Jessica Karmasek Dec. 18, 2015, 7:38am


SAN FRANCISCO (Legal Newsline) - In a ruling earlier this month, the California Supreme Court rejected an herb grower’s arguments that state law claims filed against it were preempted by the federal Organic Foods Act, most likely opening the doors to more, similar litigation over organic labeling.

The state’s high court, in its Dec. 3 decision in Quesada v. Herb Thyme Farms Inc., sided with the plaintiff.

“We hold a state law claim that produce is being intentionally mislabeled as organic is not preempted,” Justice Kathryn Werdegar wrote for a unanimous court. “When Congress entered the field in 1990, it confined the areas of state law expressly preempted to matters related to certifying production as organic, leaving untouched enforcement against abuse of the label ‘organic.’ Moreover, a central purpose behind adopting a clear national definition of organic production was to permit consumers to rely on organic labels and curtail fraud.

“Accordingly, state lawsuits alleging intentional organic mislabeling promote, rather than hinder, Congress’ purposes and objectives. Because the Court of Appeal concluded to the contrary, finding these state fraud claims impliedly preempted, we reverse its judgment.”

At issue was whether consumers may bring state law fraud and misrepresentation claims, challenging products -- in this case, herbs -- allegedly mislabeled as “certified organic.”

Defendant Herb Thyme is a large herb-growing operation with multiple farms throughout California. Most of its farms use conventional growing methods, but one of its farms uses organic processes and has been properly certified by a registered certifying agent.

According to plaintiff Michelle Quesada’s complaint, when it comes time for distribution and marketing, Herb Thyme brings its conventionally grown and organic herbs to the same packing and labeling facility, processes them together, and sends blended conventional and organic herbs out under the same “Fresh Organic” label and packaging.

Quesada alleges she bought Herb Thyme herbs at a premium in the belief they were 100 percent organic.

Her lawsuit, filed as a class and representative action, challenges as false advertising and unfair competition Herb Thyme’s practice of selling conventionally grown herbs under an organic label.

Herb Thyme, in response, sought judgment on the pleadings on federal preemption and primary jurisdiction grounds.

The Organic Foods Production Act of 1990, the grower argued, vests the U.S. Department of Agriculture with exclusive authority to regulate the labeling and marketing of organic products and both expressly and impliedly preempts state truth-in-advertising requirements.

In the alternative, Herb Thyme asked the trial court to defer action under primary jurisdiction principles unless and until an administrative complaint had been pursued through the USDA.

The trial court agreed with both express and implied preemption arguments and entered a defense judgment.

A state Court of Appeal affirmed.

It disagreed with the trial court’s finding of express preemption, reasoning that the express preemption provisions in the Organic Foods Act limited state organic certification programs, but did not foreclose state false advertising lawsuits.

However, it agreed such lawsuits were a potential obstacle to Congress’ purposes and objectives of establishing uniform national standards for organic production and labeling, and thus impliedly preempted.

The Supreme Court reversed the appeals court, finding neither express nor obstacle preemption, and reinstated the lawsuit.

“To buyers and sellers alike -- labels matter,” Werdegar wrote in the 30-page decision. “They serve as markers for a host of tangible and intangible qualities consumers may come to associate with a particular source or method of production.

“Misrepresentations in labeling undermine this signifying function, preventing consumers from correctly identifying the goods and services that carry the attributes they desire while also hampering honest producers’ attempts to differentiate their merchandise from the competition.”

Mark Kemple, an attorney at the Los Angeles office of Greenberg Traurig and who argued before the Supreme Court for Herb Thyme, could not be immediately reached for comment on the court’s ruling.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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