Wednesday, August 19, 2009

"All Natural" Labeling Laws

Last week's opinion from the Third Circuit underscores the difficulty faced by manufacturers to comply with the plethora of product labeling laws. A class action is pending in New Jersey against Snapple for selling beverages labeled as "All Natural." The claim is that the All Natural label is deceptive because the Snapple beverage contains a non-natural, man-made substance -- high fructose corn syrup. The claim was brought under New Jersey statutory and common law for, in essence, misrepresentation relating to false labeling.

Snapple argued that state law is preempted by federal law, including the federal Nutrition Labeling and Education Act (NLEA) and Federal Food, Drug, and Cosmetic Act (FDCA). But the Third Circuit held that there is no preemption by federal law. State law relating to false labeling of food and beverages can concurrently exist alongside the federal regimen.

First, the Third Circuit points out the presumption against preemption. This is particularly true for laws dealing with health and safety, in that states have traditionally been the source of regulation of health and safety issues. Specifically, the court recites that food labeling is an area historically governed by state law.

Second, the court holds that Snapple waived any claim for express preemption at the trial court level. Nonetheless, the Third Circuit suggests that express preemption does not exist under the NLEA since the NLEA regulates what a label must disclose rather than what is voluntarily, and inaccurately, disclosed.

Third, the court points out that Congress did not intend to preempt the field regarding food labeling, as there is no expression of clear Congressional intent to do so. The NLEA provides that it does not preempt state food labeling laws. Further, there was no express preemption language included by Congress in food labeling laws prior to the NLEA. Importantly, the FDA has stated that it does not seek to be the sole labeling regulator for food and beverages.

To be sure, the FDA issued a policy statement defining "natural" as excluding anything synthetic or artificial. But this policy statement does not constitute an FDA rule. Because of limited resources, the FDA did not engage in rulemaking to establish a rule-based definition of "natural." In light of the FDA's position, the Third Circuit declined to view the FDA as intending to be the sole regulator of food and beverage labels.

The court held that state regulation of food and beverage labeling does not conflict with federal labeling laws. State food and beverage labeling law is not preempted by federal labeling law.

Not only must a food and beverage manufacturer comply with numerous federal labeling laws, including the NLEA, FDCA, and the Alcohol and Tobacco Tax and Trade Bureau beer and wine labeling regulations, but also the separate labeling laws of each state, as determined by the Third Circuit. Food and beverage manufacturers must be vigilant in understanding the particular labeling requirements of each state where product is distributed.

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