Holk v. Snapple Beverage Corp.

Decision Date12 August 2009
Docket NumberNo. 08-3060.,08-3060.
Citation575 F.3d 329
PartiesStacy HOLK, Appellant v. SNAPPLE BEVERAGE CORPORATION.
CourtU.S. Court of Appeals — Third Circuit

Lynne M. Kizis Daniel Lapinski (Argued), Philip A. Tortoreti, Wilentz, Goldman & Spitzer, Woodbridge, NJ, Michael D. Halbfish, Tunney & Halfbish, Woodbridge, NJ, for Appellant.

Van H. Beckwith (Argued), Jeffrey A. Lamken, Michael G. Pattillo, Jr., Martin V. Totaro, Baker Botts, Washington, DC, for Appellee.

Before: BARRY, SMITH, Circuit Judges and RESTANI, Judge.*

OPINION

SMITH, Circuit Judge.

This appeal presents three issues related to the federal preemption of state causes of action. Plaintiff-appellant Stacy Holk brought several state law claims against defendant-appellee the Snapple Beverage Corporation in the Superior Court of New Jersey. After removing Holk's lawsuit to the United States District Court for the District of New Jersey, Snapple sought to dismiss Holk's complaint on, inter alia, the grounds of express preemption, implied field preemption, and implied conflict preemption. The District Court granted Snapple's motion on the basis of implied preemption. For the reasons discussed below, we will reverse.

I.
A.

Congress has regulated food and beverage labeling for more than 100 years. In 1906, it passed legislation commonly known as the "Wiley Act" that established labeling standards. Pure Food and Drug Act of 1906, Pub.L. No. 59-384, 34 Stat. 768, repealed by Act of June 25, 1938, ch. 675, § 902(a), 52 Stat. 1059. At the time, the Wiley Act was considered a substantial reform because it prohibited the adulteration and misbranding of food sold and distributed in interstate commerce. Pub.L. No. 59-384, §§ 7-8. By today's standards, however, the Wiley Act offered only modest reforms: it "enabled the Government to go to court against illegal products but lacked affirmative requirements to guide compliance. Labels were not even required to state the weight or measure — only that a contents statement, if used, must be truthful." U.S. Food and Drug Administration, The Story of the Laws Behind the Labels, Part II (1981).

Congress replaced the Wiley Act in 1938 with the Federal Food, Drug, and Cosmetic Act ("FDCA"). Pub.L. No. 75-717, 52 Stat. 1040 (1938). Mounting public concern over unsafe food and drug products and marketing prompted its passage. United States v. Bhutani, 266 F.3d 661, 665 (7th Cir.2001). The FDCA authorized the Food and Drug Administration ("FDA") to regulate food safety and labeling. Fellner v. Tri-Union Seafoods, L.L.C., 539 F.3d 237, 251 (3d Cir.2008). Specifically, under the FDCA, the FDA could "promulgate food definitions and standards of food quality;" "set tolerance levels for poisonous substances in food;" and take enforcement action on adulterated and misbranded foods. Id. The FDCA had its shortcomings, however. Neither the FDCA nor FDA regulations required detailed nutritional information on all food labels. Emily J. Schaffer, Is the Fox Guarding the Henhouse? Who Makes the Rules in American Nutrition Policy?, 57 Food & Drug L.J. 371, 404 (2002). In fact, nutrition labeling was required only if the manufacturer made a nutrition claim about the product such as "low-fat" or "high in fiber." Id.

In response to growing concerns from consumer groups about unsubstantiated health claims on food and beverages, the FDA and Congress began considering a national labeling law. Claudia L. Andre, Note, What's in that Guacamole? How Bates and the Power of Preemption Will Affect Litigation Against the Food Industry, 15 Geo. Mason L.Rev. 227, 232 (2007). In 1990, Congress passed the Nutrition Labeling and Education Act ("NLEA"). Pub.L. No. 101-535, 104 Stat. 2353 (1990) (codified at 21 U.S.C. § 343 et seq.). NLEA introduced a number of substantial reforms: (1) it required nutrition labeling for nearly all food products under the authority of the FDA, with exemptions for small businesses, restaurants, and some other retail establishments; (2) it changed the requirements for ingredient labels on food packages; (3) it imposed and regulated health claims on packages; (4) it standardized all nutrient content claims; and (5) it standardized serving sizes. The Impact of the Nutrition Labeling and Education Act of 1990 on the Food Industry, 47 Admin. L.Rev. 605, 606 (1995).

B.

Snapple Beverage Corporation ("Snapple") manufactures a variety of beverages, including a number of juice and tea-based drinks. In its marketing and advertising materials, Snapple represents that these beverages are "All Natural." As the FDA has acknowledged, "[t]he word `natural' is often used to convey that a food is composed only of substances that are not manmade and is, therefore, somehow more wholesome." Food Labeling: Nutrient Content Claims, General Principles, Petitions, Definition of Terms, 56 Fed.Reg. 60,421, 60,466 (Nov. 27, 1991). Snapple products, however, contained high fructose corn syrup ("HFCS"), an ingredient manufactured from processed cornstarch.1

Stacy Holk bought two bottles of Snapple on May 4, 2007. She paid $1.09 for each bottle. She had purchased other Snapple products over the preceding six years. Holk contends that the labels on these products are deceptive. She argues that consumers "have been, and continue to be, easy prey for Snapple's unlawful activities because of their willingness to pay a premium price for foods and beverages, including Snapple beverages, that are represented to be `All Natural.'"

C.

Holk filed a class action lawsuit against Snapple in the Superior Court of New Jersey, asserting claims on the basis of: (I) the New Jersey Consumer Fraud Act; (II) unjust enrichment and common law restitution; (III) breach of express warranty; and (IV) breach of the implied warranty of merchantability. Holk's claims were predicated on her belief that a number of statements on Snapple's labels were misleading. She argued that (1) Snapple products were not "All Natural" because they contained HFCS; (2) Snapple products were not "Made from the Best Stuff on Earth," as indicated on the label; and (3) Snapple falsely labeled some beverages, for example, calling one drink "Acai Blackberry Juice," despite the fact that the drink contained neither acai berry juice nor blackberry juice.

Snapple removed the case to the United States District Court for the District of New Jersey pursuant to the Class Action Fairness Act, 28 U.S.C. 1453(b). It then filed a motion to dismiss. The parties subsequently agreed that Holk could amend her complaint, rather than respond to Snapple's motion. In October 2007, Holk filed an Amended Complaint, which reasserted that Snapple's labels were misleading because they claimed the products were "All Natural" and because Snapple advertised some products as containing juice that was not in the beverages. The Amended Complaint did not allege any claims based on Snapple's use of the phrase "Made From the Best Stuff on Earth." Snapple filed a second motion to dismiss, arguing that Holk's claims were preempted, that the claims should be dismissed under the doctrine of primary jurisdiction, and that the allegations failed to state a claim. Holk responded by dropping the argument related to the juice components of Snapple beverages, leaving only the claim that Snapple products containing HFCS were deceptively labeled "All Natural."

The District Court heard oral argument on Snapple's motion to dismiss in June 2008. On June 12, 2008, the District Court dismissed Holk's complaint. It held that Snapple's claims were preempted. In its opinion, the District Court correctly identified and discussed the three types of preemption. It also noted that Snapple argued that all three types of preemption were present in this case, as Snapple contended that (1) NLEA expressly preempted state labeling requirements that are not identical to federal requirements; (2) the comprehensive nature of the FDCA and its implementing regulations demonstrate that Congress intended the federal government to occupy the field; and (3) that state law stands as an obstacle to the purposes underlying the FDCA. Next, the District Court rejected Snapple's express preemption argument, stating that there was not "specific preemptive language" in the FDCA that covered the claims. Nonetheless, the Court ruled that "Plaintiff's claims in this case are impliedly preempted by the detailed and extensive regulatory scheme established by the [FDCA] and the FDA's implementing regulations."

The District Court stated that the FDA has used the broad authority granted to it under the FDCA to issue comprehensive regulations governing the labeling and naming of juice drinks. The Court declared that the comprehensive nature of these regulations demonstrate that "the FDA has carefully balanced beverage industry and consumer interests and created a complex regulatory framework to govern beverage labeling." Though it acknowledged that the FDA has not defined "natural," it found that the "FDA has in fact contemplated the appropriate use of the term," as indicated by the FDA's definition of "natural flavor" and its informal policy regarding use of the term "natural." The Court also noted that the FDA has the authority to enforce the FDCA and regulations issued pursuant to it. In the Court's view, these factors counseled in favor of its conclusion "that the [FDCA] and FDA regulations so thoroughly occupy the field of beverage labeling at issue in this case that it would be unreasonable to infer that Congress intended states to supplement this area."

Finally, the District Court deferred to the agency's expertise in the regulation of food and beverages. It asserted that it would be inappropriate for the Court to set rules, which the FDA "with all of its scientific expertise" has not yet done. Thus the District Court concluded that the claims were "impliedly preempted" because "permitting states through statutes or common law causes of action to impose...

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