PublicNuisanceWire.com

In what could be a big blow for consumer product companies, the 3rd U.S. Circuit Court of Appeals has revived a New Jersey statewide class action suit against Snapple, finding that federal regulation does not preempt consumer fraud claims involving Snapple’s “All Natural” labeling.

The class action was initiated by New Jersey resident Stacy Holk, who allegeldy bought two bottles of Snapple in May of 2007 at a “premium price” of $1.09 each. Holk was apparently surprised and distressed to discover that her Snapple contained high-fructose corn syrup, despite having the words “all natural” on the label.  Represented by Wilentz, Goldman & Spitzer and Tunney & Halbfish, Holk filed a class action in New Jersey state court, alleging consumer fraud and breach of warranty.

Snapple’s lawyers at Baker Botts had the case removed to federal court, where Trenton Federal District Court Judge Mary Cooper dismissed it, ruling that Holk’s claims were preempted by FDA regulation of food and beverage labeling.

“Snapple has always followed FDA labeling rules and this is no different,” said Van H. Beckwith, a partner with Baker Botts, LLP. “Last July, the FDA specifically spoke to the issue and said that it would not object to labeling HFCS as natural. This makes perfect sense, considering it follows 15 years of FDA pronouncements and the sweetener has the same basic ingredients as table sugar—glucose and fructose.”

However, in its 30-page ruling, the 3rd Circuit disagreed. The appellate court found that FDA policy (and legal precedent) left room for state regulation in food and beverage labeling. It also concluded that the FDA’s informal policy on the use of the phrase "all natural" did not preempt Holk’s claims.

“It’s not so much they are saying there’s any validity to the actual claim that this woman made, but they were interpreting the FDA’s label authority in whether or not it permitted a lawsuit in state court,” said Hans von Spakovsky, senior legal fellow at the Heritage Foundation. “Based on their interpretation of the law, the court is saying the action of the state court is not preemptive. They are sending it back down to courts so the case can go forward and, at that point, Snapple will hopefully prevail by showing they didn’t in any way violate the labeling on the product.”

The suit seeks disgorgement of Snapple's profits from its allegedly false labeling.

“I’m afraid that what it means is that this will encourage the plaintiff’s bar to file lots more frivolous lawsuits against makers of consumer products,” said von Spakovsky. “Let’s face it, 99 percent of us don’t pay any attention to what’s on a label when we go in and buy something like this. And for someone to sue is the kind of frivolous lawsuit that causes the price of consumer goods to go up, because the companies have to deal with them.”

Since the charges, Snapple has revised its formula, replacing high fructose corn syrup with sugar, although the company doesn’t believe it has done anything wrong.

“Snapple’s labels tell the individual consumer everything he or she needs to know in making an individual buying decision and fully discloses all of the beverage’s ingredients,” said Beckwith.