Kosta v. Del Monte: Federal Court Upholds Food Labeling Claims

A California federal judge has largely rejected efforts by food giant Del Monte to dismiss the claims in a consumer class action alleging violations of California’s Food, Drug, and Cosmetics Act (FDCA). See Kosta v. Del Monte Corp., No. 12-1722 (N.D. Cal. May 15, 2013) (order on motion to dismiss, available here). The plaintiffs allege FDCA violations based on Del Monte’s packaging and labeling of pasteurized and chemically preserved fruit (typically found in opaque cans on supermarket shelves) in transparent containers and with a deceptive “Must Be Refrigerated” label. The company is also accused of labeling vegetables containing calcium chloride as having “No Preservatives”, and labeling as “natural” tomatoes containing citric acid. See Order at 2-3.

Del Monte sought to foreclose these issues from ever being assessed on the merits with a motion to dismiss based on standing, preemption, and abstention. See Order at 4-6. While District Court Judge Yvonne Gonzalez Rogers formally denied in part and granted in part the motion, as a practical matter the motion was denied, as the claims emerged nearly fully unscathed.

Del Monte’s basis for dismissal with perhaps the broadest resonance was its theory that the named plaintiffs lacked standing by not having plead injury-in-fact. See Order at 15-17. Specifically, Del Monte argued that the diminution in value alleged by the plaintiffs (i.e., the quantum by which the products were priced above their true market value owing to the deceptive labeling) was insufficiently tangible and particularized to satisfy Article III standing requirements. Id. Additionally, Del Monte contended that the plaintiffs failed to satisfy purportedly more exacting standing requirements under California’s Unfair Competition Law. Id. The court sided with the plaintiffs, however, holding: “Plaintiffs allege they paid a premium for Del Monte’s products which they otherwise would not have paid but for Del Monte’s misrepresentations. As with Article III standing, the Court finds that Plaintiffs have alleged economic injury resulting from Del Monte’s alleged unfair competition and false advertising.” Order at 17.

Del Monte had argued that the claims are preempted by federal food-labeling legislation, the determination of which turned on whether the plaintiffs’ claims seek to impose labeling requirements in excess of those mandated by federal law. Order at 7. Judge Rogers held that there was no federal preemption, as the plaintiffs sought to impose labeling requirements coextensive with federal law. Order at 10-11. Additionally, Judge Rogers rejected Del Monte’s theory of implied preemption. Order at 13.

No more availing was Del Monte’s abstention theory, based on the primary jurisdiction doctrine, which allows trial courts to stay cases pending resolution of the same issues by an administrative agency with special competence in the issue being litigated. See Order at 13-14. Del Monte posited the FDA to be the federal agency with special food labeling competence, but because the plaintiffs’ claims did not encroach on the FDA’s role in promulgating regulations, and merely sought to enforce what the FDA and California law both already required, the abstention theory of dismissal was also rejected. Order at 15.