Product Labeling News: Nestle’s Non-GMO Self-Certificate Possibly Misleading

A recent decision by a federal judge here in California has allowed a class action case against Nestle to go forward based on an allegedly misleading non-GMO label. See Latiff v. Nestlé USA, Inc., Case No. 2:18-CV-06503-ODW (US Dist. CD Cal. September 19, 2019).

Two aspects of the package labeling were deemed potentially problematic. First, the labeling indicated that there were no GMO ingredients even though there were potentially GMOs in the ingredient chain upstream from the final ingredient. “GMO” stands for “genetically modified organisms” and many believe that food products containing GMOs are unhealthy or potentially unsafe. As an example, the plaintiff alleged that she bought coffee creamer containing milk products. The creamer stated that the product contained no GMO ingredients, but the milk was obtained from animals that were fed with grains that had been genetically modified. Second, Nestle attached a self-generated “no GMO seal” that the plaintiff alleged looked like a third-party “no GMO seal” offered for use by food processing companies. The standards for Nestle’s self-generated seal-of-approval were much less stringent than the standards used by the third party not-for profit. The plaintiff, Jennifer Latiff, alleged that she bought certain Nestle food products because of the labeling but that, as described, the labeling was false or misleading. She alleged that it was deceptive to label the product as “non-GMO” if the milk came from cows fed with GMO grains. She also alleged that she relied on that third-party seal-of-approval and that she was confused by Nestle’s seal that was too similar.

In response to Nestle’s attempt to have the case dismissed, the judge allowed the class action to proceed. For the judge, the two aspects described above made it ” … plausible that consumers would be misled.”

Nestle also argued that Latiff and the other plaintiffs had no right to pursue the case because they had suffered no injury. That is, Nestle argued that there was no injury or sickness or other ill-effect of consuming the products. However, this argument was also rejected since the plaintiff alleged that she had an economic injury. The plaintiff alleged that she had paid more money for products that were labeled as “non-GMO.” An alleged economic injury is sufficient to confer standing on a plaintiff according to the judge. The judge also held that the complaint was sufficient to state claims under various California statutes like the California False Advertising Act and the Unfair Competition Law.

The case will now go forward into the next stage of the litigation. The plaintiff and the class she represents have not “won” the case yet and will face additional legal challenges, although Nestle may find it prudent and financially expedient to settle the case. Class action lawsuits are notoriously expensive to fight.

Legal lessons: Package labeling is subject to a variety of federal and state laws. As such, San Diego businesses and those in the rest of the Golden State must be cautious when making claims on their packaging. Furthermore, using self-created “seals-of-approval” should be done with caution, and care should be taken to avoid mimicking a seal offered by a non-commercial third party.

Call San Diego Corporate Law Today

For more information, call corporate attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters and he proudly provides legal services to business owners in San Diego and the surrounding communities. Call Mr. Leonard at (858) 483-9200 or contact him via email. Like us on Facebook.

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