Food Liability Law Alert: Class Plaintiffs Seek State Law Remedies for Alleged Violation of the Organic Foods Production Act of 1990
12/14/2007
A string of putative class action complaints targeting grocers have been filed across the country. They follow the same pattern and center around the same basic allegation: milk certified as organic under the Organic Foods Production Act of 1990 (the "Act") is not, in fact, organic. The plaintiffs assert that sale of this milk—particularly at a price higher than nonorganic milk—violates state consumer protection statutes.
The suits against grocers have their genesis in the U.S. Department of Agriculture's (the "USDA") action against Aurora Dairy, which caused Aurora Dairy to enter into a consent agreement with the USDA. However, when Aurora Dairy entered into the consent agreement, the USDA dismissed with prejudice its "Notice of Proposed Revocation" of organic certification, and milk from the dairy did not lose its certification retroactively or prospectively.
Based on our experience in similar cases involving other retailers, federal preemption may be the key initial issue for defendants in the grocer's position. Although the plaintiffs are alleging violations of federal statutes, they are not seeking to enforce the statutes. Rather, they are claiming that those alleged violations trigger the defendant's liability under state consumer protection acts, common-law consumer warranties and common-law unjust enrichment theories. A court may find that the federal government so heavily regulates an issue—in this case, organic food standards and their enforcement—that state law claims are "preempted" (i.e., barred) by comprehensive federal action. Indeed, the USDA investigated the very issues raised in the various complaints and did not revoke organic certification. Should a court determine that Congress, through legislative action, has sufficiently occupied the field so as to preempt regulation, the plaintiffs' state law claims would fail. And even if the preemption argument failed, the plaintiffs face an uphill battle at class certification and convincing a court, in essence, to overrule the USDA's decision.
If successful, we expect plaintiffs' class action lawyers will look at expanding this litigation to other products certified as organic under the Act.
Going forward, retailers and food suppliers should consider taking the following steps:
- Periodic audits of their own organic suppliers and vendors, conducted by counsel in order to preserve privilege.
- Building compliance language into supplier and vendor agreements in order to mitigate and shift risk for claims (including fraud) related to violations of the Act.
- Choosing organic suppliers and vendors with a proven track record of complying with federal organic standards.
- Careful review of relevant insurance policies.
For more information, contact:
Seattle
Rita V. Latsinova at rvlatsinova@stoel.com or (206) 386-7613
Portland
Lois O. Rosenbaum at lorosenbaum@stoel.com or (503) 294-9293
Jeremy D. Sacks at jdsacks@stoel.com or (503) 294-9649
Boise
Mark S. Geston at msgeston@stoel.com or (208) 387-4291