Years later Reid learned his faith in Benecol was misplaced. That “No Trans Fat” claim on the package? False. The truth: Bencol contains at least some trans fat. And what about those cholesterol claims? The trans fat in Benecol actually counteracts the spread’s cholesterol-lowering properties.
Reid brought a federal class action lawsuit against Johnson & Johnson and McNeil Nutritionals (collectively “McNeil”), the makers of Benecol. Reid’s complaint contained claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. McNeil asked the district court to dismiss Reid’s complaint on the basis of standing, preemption, primary jurisdiction, and abstention.
The district court dismissed Reid’s complaint on standing and preemption grounds. In Reid v. Johnson & Johnson, No. 12-56726 (9th Cir. 2015), the Ninth Circuit reversed. After finding Reid had standing to pursue the claims, slip op. at 9–11, the court turned to McNeil’s argument that Reid’s state law claims are preempted by the Federal Food, Drug, and Cosmetic Act (“FDCA”) and the Food and Drug Administration’s (“FDA”) related regulations.
The “No Trans Fat” Claim
The Ninth Circuit first dealt with Reid’s claim that McNeil’s “No Trans Fat” labeling violated California law. The court first set out the framework for food regulation. In 1990, Congress passed the Nutritional Labeling and Education Act (“NLEA”). NLEA brought about the familiar Nutrition Facts Panel on food packages. NLEA includes a preemption provision to ensure the Nutrition Facts Panel is uniform across the United States. A state law that requires something in the Nutrition Facts Panel that differs from FDA regulations is preempted. At the same time, the Ninth Circuit observed that “NLEA does not preempt state law-based causes of action that are identical to the federal labeling requirements.” Reid, slip op. at 12.
The court determined that the fate of the “No Trans Fat” claim “turns on whether the statement is authorized by FDA regulations.” Id. at 17. The Ninth Circuit concluded that the “No Trans Fat” claim was not authorized by FDA for two reasons. First, FDA sent a warning letter in which it referred to a “No Trans Fat” claim as an “unauthorized nutrient content claim.” Id. at 18. Second, FDA regulations forbid nutrient content claims that are “false or misleading in any respect.” 21 C.F.R. § 101.13(i)(3). FDA promulgated a separate rule allowing “No Fat” and “No Saturated Fat” claims for food “that contains less than 0.5 grams of fat or saturated fat by serving.” Reid, slip op. at 19. FDA would not have “go[ne] to the trouble of promulgating” that rule if those claims were already not false or misleading under section 101.13(i)(3). Since FDA expressly accepted “No Fat” and “No Saturated Fat” claims, the court found FDA’s refusal to do the same for “No Trans Fat” meant the claim is not authorized. The Ninth Circuit found the claim was not preempted. Id. at 20.
The Cholesterol-Lowering Claim
The court next turned to Reid’s claim against McNeil for its marketing Benecol as a cholesterol fighter. McNeil conceded that its cholesterol claims “fall short” of what FDA permits in 21 C.F.R. § 101.83(c)(2). Reid, slip op. at 20. Regardless, McNeil maintained Reid’s claim was preempted due to a 2003 FDA letter in which the agency stated it intends to exercise enforcement discretion with respect to cholesterol claims like the ones on Benecol’s packaging.
The Ninth Circuit rejected McNeil’s argument. The court held that “the 2003 letter lacks preemptive effect.” Id. at 23. The court declined to apply deference to the agency’s statement under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), since such actions “do not carry the force of law.” Reid, slip op. at 23. Even so, the court found that the 2003 statement’s own terms did “not authorize any health claims that conflict with the FDA’s existing . . . rule.” Id. Further, FDA “did not intend to foreclose state law challenges to health claims that do not comply with existing [FDA] rules.” Id. at 24.
The Supreme Court’s decision in POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014), provided a lesson for FDA-regulated industries. Mere compliance with a FDA regulatory standard does not insulate a party from false advertising liability under the Lanham Act. Reid is not the same as POM Wonderful. Reid’s claims were based on state, not federal law. Further, Reid alleged that McNeil’s labeling did not facially comply with FDA regulations.
Reid illustrates the risk of noncompliance. Reid opens the door for consumers to sanction companies for noncompliance with the FDCA through state law claims. A company making questionable marketing claims under the FDCA might not raise FDA’s ire, but could face a consumer class action suit instead.
Query whether claims like those in Reid represent an end run around FDA’s exclusive authority to enforce the FDCA. 21 U.S.C. § 337(a). A petition pending at the Supreme Court could shed light on this question. Athena Cosmetics, Inc. v. Allergan, Inc., presents the question whether a state unfair competition claim premised on a party’s alleged failure to obtain FDA approval for a product is preempted. The Court is currently waiting for the Solicitor General to provide his views on the petition.