Backus v. ConAgra Food, Inc.

          ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS, AND (2) ORDER FOR LIMITED DISCOVERY

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In this putative class action, defendant food manufacturer moves to dismiss the complaint pursuant to FRCP 12(b)(1) and 12(b)(6). For the reasons stated herein, defendant’s motion is Granted in part and Denied in part, subject to an Order for limited discovery to resolve the issue of standing.

         STATEMENT

         Plaintiff Troy Backus brings this putative class action against defendant’s use and labeling of artificial trans-fat in its margarine products. For many years, Backus purchased and consumed a variety of margarine spreads and sticks under the brand name Fleischmann’s, which is manufactured and sold by defendant ConAgra Foods, Inc. ConAgra’s products contained partially-hydrogenated oil, a food additive derived from low-cost oils. The manufacturing process for partially-hydrogenated oils produces artificial trans-fat with a chemical structure different from most naturally-occurring fat. The chemical properties of artificial trans-fat give partially-hydrogenated oil a longer shelf life as compared to other additives derived from low-cost oils (Amd. Compl. ¶ 4).

         Backus’s complaint cites numerous studies that purportedly link the consumption of artificial trans-fat to increased risk of certain medical conditions such as cardiovascular heart disease, diabetes, breast, prostate and colorectal cancer, Alzheimer’s disease, and organ damage. In particular, the complaint alleges “[t]here is no ‘safe level’ of artificial trans-fat intake” and “any incremental increase in trans-fat increases risk of [cardiovascular heart disease]” (id. at ¶¶ 4-5). The Food and Drug Administration has issued a final determination that partially-hydrogenated oils are no longer “generally recognized as safe.” 80 Fed. Reg. 34650 (June 17, 2015). Pursuant to that determination, manufacturers have until 2018 to remove partially-hydrogenated oils from their products.

         Although all of ConAgra’s margarine products at issue contained partially-hydrogenated oils (and listed those oils among the ingredients of those products), the front and back product labels described the product as containing “0g of Trans-Fat, ” and “No Trans-Fat.” In addition, ConAgra’s labels claim its products contain “100% Less Cholesterol” and “70% Less Saturated Fat” than butter and “[t]he delicious taste of Fleischmann’s enhances your favorite foods while maintaining your healthy lifestyle” (id. at ¶¶ 17-18).

         Backus claims that he relied on the various health and wellness claims appearing on ConAgra’s packaging, which he claims implied the products were healthy. Backus claims that he would not have purchased the margarine products absent these claims (id. at ¶ 14). Backus further claims that he could not have discovered earlier ConAgra’s allegedly unlawful acts described herein because the dangers of artificial trans-fat were unknown to him as a lay consumer (id. at ¶ 24).

         This is not Backus’s first foray into litigation regarding artificial trans-fat. Backus has filed three prior lawsuits regarding artificial trans-fat and food labeling. Backus v. General Mills, Inc., No. 15-1964 (N.D. Cal. Aug. 18, 2015) (Judge Thelton Henderson); Backus v. H.J. Heinz Co., No. 15-2738 (N.D. Cal. Oct. 16, 2015) (Judge William Orrick) (voluntarily dismissed with prejudice), Backus v. Nestle USA, Inc., No. 15-1963 (N.D. Cal. Mar. 8, 2016) (Judge Maxine Chesney) (pending appeal).

         In January 2016, Backus commenced this action against ConAgra and seeks to represent two nation-wide classes, one for persons who purchased ConAgra’s margarine products containing partially-hydrogenated oil and the other for persons who purchased ConAgra’s margarine products in packaging containing the allegedly misleading claims (Amd. Compl. ¶ 25).

         Backus’s complaint alleges various claims for relief for ConAgra’s use of trans-fat, on the basis that using trans-fat in food products is unlawful, and for its product mislabeling, on the basis that its labels misrepresented the product.

         As to the use claims, Backus alleges the following violations: (1) the unlawful prong of California Business and Professions Code Section 17200, (2) the unfair prong of Section 17200, and (3) breach of the implied warranty of merchantability.

         As to the mislabeling claims, Backus alleges the following violations: (1) the unfair prong of Section 17200, (2) the unlawful prong of Section 17200, (3) the fraudulent prong of Section 17200, (4) the California False Advertising Law, California Business and Professions Code Sections 17500, et seq., (5) the California Consumer Legal Remedies Act, California Civil Code Sections 1750, et seq., and (6) breach of the express warranty.

         Backus seeks, among other things, restitution, disgorgement, punitive damages, injunctive relief, and attorney’s fees. ConAgra now moves to dismiss Backus’s complaint pursuant to FRCP 12(b)(1) and 12(b)(6). Additionally, ConAgra requests judicial notice of the complaints and orders pertaining to Backus’s prior lawsuits as well as Backus’s counsel’s public comment on partially-hydrogenated oils. The records are not necessary to this decision. As such, the request for judicial notice is Denied as moot. This order follows full briefing and oral argument.

         ANALYSIS

         First, this order will address whether federal law bars the use claims. Second, it will address express federal preemption and the sufficiency of the mislabeling claims. Third, it will address Article III standing. Fourth, it will provide the details for limited discovery.

         1. Backus’s Use Claims.

         Backus alleges that ConAgra violated California and federal law by including artificial trans-fat in its products.

         A. The Use of Trans-Fat is Not Unlawful Under Federal Law.

         Backus alleges that ConAgra violated the unlawful prong of Section 17200 because it violated federal law by using partially-hydrogenated oils in its food products. Under the unlawful prong, Section 17200 “borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012).

         Backus argues that the sale of food with trans-fat is unlawful because it violates the Federal Food, Drug, and Cosmetic Act in various ways, specifically portions of the FDCA that prohibit the use of “adulterated foods.” The FDCA deems a food “adulterated” if it contains any unsafe food additive. 21 U.S.C. 342(a)(2)(c). Moreover under Section 348(a), the FDA must grant pre-market approval to all food additives. However, the FDCA explicitly exempts from the definition of “food additive” foods Generally Recognized as Safe (GRAS), which is a status of safety “adequately shown through scientific procedures.” 21 C.F.R. 170.30.

         ConAgra’s products contain trans-fat, which is a partially-hydrogenated oil. The FDA recently determined that partially-hydrogenated oils are no longer GRAS, stating that “there is no longer a consensus among qualified experts that partially-hydrogenated oils are ...