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Ault v. J.M. Smucker Co.

United States District Court, S.D. New York

May 15, 2014

ADRIANNA AULT, individually and on behalf of all others similarly situated, Plaintiff,
v.
J.M. SMUCKER CO., an Ohio corporation, and DOES 1-50, Defendants.

OPINION & ORDER

PAUL A. CROTTY, District Judge.

Plaintiff Adrianna Ault ("Plaintiff") claims to have been mislead by Defendant J.M. Smucker Co.'s ("Smuckers" or "Defendant") marketing of its Crisco Oil products (Crisco Pure Vegetable Oil, Crisco Pure Canola Oil, Crisco Pure Corn Oil, and Crisco Natural Blend Oil) (collectively, "Crisco Oil") as "All Natural" when Crisco Oil comes from soy beans, rapeseeds, and corn, which are genetically modified organisms ("GMO") and therefore do not naturally occur; and also because Crisco Oil is so heavily processed that it is really manmade. This is not the first legal action challenging the labeling of a food product (e.g., corn oil) as "All Natural, " when the source of the product (e.g., corn) is or might be a GMO.

Defendant moves to dismiss for the following reasons: (1) the U.S. Food and Drug Administration's ("FDA") policies and regulations preempt Plaintiff's state law claims; (2) even if there is no preemption, the Court should decline to enter the "All Natural" debate and defer to the FDA as it has primary jurisdiction; (3) Plaintiff's consumer protection claims fail because they do not allege with particularity that Crisco Oil contains GMOs or artificial ingredients or that a reasonable consumer would be misled by Crisco Oil's "All Natural" label; (4) Plaintiff's breach of warranty claim fails because "All Natural" does not constitute a warranty and because Plaintiff lacks privity with Smuckers; and (6) Plaintiff lacks standing to pursue any claims involving Crisco Oils that she did not purchase.

While it might be better for the FDA to commence an administrative proceeding or process, involving all stakeholders, focusing on how, why, and when products can be labeled "All Natural, " the fact is that the FDA has not done so and is not likely to do so in the near future. In these circumstances, Defendant's arguments concerning preemption cannot prevail. While litigating under state false advertising laws has obvious drawbacks, it would be unwise" at least at the pleading stage-to deprive Plaintiff of her state remedy. Accordingly, the Court DENIES Defendant's motion.

COMPLAINT

Plaintiff alleges that Crisco Oil is not "All Natural" because its ingredients are likely derived from GMO. Over 70 percent of U.S. corn, over 90 percent of U.S. soy, and over 80 percent of U.S. canola (rapeseed) crops are GMO, and Smuckers sources its ingredients from U.S. commodity suppliers who supply GMO. Id. ¶ 21. When a producer wishes to use non-GMO ingredients, it must specifically source its crops or purchase and verify its supply from non-GMO growers through identity preservation programs. Id. Having failed to lay claim to either method or to label its products as non-GMO, Plaintiff concludes that it must be that Smuckers uses GMO in Crisco Oil. Id. 21-22. Plaintiff also points to Smuckers's "Statement Regarding Genetic Modification, " where it stated that "[d]ue to expanding use of biotechnology by farmers and commingling of ingredients in storage and shipment, it is possible that some of [Smuckers'] products may contain ingredients derived from biotechnology." Id. ¶ 22.

Plaintiff also claims that the ingredients are not "All Natural" because their processing deprives them of the chemical properties of the plants from which they originated and therefore renders the final products chemically-derived and non-natural. Id. ¶ 24. Crisco Oil undergoes five chemical processes. Id. ¶ 26. First, a physical press is applied to the vegetables to extract the oil. Any remaining oil in the vegetables is extracted with the chemical Hexane, which may be present in the final product. Id. Third, the crude oil is neutralized with an alkaline soap solution that separates and removes the free fatty acids. The solution is separated from the oil using potassium hydroxide, a corrosive acid. Id. ¶ 28. Finally, the oil is bleached and deodorized using additional cleaning solutions and conditioned using high-concentration phosphoric acid. Id. ¶¶ 29-30.

Plaintiff purchased Crisco Oil products in the past four years "in reliance on Defendant's representations that the Products are All Natural.'" Id. ¶ 8. This representation was material to her decision to purchase the products, and Plaintiff suffered injury as a result. Id. Plaintiff alleges that Smuckers's advertising of Crisco Oil violates New York General Business Laws §§ 349 and 350 and breaches its express warranty that Crisco Oil is all natural. She brings this action on behalf of all purchasers of Crisco Oil from May 15, 2009 until the class action notice is disseminated. Id. ¶ 31.

DISCUSSION

I. Legal Standard

To state a claim, a plaintiff must "provide the grounds upon which his claim rests through factual allegations sufficient to raise a right to relief above the speculative level.'" ATSI Comm'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Ad. Corp. v. Tworaly, 550 U.S. 544, 555 (2007)). Plaintiff must allege "enough facts to state a claim to relief that is plausible on its face.'" Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true all well-pleaded factual allegations and draws all inferences in Plaintiffs favor. See Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). In evaluating a motion to dismiss, the Court "may consider any written instrument attached to the complaint, statements or documents incorporated into the complaint by reference... and documents possessed by or known to the plaintiff and upon which [he] relied in bringing the suit." ATSI, 493 F.3d at 98.[1]

II. Plaintiffs Claims Are Not Preempted by FDA Policies

Defendant argues that Plaintiff's New York General Business Laws §§ 349 and 350 claims are preempted by FDA policies. Preemption of state law occurs through the "direct operation of the Supremacy Clause." Kurns v. R.R. Friction Prods. Corp., 132 S.Ct. 1261, 1265 (2012) (internal quotations omitted). Even without an express provision for preemption, state law must yield to federal law when there is a conflict with a federal statute or when the scope of a federal statute indicates that Congress intended federal law to occupy a field exclusively. See id. at 1265-66. Here, there is no indication that Congress intended the FDA to occupy the entire field of food labeling. See Lockwood v. Conagra Foods, Inc., 597 F.Supp.2d 1028, 1032 (N.D. Cal. 2009). As a result, the state law claims are preempted only if they seek to impose requirements that conflict with federal requirements.

Defendant first claims that the state law claims conflict with "a series of FDA policies regarding bioengineered foods." See Defendant's Memorandum of Law in Support of Motion to Dismiss ("Def.'s Mot"), ECF No. 25 at 12. According to Defendant, even informal FDA policies regarding the use of the term "natural" can preempt state law. See id. In support, Defendant cites to Grocery Manufacturers of America, Inc. v. Gerace, 755 F.2d 993 (2d Cir. 1985), where the Second Circuit held that New York law imposed cheese labeling requirements regarding the precise size of the letters and location of the word "imitation" that did not "comport exactly with the federal specifications." Id. at 1002. But no federal specifications exist here. See Letter from Tina Wolfson to the Hon. Paul A. Crotty, January 7, 2014, ECF No. 32, Ex. 1 at 2 [hereinafter "January 6, 2014 FDA Letter"] ("FDA has not promulgated a formal definition of the term natural' with respect to foods."). Even if an informal FDA definition does exist, the term "natural" "may be used in numerous contexts and may convey different meanings depending on that context." 75 Fed. Reg. 63552, 63586 (Oct. 15, 2010). Indeed, that is one of the reasons the FDA has never adopted a formal definition. Pelayo v. Nestle USA, Inc., No. CV 13-5213, 2013 WL 5764644, at *5 (C.D. Cal. Oct. 25, 2013). Notably, the FDA has declined to consider the specific issue here: "whether and under what circumstances ...


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