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All One God Faith, Inc. v. Organic and Sustainable Industry Standards

April 13, 2010

ALL ONE GOD FAITH, INC., PLAINTIFF AND APPELLANT,
v.
ORGANIC AND SUSTAINABLE INDUSTRY STANDARDS, INC., DEFENDANT AND APPELLANT.



(San Francisco County Super. Ct. No. CGC-08-474701). John E. Munter, Judge.

The opinion of the court was delivered by: Bruiniers, J.

CERTIFIED FOR PUBLICATION

The federal government imposes mandatory standards governing the marketing of "organic" food and agricultural products, but provides only voluntary and permissive criteria for "organic" personal care products, such as soaps and lotions. (7 U.S.C. § 6501 et seq.; Organic Foods Production Act of 1990.) A trade association, Organic and Sustainable Industry Standards, Inc. (OASIS), seeks to develop a standard that would provide a definition of "organic" specific to beauty and personal care products and would permit its members whose products meet this standard to advertise using an "OASIS Organic" seal on the product. All One God Faith, Inc., who does business as Dr. Bronner's Magic Soaps (Dr. Bronner), filed suit against OASIS and certain of its members, alleging that this certification would constitute unfair competition and misleading advertising. OASIS filed a special motion to strike Dr. Bronner's claim against it pursuant to the anti-SLAPP statute,*fn1 Code of Civil Procedure section 425.16.*fn2 OASIS appeals from the trial court's denial of its motion. Dr. Bronner has filed a protective cross-appeal, contending that the motion should have also been denied under section 425.17. We affirm.

I. Factual and Procedural Background*fn3

A. Dr. Bronner's First Amended Complaint

Dr. Bronner filed suit in the San Francisco Superior Court seeking injunctive relief against several of its competitors and against OASIS under California's Unfair Competition law. (Bus. & Prof. Code, § 17200 et seq.) Only the third cause of action is directed against OASIS.*fn4 According to Dr. Bronner's first amended complaint (FAC), Dr. Bronner "engages in the business, among other things, of manufacturing and selling... personal care and cosmetic products including the nation's top-selling natural brand of liquid and bar soap in a number of varieties under the `Dr. Bronner's Magic Soaps' brand and lotions, hair rinses, shampoos, hair conditioners, shaving gels and balms under the brand, `Dr. Bronner's Magic.' " Dr. Bronner's products are labeled either as "Made with Organic Oils" or as "Organic" in accordance with voluntary criteria promulgated by the U.S. Department of Agriculture's (USDA) National Organic Program (NOP), established under the Organic Foods Production Act of 1990.*fn5 (7 U.S.C. § 6501 et seq.)

As the FAC explains, "[t]he NOP criteria only govern personal care products that voluntarily represent or imply that they meet the NOP criteria or carry the USDA organic seal. The NOP regulations do not apply to personal care products that represent that they are organic but do not purport to comply with the NOP organic criteria and do not carry or imply that they carry the USDA organic seal." Under the NOP criteria, a personal care product labeled "Organic" must contain at least 95 percent organically produced ingredients (excluding water and salt) and remaining ingredients must consist of approved nonagricultural substances or nonorganically produced agricultural products that are not commercially available in organic form. Furthermore, under the NOP criteria, a personal care product labeled "Organic" or "Made with Organic [specified ingredients]" cannot contain any cleansing or moisturizing agents made of synthetic petrochemicals or petrochemical compounds. Processes such as hydrogenation and sulfation are not permitted to produce such agents.

Dr. Bronner alleges that OASIS is a commercial trade association and that its members include many of the other named defendants, who sell competing personal care products. Dr. Bronner alleges that OASIS was designed to represent and promote the commercial goals of its member companies in their efforts to sell "organic" personal care products. According to Dr. Bronner's FAC, "[t]he primary immediate goal of OASIS has been to issue an industry standard for `organic' personal care products, and to promote the commercial and sales goals of its members in the marketplace seeking to sell body care products to consumers seeking to purchase organic products. In doing so, OASIS acts as the agent of its trade association members as to whose products OASIS promotes through its purported certifications."

Dr. Bronner contends that OASIS issued a new standard that would allow a product to be labeled as "Organic" even if containing cleansing agents made from nonorganic material that has been hydrogenated and/or sulfated, and preserved with synthetic petrochemicals. According to the allegations of the FAC, the development of the OASIS standard was "promoted principally by Defendant [Estée] Lauder[, Inc. (Estée Lauder)] but... was also supported by other Defendants including Hain Celestial [Group, Inc. (Hain Celestial)] and Cosway [Company, Inc. (Cosway)]."*fn6 Dr. Bronner alleges that it has been informed that Estée Lauder "plans to imminently label its products as certified `Organic' in accordance with the [OASIS] standard...."*fn7 Dr. Bronner seeks injunctive relief, claiming that "[u]nless OASIS is enjoined from such deceptive certification of products, and [Estée] Lauder is enjoined from marketing such products, Dr. Bronner's will lose business to Defendants [Estée] Lauder and other companies, as a result of the fact that Defendant OASIS's certification of these products as `Organic' constitutes an unfair and unlawful business practice and false and deceptive advertising, in that consumers... will be misled into buying these OASIS-certified products instead of personal care products manufactured and sold by Dr. Bronner's." In its prayer for relief, Dr. Bronner asks that OASIS "be permanently enjoined from certifying as `Organic' any product for sale within the State of California which cannot lawfully be labeled as `Organic' under the NOP criteria...."

B. OASIS's Motion to Strike and Supporting Declarations

OASIS moved to strike Dr. Bronner's third cause of action pursuant to section 425.16, arguing that OASIS was being sued for exercising its right to free speech-specifically, articulating and publishing its "OASIS Organic" standard. OASIS submitted a declaration from its Volunteer Chair of the Board of Directors, Gay Timmons (Timmons), which provides background information about OASIS.

OASIS is a mutual benefit trade association, organized under Internal Revenue Code section 501(c)(6),*fn8 "formed in 2007 to promote the production of organic and sustainable health and beauty care products." OASIS does not produce or manufacture any cosmetic or personal care products, nor is it engaged, or does it intend to be engaged, in the business of selling or leasing goods or services. OASIS aims to provide the following services: (1) "[d]evelop, maintain, and administer verifiable certification standards for health and beauty products"; (2) "[p]rovide a forum for educating and communicating to consumers and trade members of the health and beauty industry"; (3) "[p]articipate and advocate for its members in the global marketplace for international collaboration on standards for health and beauty products"; (4) "[s]erve as a link between interested industry producers and qualified suppliers"; and (5) "[c]ommunicate, interact, and collaborate with other agencies concerned with improving the sourcing and longterm environmental and health impact of [h]ealth and [b]eauty products.... [¶]... OASIS's members range from large, global brands and private label manufacturers of beauty and personal care products to small, specialty brands, raw ingredient manufacturers, and ingredient suppliers." The OASIS Board is comprised of ten members, three of whom are affiliated with either defendants Cosway, Estée Lauder, or Hain Celestial. The declaration also explains that "[Estée] Lauder holds only one of the seats on the OASIS Board. OASIS is in no way dominated or controlled by [Estée] Lauder. Nor has [Estée] Lauder played the leading role in creating or promoting the `OASIS Organic' standard."

The declaration further provides that, for several months before the motion to strike was filed, OASIS had been working to develop an "OASIS Organic" standard that would provide a definition of "organic" specific to beauty and personal care products. At the time the motion to strike was filed, OASIS had not yet completed its formulation of the standard, but had released a series of draft standards to the industry and public, via its website, for comment. OASIS had also received approximately 50 inquiries from members of the public regarding its draft standards. Once the standard is finalized, those of OASIS's members "whose products meet the `OASIS Organic' standard, as determined by [a] third party certification agent, may then choose to advertise their products as meeting the `OASIS Organic' standard [by] display[ing] the `OASIS Organic' certification mark on the product."*fn9 The "OASIS Organic" seal appears as a circle, with the word "oasis" inside the circle, and the word "organic" appearing in larger font below the circle. If an OASIS member chooses to so advertise, it must "indicate that the `OASIS Organic' standard was employed, display the `OASIS Organic' certification mark on the product, and direct [its] consumers to the details of the standard." OASIS intends to publish the final standard to the general public so that the public has access to what "OASIS Organic" means.

At the time the motion to strike was filed, OASIS had not yet authorized any entity to use the "OASIS Organic" label and no product bearing the "OASIS Organic" seal was on the market, or likely to be on the market for at least several months. Timmons declares that OASIS itself does not currently certify, and does not plan to certify any products. OASIS only intends to set the standard that will be employed by third party certification agents who will perform all product certification.

OASIS also submitted, in support of its motion to strike, three newspaper articles, dating from the 1970's, on the topics of "natural" and "organic" food and cosmetics.

C. Dr. Bronner's Opposition to the Motion to Strike

Dr. Bronner opposed the motion to strike, arguing that it had not challenged speech "in connection with a public issue or an issue of public interest," as required by section 425.16. Alternatively, Dr. Bronner argued that OASIS's commercial speech was specifically exempted from the protections of the anti-SLAPP statute by section 425.17, subdivision (c).*fn10

The parties stipulated that the trial court, in deciding the motion, could consider the application, obtained from OASIS's website, by which one applies to become a member of OASIS. The membership application provides: "Welcome to OASIS, an organization whose purpose is to support organic and sustainable Health & Beauty consumer goods. OASIS meets the unprecedented consumer demand for reliable production standards for companies pursuing a greater share of the Organic and Sustainable Market.... [¶]... [¶] Organic And Sustainable Industry Standards - OASIS - was formed by a group of concerned trade professionals, and we are pleased to invite you to join today. Join as a voting member if you plan on certifying a Health and Beauty product or ingredients made using organic raw materials. Join as a supporting member if you work in a supporting role in the production of sustainable Health and Beauty products." (Boldface omitted.) The application describes OASIS's mission: "OASIS is dedicated to providing verifiable standards that support and promote organic and sustainable production for the Health and Beauty Industry, utilizing principles of incremental improvement and continuous change. The OASIS seal provides assurance to the consumer of credible value for organic and sustainable claims on OASIS products." (Italics omitted.)

The application also provides: "The By Laws of OASIS define that `voting' members must either be in the process to become certified for a product or have been certified." Voting membership fees range from $300 to $5,000. The suggested membership fee for a supporting member is $100.

D. The Trial Court Ruling and Current Appeal

By trial court order, not contained in the record but acknowledged by the parties, briefing and argument on the motion to strike was bifurcated, with the first portion of the hearing limited to the threshold question of whether OASIS's alleged conduct constituted an "act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue."

On October 8, 2008, the court denied OASIS's motion to strike in an order stating only that the motion was denied (October 8 Order). OASIS filed a timely notice of appeal from the October 8 Order. Dr. Bronner filed a motion to dismiss the appeal, asserting that the trial court could have based its denial of the motion to strike on the commercial speech exemption contained in section 425.17, subdivision (c) and, if so, the October 8 Order was not appealable pursuant to section 425.17, subdivision (e).*fn11 We deferred ruling on the motion to dismiss and ordered the trial court to file "an amended order clarifying the reason why it denied the motion to strike."

In response, the trial court filed an amended order (Amended Order), which clarifies that the motion to strike was denied under section 425.16 alone and was "not based in any part upon... section 425.17." The Amended Order further provides: "The alleged conduct of OASIS does not constitute an `act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' within the meaning of section 425.16. Authorities supporting that conclusion include Kasky v. Nike, Inc. (2002) 27 Cal.4th 939 [(Kasky)], Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39 [(Nagel)], and Consumer Justice Center v. Trimedica International, Inc. (2003) 107 Cal.App.4th 595 [(Trimedica)]." With respect to section 425.17, the trial court stated: "The alleged conduct of OASIS does not fall under section 425.17[, subdivision] (c) because OASIS, while a trade group consisting of, and acting on behalf of, its members who are in the business of selling goods, is not itself `a person primarily engaged in the business of selling or leasing goods or services.' The plain language of section 425.17[, subdivision] (c) does not extend to trade associations not themselves engaged in the business of selling or leasing goods or services, and to this Court's knowledge there is no appellate decision holding or stating otherwise."

Thereafter, we denied Dr. Bronner's motion to dismiss OASIS's appeal. Dr. Bronner also filed a timely cross-appeal from the Amended Order. OASIS moved to dismiss Dr. Bronner's cross-appeal on the grounds that Dr. Bronner was not aggrieved by the Amended Order. We denied the motion.*fn12

II. Discussion

A. The Anti-SLAPP Statute

The Legislature adopted the anti-SLAPP statute in 1992, finding that "it is in the public interest to encourage continued participation in matters of public significance, and... this participation should not be chilled through abuse of the judicial process." (§ 425.16, subd. (a).) Section 425.16, subdivision (b)(1) provides that "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." In order to protect the constitutional rights of petition and free speech, the statute is to be broadly construed. (§ 425.16, subd. (a).)

The Supreme Court has "summarize[d] a court's task in ruling on an anti-SLAPP motion to strike as follows. Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant's burden is to demonstrate that the act or acts of which the plaintiff complains were taken `in furtherance of the [defendant]'s right of petition or free speech under the United States or California Constitution in connection with a public issue,' as defined in the statute. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon), first bracketed material added.)

The question of whether an anti-SLAPP motion to strike should have been granted is reviewed independently. (Salma v. Capon (2008) 161 Cal.App.4th 1275, 1283; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 839; Trimedica, supra, 107 Cal.App.4th at p. 599.) Contrary to Dr. Bronner's suggestion, the trial court does not make factual findings in ruling on an anti-SLAPP motion. (See HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212 ["court considers the pleadings and evidence submitted by both sides, but does not weigh credibility or compare the weight of the evidence"].) Accordingly, we independently review "whether the anti-SLAPP statute applies to the challenged claim. [Citation.] Furthermore, we apply our independent judgment to determine whether [plaintiff's] causes of action arose from acts by [a defendant] in furtherance of [defendant's] right of petition or free speech in connection with a public issue. [Citations.]" (Thomas v. Quintero (2005) 126 Cal.App.4th 635, 645.)

B. OASIS Has Not Met Its Burden of Showing that the Challenged Cause of Action Arises from Protected Activity under the Anti-SLAPP Statute

1. OASIS's Certification Activities are not in Furtherance of its Speech in Connection with a Public Issue or Issue of Public Interest

The trial court here addressed only the first step of the two step Equilon process, and denied the motion on the basis that OASIS had failed to show that it had engaged in protected activity. We likewise review this threshold question. We consider whether the trial court correctly concluded that Dr. Bronner's cause of action does not arise from acts in furtherance of OASIS's constitutional right of petition or free speech in connection with a public issue, as required by section 425.16, subdivision (b)(1). "In doing so we review primarily the complaint, but also papers filed in opposition to the motion to the extent that they might give meaning to the words in the complaint. [Citations.]" (Dible v. Haight Ashbury Free Clinics, Inc. (2009) 170 Cal.App.4th 843, 849 (Dible); accord, § 425.16, subd. (b)(2).)

We believe the trial court was correct. While the act of formulating a proposed industry "organic" standard may constitute protected activity, we find that the certification of products which Dr. Bonner seeks to enjoin in its third cause of action is not. Contrary to the conclusion reached by the dissent, we hold that OASIS's certification activities do not constitute "conduct in furtherance" of OASIS's formulation of the standard. (§ 425.16, subd. (e)(4), italics added.)

"The anti-SLAPP statute's definitional focus is not the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability-and whether that activity constitutes protected speech or petitioning." (Navellier v. Sletten (2002) 29 Cal.4th 82, 92; accord, Stewart v. Rolling Stone LLC (2010) 181 Cal.App.4th 664, 679 (Stewart).) "But the mere fact an action was filed after protected activity took place does not mean it arose from that activity." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76-77.) Nor does the fact "[t]hat a cause of action arguably may have been triggered by protected activity" necessarily mean that it arises from such activity. (Id. at p. 78.) Rather, "[t]he trial court must instead focus on the substance of the plaintiff's lawsuit in analyzing the first prong of a special motion to strike. [Citations.]" (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 669-670 (Peregrine Funding).) ...


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