Transcript IS IT REALLY ORGANIC? THIRD-PARTY CERTIFICATIONS FOR

IS IT REALLY ORGANIC?
THIRD-PARTY CERTIFICATIONS FOR ORGANIC PRODUCTS
CONSUMER PROTECTION?
PRODUCER PROTECTION?
April 1, 2011
Barry Reingold
Perkins Coie LLP
Organic Foods Production Act of 1990, 7
U.S.C. 6501 et seq., establishes National
Organic Program, 7 C.F.R. pt. 205
• Unhappy with patchwork of state regulation of organic
products, Congress intends to establishes uniform standard
"so that farmers know the rules, so that consumers are sure to
get what they pay for, and so that national and international
trade in organic foods may prosper"
– S. Rep. 101-357 (1990)
No private right of action
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Did Congress intend to preempt false
advertising claims under state law?
• Does NOP structure suggest preemptive intent? Probably not:
– certification program not administered by government agency like
FDA
• still no preemption
– Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)
– Wyeth v. Levine, 129 S. Ct. 1187 (2009)
– 55 DOA-accredited certifying agents throughout USA
• many agent organizations include producers of organic
products whose products are subject to certification
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Certification preempts some but not all
false advertising claims under state law
• In re Aurora Dairy Corp. Organic Milk Marketing and Sales
Practices Litigation, 621 F.3d 781 (Eighth Cir. 2010)
– 19 consolidated consumer class actions against
• milk producers (Aurora Defendants),
• retailers (Wal-Mart. Costco, Publix, Safeway, Target, Wild
Oats), and
• accredited certifying agent (QAI, Inc.).
– core allegation: Aurora products certified by QAI as organic - and
so advertised by Aurora and the retailer defendants - were not
because products were produced by non-organically managed
cows
• non-frivolous claim: Aurora in 2007 had been subject to USDA
revocation proceeding resulting in administrative consent
decree
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But advertising claims at issue neither
uniform nor simple
• milk cartons did not state simply "organic," "USDA organic" or
"made with organic ingredients."
• "For example, several of the cartons featured depictions of
pastoral scenes with cows grazing in pastures, and advertising
the idyllic conditions under which the dairy cows lived.
– Aurora advertised, "As producers of organic milk, our motto is
'Cows First,'" and "We believe that animal welfare and cow
comfort are the most important measures in organic dairy."
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But advertising claims at issue neither
uniform nor simple (cont’d)
– Retailer A represented its milk was "produced without the use of
antibiotics or pesticides, and organic farmers were committed to
the humane treatment of animals."
– Retailer B asserted its dairy cows "enjoy a healthy mix of fresh air,
plenty of exercise, clean drinking water and a wholesome, 100%
certified organic diet."
– Retailer C stated "Our milk comes from healthy cows that graze in
organic pastures and eat wholesome organic feed."
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Plaintiffs also challenged advertising
claims in media other than on the milk
cartons
• Retailer D reported in an article about a visit to Aurora's dairy
farm: "The cows on the farm have quite the life. They feed on a
balanced organic vegan diet and have access to organic
pastures for grazing."
• District Court dismissed, finding all claims preempted by
OFPA.
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Eighth Circuit affirmed in part,
reversed in part
• claim against QAI (certifying organization) based on assertion
it should have revoked Aurora's certification. Claim preempted
because "to the extent state law permits outside parties,
including consumers, to interfere with or second guess the
certification process, the state law is an obstacle to the
accomplishment of congressional objectives of the OFPA." 621
F.3d at 795
• "For similar reasons," claims that Aurora and the retail
defendants "sold milk as organic when in fact it was not
organic are preempted because they conflict with the OFPA."
ibid.
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Eighth Circuit affirmed in part,
reversed in part (cont’d)
– only penalty for selling milk in non-compliance with NOP is
revocation and/or civil penalties through DOA enforcement
actions
– plaintiffs cannot invoke state law to "seek damages from any
party for Aurora's milk being labeled as organic in accordance
with the certification . . " 621 F.3d at 797
• so simple statement on carton "organic," "USDA organic" or
"made with organic ingredients." cannot be basis for challenge
if product has been so certified
– plaintiffs may not raise Buckman Company v. Plaintiffs'
Legal Committee, 531 U.S. 341 (2001), "fraud-on-the-FDA"
types of claims to challenge validity of NOP certification
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BUT state law may be invoked to
challenge "the facts underlying
certification"
• What are those facts?
• Because court did not deal with class certification, did not have
to address key issues:
– Is the fact of NOP certification relevant to plaintiffs' claims?
• Probably not: plaintiffs cannot challenge facts "[ ]related to the
decision to certify [as organic], and certification compliance. . ."
– So how define term "organic" for purposes of litigation?
• "reasonable consumer" standard?
– an invitation to create a "parallel universe"?
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If the term "organic" is effectively off the
table, what
"facts underlying certification" may be
challenged?
Court cites examples:
• Aurora "misrepresent[ed] the manner in which its dairy cows were
raised and fed" and "suppress[ed] or omitted]] material facts
regarding the production of its 'organic' milk or milk products,
specifically that . . the dairy cows were not raised at pasture." 621
F.3d at 799.
• The retailer defendants as a group "misrepresented the manner in
which the dairy cows were raised and fed in violation of state
deceptive trade practices laws and [are] alleged to have suppressed
or omitted material facts regarding the production of [their] products."
621 F.3d at 800.
• Retailer A falsely advertised "that its milk is antibiotic and hormone
free" and "made knowing false statements on its packaging about the
humane treatment of cows." ibid.
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Open Questions
• what are litigable facts?
– whether cows were raised "at pasture"?
– whether cows were treated "humanely"?
• How do "reasonable" consumers interpret these terms?
– consumer surveys?
• How do defendants prove cows were raised "at pasture" and
"humanely"
– expert witnesses?
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Class certification hurdles
• How determine "commonality" and typicality" under Fed. R. Civ. P.
23?
• In re Sears, Roebuck & Co. Tool Marketing and Sales Practices
Litigation, 2009 WL 3460218 (N.D. Ill.)
– Plaintiff alleged that Sears falsely advertised its" Craftsmen" line of tools
as "Made in USA."
– Introduced evidence that 57% of Sears' "do-it-yourself" customers and
72% of "professional" customers would pay 20 to 50% more for a
domestically-made tool.
– Court denies certification, rejecting plaintiff's argument that certification
was mandated because plaintiffs were injured by the "same fraudulent
scheme."
– Certification inappropriate where "advertising for Craftsmen tools varied"
and putative class "was exposed to a varied mix of representations,
communicated through different channels and absorbed in different ways
and to different degrees."
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Uncertain exposure to FTC enforcement
action
• Revised "Green Guides" expressly decline to address organic
food claims covered by NOP standards, or organic textile
claims outside NOP standards
– but Green Guides "substantiation" analysis will apply:
• ". . . to the extent that reasonable consumers perceive organic
or natural claims as general environmental benefit claims or
comparative claims, the marketer must be able to substantiate
those claims and all other reasonably implied claims [as
required by Part V. A. 4 of the Green Guides]. (Green Guides
Summary of Proposal at 136)(emphasis added)
– For producers of NOP-certified organic products, what does
this mean?
» must prove environmental benefits flowing from organic
food production?
– assumption underlying the Organic Foods
Production Act?!
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Questions?
Barry Reingold, Perkins Coie LLP
[email protected]
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