On May 7, 2020, the First Circuit in Lee v. Conagra Brands, Inc., reversed the dismissal of a consumer fraud class action on the ground that the complaint plausibly stated that the product’s “100% Natural” statement may be deceptive to a consumer where the product contains genetically modified organisms (GMOs).
In Lee, the plaintiff claimed that a “100% Natural” representation on the product label for Wesson Oil enticed her to buy the product because it indicated to her that the oil was GMO-free, when in fact it was not. She filed a class action alleging unfair or deceptive trade practices in violation of the Massachusetts consumer fraud law, Chapter 93A. The district court granted Conagra’s motion to dismiss, finding that the “100% Natural” language was “consistent with the FDA’s longstanding policy for the use of the term ‘natural’ on the labels of human food.” Additionally, the district court held that the FDA does not require a product to disclose on its label the use of GMOs.
An act or practice violates Chapter 93A if it is “either unfair or deceptive.” The First Circuit’s decision addressed only the “deceptive” prong as plaintiff failed to raise, and thus waived, any argument that the label was “unfair.” Noting that its “analysis begins and ends with the allegations in the complaint,” the Lee Court held that the complaint “plausibly alleges that Wesson Oil’s label could have deceived a reasonable consumer” because it alleged that consumers consider whether a product is “natural” before purchasing, that consumers may be willing to pay a higher price for “natural” items, and that surveys show both scientists and consumers do not consider products that contain GMOs to be all natural.
In so ruling, the First Circuit explained that “the FDA’s guidance will inform our analysis as to whether these allegations survive dismissal.” The defendant had argued that FDA rules do not require disclosures that a product contains GMOs and the complaint essentially compelled such a disclosure contrary to the FDA’s views. But, the Court noted that the complaint did not seek any such disclosure, only damages for deceptive advertising.
Further, the Court found that FDA guidance has not stated that GMOs are natural or that they may be advertised as such. Instead, the FDA “has merely noted its policy that a product may not be labeled as ‘natural’ if it contained anything ‘artificial or synthetic (including all color additives regardless of source).’” The FDA has issued no rule defining GMOs or stating whether GMOs are “artificial or synthetic.” Indeed, the Court noted that the FDA’s 2015 request for comment as to whether GMOs are natural implicitly acknowledges that the agency has not yet ruled that they are. Ultimately, the Court found that defendant’s argument “confuse[d] the FDA’s informal policy not to restrict the use of the term ‘natural’ with a rule defining it,” concluding that where “an agency has issued no binding rule defining a term, the agency’s pronouncements do not dictate whether a representation has the capacity to deceive a reasonable shopper under Chapter 93A.”
According to the First Circuit, though the FDA has stated that that “food labelers have no general freestanding duty to disclose on a product’s label whether it contains GMOs,” it does not necessarily follow that that “labelers never need to disclose whether their products contain GMOs.” “Even if [FDA] guidance generally blesses silence regarding GMO ingredients, it falls far short of blessing an affirmative misrepresentation concerning the presence of such ingredients.” The Court held that Conagra’s reliance on the USDA’s Final Rule on the National Bioengineered Food Disclosure Standard was of no help for the same reason: “Even if we assume without deciding that the USDA sought to free Conagra of any obligation to disclose the presence of GMOs in Wesson Oil, it says nothing of representations suggesting GMOs’ absence.”
The First Circuit’s decision will do nothing to stem the tide of “100% Natural” or “All Natural” false advertising class actions.