SAN FRANCISCO (CN) - A 9th Circuit panel reversed the dismissal of a federal class action over allegedly chemical-laden "all natural" cosmetics, finding federal law doesn't expressly preempt California's false-advertising laws.
Skye Astiana and Tamar Davis Larsen filed a federal class action against Hain Celestial Group and Jason Natural Products, claiming they were deceived into purchasing the companies' cosmetics based on labels proclaiming the products "all natural," "pure natural" and "pure, natural and organic."
The women say that in reality, the companies' cosmetics allegedly contain synthetic and artificial ingredients like benzyl alcohol and even airplane antifreeze. They say they never would have purchased the products - and paid the premium prices charged for them - if they had known the products weren't actually all natural.
A federal judge first dismissed the women's quasi-contract claim, finding it was not a stand-alone cause of action and "nonsensical as pled in any event."
Hain then asked the court to dismiss the case entirely, arguing that the federal Food, Drug and Cosmetic Act preempted the women's state-law claims. The judge opted to dismiss the case - rather than stay it - so the parties could seek guidance from the Food and Drug Administration.
On appeal, Hain against reasserted its preemption argument and asked a 9th Circuit panel to completely dismiss the case. The company said allowing the class action to go forward would create a "novel state labeling requirement" under California law that the U.S. Supreme Court had addressed in a case over pesticide labels.
Noting that the high court had not absolutely barred state-law suits over inadequate labeling in the pesticide case, Circuit Judge Margaret McKeown said on Friday that the class action did not seek to change Hain's product labels except to stop calling the products "all natural" if they are not.
"FDA regulations do not require Hain to label its products 'all natural' or 'pure natural,'" McKeown wrote. "If the class action ultimately requires Hain to remove these allegedly misleading advertising statements from its product labels, such a result does not run afoul of the Food, Drug and Cosmetic Act, which prohibits 'requirements' that are 'different from,' 'in addition to,' or 'not identical with' federal rules."
McKeown acknowledged that the FDA has never regulated the use of the word "natural" on cosmetic labels, but rejected Hain's argument that the agency therefore permits the use of the word in whatever way companies wish to do so.
"This argument proves too much," McKeown wrote in the 17-page decision. "By this logic, a manufacturer could make any claim - wild, untruthful or otherwise - about a product whose contents are not addressed by a specific regulation. The statute, however, proscribes statements that are 'false or misleading in any particular,' not statements that are 'prohibited by specific FDA regulations.'"
The panel also reinstated the class' quasi-contract cause of action, which the lower court had likened to the disfavored common-law unjust enrichment claim.
"Unjust enrichment and restitution are not irrelevant in California law," McKeown wrote. "Rather, they describe the theory underlying a claim that a defendant has been unjustly conferred a benefit 'through mistake, fraud, coercion or request.' When a plaintiff alleges unjust enrichment, a court may construe the cause of action as a quasi-contract claim seeking restitution."
She continued: "The class alleged in its first amended complaint that they were entitled to relief under a 'quasi-contract' cause of action because Hain had 'enticed' plaintiffs to purchase their products through 'false and misleading' labeling, and that Hain was 'unjustly enriched' as a result. This straightforward statement is sufficient to state a quasi-contract cause of action. To the extent the district court concluded that the cause of action was nonsensical because it was duplicative of or superfluous to the class' other claims, this is not grounds for dismissal."
In late 2014, a different federal judge in San Francisco certified a separate class action against Hain over its use of the word "organic" on labels of its Avalon and Jason cosmetics.
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