Commercial Litigation and Arbitration

Primary Jurisdiction Doctrine — Factors

Hood v. Wholesoy & Co., 2013 U.S. Dist. LEXIS 97836 (N.D. Cal. July 12, 2013):

Pending before the Court is the Motion of Defendants Wholesoy & Co., Modesto Wholesoy Company LLC, The Wholesoy Company, Tan Industries, Inc., Ken Nordquist, and Ted Nordquist (collectively "Wholesoy") to Dismiss the class action complaint of Plaintiff Janet Hood. (Dkt. No. 12.) Plaintiff brings this putative class action alleging that Wholesoy's product labels do not comply with certain requirements of the federal Food, Drug, and Cosmetics Act ("FDCA"), as adopted by the California Sherman Law, Cal. Health & Safety Code section 109875, et seq. ("Sherman Law"). Based upon those violations, Plaintiff asserts claims under state and federal consumer protection statutes: the California Unfair Competition Law, Bus. & Prof. Code section 17200 et seq. ("UCL"); the California False Advertising Law, Cal. Bus. & Prof. Code section 17500 ("FAL"); the California Consumers Legal Remedies Act, Cal. Civ. Code section 1750 et seq. ("CLRA"); the Song-Beverly Consumer Warranty Act, Cal. Civ. Code section 1790 et seq. ("Song-Beverly"), and the Magnuson-Moss Warranty Act, 15 U.S.C. section 2301 ("Magnuson-Moss"). Plaintiff also alleges a state law claim for restitution based on unjust enrichment and quasi-contract. Wholesoy brings its motion under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6) on grounds of, among other things, abstention under the primary jurisdiction doctrine.

Among other grounds, Wholesoy moves to dismiss or stay the Complaint based upon the doctrine of primary jurisdiction. Wholesoy argues that, because the FDA has regulatory authority over food labeling and the issues in this case require expertise or uniformity in administration, the Court should not "undermin[e], through private litigation, the FDA's considered judgments." Pom Wonderful, LLC v. Coca-Cola Co., 679 F.3d 1170, 1178 (9th Cir. 2012).

"The primary jurisdiction doctrine allows courts to stay proceedings or to dismiss a complaint without prejudice pending the resolution of an issue within the special competence of an administrative agency... and is to be used only if a claim involves an issue of first impression or a particularly complicated issue Congress has committed to a regulatory agency." Clark v. Time Warner Cable, 523 F. 3d 1110, 1114 (9th Cir. 2008). A court traditionally weighs four factors in deciding whether to apply the primary jurisdiction doctrine: "(1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration." Syntek Semiconductor Co. v. Microchip Tech., Inc., 307 F.3d 775, 781 (9th Cir.2002) (amended). "[T]he doctrine is a 'prudential' one, under which a court determines that an otherwise cognizable claim implicates technical and policy questions that should be addressed in the first instance by the agency with regulatory authority over the relevant industry rather than by the judicial branch." Clark, 523 F.3d at 1114. "Normally, if the court concludes that the dispute which forms the basis of the action is within the agency's primary jurisdiction, the case should be dismissed without prejudice so that the parties may pursue their administrative remedies." Syntek, 307 F.3d at 782; Astiana v. Hain Celestial Grp., Inc., 905 F. Supp. 2d 1013, 1015 (N.D. Cal. 2012) (if doctrine applies, court can either stay proceedings or dismiss the case without prejudice.)

Thus, where determination of a plaintiff's claim would require a court to decide an issue committed to the FDA's expertise without a clear indication of how FDA would view the issue, courts of this district have repeatedly found that dismissal or stay under the primary jurisdiction doctrine is appropriate. See Astiana v. Hain Celestial, 905 F. Supp. 2d. at 1016 (relying on Pom Wonderful to dismiss claims where the absence of FDA rules or policy statements would require court to make an independent determination that would "risk undercutting the FDA's expert judgments and authority"); Ivie v. Kraft Foods Global, Inc., C-12-02554-RMW, 2013 WL 685372 at *7 (N.D. Cal. Feb. 25, 2013) (applying primary jurisdiction to dismiss one of several claims where particular issue was subject of proposed new regulation as to which FDA issued public notice and heard comments); see also All One God Faith, Inc. v. Hain Celestial Grp., Inc., C 09-3517 SI, 2012 WL 3257660 (N.D. Cal. Aug. 8, 2012) (finding application of primary jurisdiction doctrine appropriate where claims "would inevitably require the [c]ourt to interpret and apply federal organic standards, potentially create a conflict with those standards, and would intrude upon and undermine the USDA's authority"); Gordon v. Church & Dwight Co., No. 09-5585 SI, 2010 WL 1341184, at *2 (N.D. Cal. Apr. 2, 2010) (dismissing UCL, FAL, and CLRA claims on primary jurisdiction grounds where, inter alia, "the FDA has stated that it is still considering public comments and other data in connection with warnings similar to those that plaintiffs seek to have the court impose"); Taradejna v. Gen. Mills, Inc., 909 F.Supp.2d 1128, (D. Minn. 2012) (dismissing complaint under primary jurisdiction doctrine where FDA had issued a proposed rule on precise subject at issue, and decision by court could undermine national uniformity in labeling regarding what met standard of identity for "yogurt"); cf. Janney v. Mills, C 12-3919 PJH, 2013 WL 1962360 (N.D. Cal. May 10, 2013) (finding question of abstention under primary jurisdiction doctrine "a close one" where FDA had expressed varying positions on question of the term "natural" in food labeling, but denying request to abstain where FDA had "repeatedly declined" to take a clear position and shown a "relative lack of interest" in doing so, such that deferral to FDA would likely be futile).

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