Date: May 13, 2015
In Segedie v. The Hain Celestial Group, Inc., a trial court in the Southern District of New York held that plaintiffs had properly stated a claim of consumer fraud based on alleged misuse of the term “organic.” The court rejected the defendant’s argument that the plaintiffs’ claim is preempted by federal law.
Leah Segedie and Dmitriy Shneyder are alleged purchasers of certain “Earth’s Best” branded food, body care, and home care products. The plaintiffs claimed that 62 food products and 12 body care products were misleadingly labeled as “organic.” Defendant sought to dismiss the challenge to the organic claims in part on the basis that those claims are preempted by the Organic Food Production Act of 1990 (OFPA) and the National Organic Program (NOP) regulations, as well as the authority of the decision by the United States Court of Appeals for the Eighth Circuit in In re Aurora Dairy Corp. Organic Mil Mktg. & Sales Practice Litig. The New York court rejected the defendant’s argument, finding that allowing the suit to proceed would not present a “sharp” conflict with the congressional purpose of the OFPA in part because the statute advances the purpose of assuring consumers that organically produced products meet consistent standards. Also, the court reasoned, the suit is not premised on a “reasonable consumer” theory but rather seeks to enforce the national standards. Finally, the court held that allowing the case to proceed provides a remedy to consumers that they otherwise would not have.
The court held that the plaintiffs had properly stated a claim of mislabeling when they alleged that certain synthetic ingredients such as AHA, DHA, taurine, and inositol are not permitted in products labeled as “organic.” In doing so, the court rejected defendant’s assertion that there was a broad exception permitting the inclusion of synthetic vitamins and minerals. Rather, the court noted that only nutrients specifically listed in 21 C.F.R. 104.20(d)(3) could properly be added to a product while properly maintaining the “organic” label.
This case is significant because it allows plaintiffs to bring lawsuits challenging the inappropriate use of organic claims under the OFPA and NOP regulations and it raises doubts about the holding of the Eighth Circuit Court of Appeals. It may, of course, encourage additional similar actions.