Marentette v. Abbott Labs., Inc.

• Decision Date: 23 March 2018
• Docket Number: Docket No. 17-62-cv,August Term, 2017
• Parties: Sara MARENTETTE, Matthew O'Neil Nighswander, Ellen Steinlien, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants, v. ABBOTT LABORATORIES, INC., Defendant–Appellee
• Court: U.S. Court of Appeals — Second Circuit

886 F.3d 112

Sara MARENTETTE, Matthew O'Neil Nighswander, Ellen Steinlien, on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,

v.ABBOTT LABORATORIES, INC., Defendant–Appellee,

Docket No. 17-62-cv

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: August 23, 2017

Decided: March 23, 2018

Yvette Golan, The Golan Firm, Washington, DC (D. Greg Blankinship, Todd Seth Garber, Finkelstein, Blankinship, Frei–Pearson & Garber, LLP, White Plains, NY; Kim Richman, The Richman Law Group, Brooklyn, NY, on the brief), for Plaintiffs–Appellants Sara Marentette, Matthew O'Neil Nighswander, and Ellen Steinlien.

Scott Glauberman (Shawn J. Gebhardt, on the brief), Winston & Strawn LLP, Chicago, IL, for Defendant–Appellee Abbott Laboratories, Inc.

Chad A. Readler, Acting Assistant Attorney General, Mark B. Stern, Joshua M. Salzman, United States Department of Justice; Carrie F. Ricci, Mai P. Dinh, United States Department of Agriculture, for Amicus Curiae United States Department of Agriculture, in support of neither party.

Before: Pooler and Lynch, Circuit Judges, and Cogan, District Judge.^*

Cogan, District Judge:

Three parent consumers ("Parents") filed a putative class-action complaint against Abbott Laboratories, Inc., alleging that Abbott violated New York and California statutes and common law by advertising and selling Similac infant formula branded as organic and bearing the "USDA Organic" seal when the formula contained ingredients not permitted by the Organic Foods Production Act ("OFPA" or "the Act"). The United States District Court for the Eastern District of New York (Pamela K. Chen, J. ), dismissed Parents' suit, concluding that their state-law claims were preempted by the Act. Marentette v. Abbott Labs., Inc. , 201 F.Supp.3d 374, 376 (E.D.N.Y. 2016). We agree that Parents' claims are preempted, and therefore AFFIRM the district court's judgment dismissing the complaint.

BACKGROUND

According to the operative first amended complaint, Parents purchased Similac Advance Organic Infant Formula at various times from August 2012 through August 2014. Parent Ellen Steinlien alleges that she purchased the formula approximately once per month at stores in California. Parents Sara Marentette and Matthew O'Neil Nighswander (who are married) claim that they purchased the formula in both liquid and powder form in New York and New Hampshire during the relevant time. The formula's packaging states that it is organic and displays the "USDA Organic" seal.

Parents allege that they purchased Similac Organic formula after seeing and relying on the word "organic" and the "USDA Organic" seal on the packaging, and that these labels led them to believe that the formula was organic. Parents allege that the Similac Organic formula was falsely labeled because it contains 16 ingredients¹ that are prohibited by the OFPA, and that the formula is therefore not organic. Parents brought statutory consumer-protection claims, common-law breach-of-express-warranty claims, and common-law unjust-enrichment claims under New York and California law, all based on their false-labeling allegation.

Abbott moved to dismiss, arguing primarily that Parents' state-law claims were preempted by the Act under the doctrine of conflict preemption (specifically, obstacle preemption), because permitting Parents to sue under state law for a label authorized by a certification scheme enacted by Congress would thwart Congress's purpose in enacting that scheme. Abbott also argued that Parents' claims were expressly preempted, along with other defenses. Parents countered that their suit did not conflict with federal law because they in fact sought to vindicate federal law through state-law causes of action. Parents also disputed Abbott's secondary arguments. Most significantly, they argued that the existence of an express preemption clause in the statute was strong evidence against implied conflict preemption.

After oral argument on the motion, the district court granted Abbott's motion to dismiss solely on conflict-preemption grounds. Marentette , 201 F.Supp.3d at 376. Citing the Eighth Circuit's decision in In re Aurora Dairy Corp. Organic Milk Marketing & Sales Practices Litigation , 621 F.3d 781 (8th Cir. 2010), the district court concluded that Parents' challenge to the organic label on Abbott's products was in essence a challenge to the USDA-accredited certifying agent's certification decision itself, and that the state-law causes of action therefore posed an obstacle to Congress's objectives in enacting the OFPA.

Marentette , 201 F.Supp.3d at 381. The district court emphasized that the stated purposes of the Act, including "establish[ing] national standards" for organically produced products and "assur[ing] consumers that organically produced products meet a consistent standard," would be significantly undermined if Parents' claims proceeded. Id. at 382. According to the district court, the OFPA's enforcement and remedial scheme was further evidence that the statutory scheme Congress enacted to create uniform national standards would be "significantly disrupted, if not thwarted, by a hodgepodge of potentially inconsistent State and federal court decisions on what constitutes ‘Organic.’ " Id. at 384. After the district court denied Parents' motion for leave to amend the complaint a second time, Parents appealed the order dismissing their first amended complaint.

This Court held oral argument on August 23, 2017. After oral argument, we solicited the views of the United States Department of Agriculture as amicus curiae on two questions related to the certification process and the USDA's regulations: (1) whether the certification process requires the certifying agent to review and approve the ingredients of the final product to be labeled organic, and (2) whether certification is co-extensive with statutory and regulatory compliance, that is, whether products made in accordance with a properly certified plan will necessarily comply with the OFPA. The USDA responded on October 6, 2017. Its amicus brief stated that certifying agents review and approve both the process and the ingredients of the final product to be labeled organic, but generally do not inspect or certify batches of products. The USDA also explained that certification is intended to be coextensive with compliance, but that it may not be if a plan is improperly certified or if a producer or handler changes the plan after certification.

DISCUSSION

I. History of the Organic Foods Production Act

Because the outcome of this case depends in large part on the content and scope of the OFPA, we begin with some background on the statutory scheme. Enacted in 1990, the OFPA directs the Secretary of Agriculture to "establish an organic certification program for producers and handlers of agricultural products that have been produced using organic methods." 7 U.S.C. § 6503(a). The Act defines its purposes as "(1) to establish national standards governing the marketing of certain agricultural products as organically produced products; (2) to assure consumers that organically produced products meet a consistent standard; and (3) to facilitate interstate commerce in fresh and processed food that is organically produced." Id. § 6501.

Consistent with this statutory mandate, the USDA established the National Organic Program ("NOP" or "Program") to implement the OFPA. Under the OFPA, a product may only be sold or labeled as organic if it was "produced and handled in compliance with an organic plan agreed to by the producer and handler of such product and the certifying agent." Id. § 6504(3). Organic plans must be certified by an accredited certifying agent. Id. §§ 6503(d), 6504(3), 6514 – 6515. Exactly what this certification process entails is at the heart of this suit.

A producer or handler (such as Abbott)² seeking organic certification must write an organic plan describing all of the practices and procedures that it will perform as to the organic product, and must list each substance to be used as an input, so that the certifying agent can assess whether the plan complies with the OFPA. Id. § 6513; 7 C.F.R. § 205.201(a)(2). The USDA understands the term "input" to mean "all substances or materials used in the production or handling process." USDA Br. 5 (citing 7 C.F.R. § 205.2 ). This includes substances that are present in the final product (for example, the wheat in an organic-labeled cereal) and those that are incidental to the final product (such as the fertilizer used in the soil where the wheat used in an organic-labeled cereal is grown). Id.

To be sold or labeled as organic, a product generally must have been produced and handled without the use of synthetic chemicals. 7 U.S.C. §§ 6504(1) ; 6510(a). But the OFPA authorizes the Secretary of Agriculture to create a "National List" of synthetic substances that are permitted in organic products. See id. §§ 6510(a)(1), 6517; 7 C.F.R. § 205.605(b). Because only those synthetic substances which are included on the National List may be used in organic-labeled products, certifying agents must consider whether any of the ingredients a producer or handler intends to include are synthetic, and must deny certification if they are not included on the National List.

Once the certifying agent has approved an organic plan, it performs an on-site inspection, during which it reviews all of the inputs and methods of production. See 7 C.F.R. §§ 205.402(a)(4), 205.403. If the certifying agent confirms that the applicant's operation complies with its proposed organic plan, the applicant is certified and may begin selling and labeling products made under that plan as organic, subject to annual reinspection. 7 C.F.R. § 205.403(a)(1). But if the certifying agent has reason to believe that the applicant is not complying with or is unable to comply with the organic plan, the certifying agent must note the non-compliance, and, if it is not corrected, must deny...