When judges defer to an administrative agency’s interpretation of its own rule, targets of government regulation normally lose out. Private enterprises and organizations like Washington Legal Foundation have been urging the U.S. Supreme Court to reconsider Auer v. Robbins, the precedent that unleashed this doctrine that allows the proverbial fox to guard the hen house. We also routinely criticize class action lawsuits alleging that true statements on food labels are unlawfully false, misleading, unfair, or illegal.
It is not without a sense of irony, then, that we applaud a July 30, 2018 Central District of California opinion in Wilson v. Odwalla, which relied on “Auer deference” in granting the defenant’s motion for summary judgment in a consumer class action suit. The district court faithfully applied Auer to reach the correct decision. The Food and Drug Administration rule at issue in Wilson is clearly ambiguous—a key factor in the Auer analysis.
Wilson asserts that he and other unnamed plaintiffs purchased Odwalla orange juice based on the “no added sugar” claim on the label. The statement, Wilson argues, runs afoul of an FDA regulation. A violation of an FDA rule also infringes on California’s Sherman Food, Drug and Cosmetic Law, which private plaintiffs can enforce through claims under the state’s Unfair Competition Act and other California consumer-protection laws.
Odwalla argued in its summary-judgement motion that federal law preempted Wilson’s state-law claims. The court rejected Odwalla’s preemption defense, reasoning that Wilson was not asking the company to do (or undo) anything on its label different from what FDA required. The court then turned to whether Odwalla violated the rule.
The FDA rule states that food processors can only print “no added sugar” and similar statements on their labels only if “the food that it resembles and for which it substitutes normally contains added sugars.” Wilson argues that the only group of products for which Odwalla’s juice substitutes is other 100% orange juice drinks. But Odwalla contends that its product substitutes for any beverage containing fruit juice. The court concluded that because both interpretations are reasonable, the applicable federal rule is ambiguous.
Under Auer, if a rule is ambiguous, a reviewing court will defer to the promulgating agency’s interpretation. Odwalla pointed to an August 2017 letter from FDA to the Center for Science in the Public Interest (CSPI) responding to the group’s concern that juice beverage makers were unlawfully misleading consumers with “no added sugar” labeling statements. FDA did not agree with CSPI’s narrow interpretation of “substitutes.” The letter stated that a substitute product need not be “very similar.” It continued, “For example, juices with no added sugar could substitute for juices with added sugar, fruit-flavored soft drinks sweetened with sugar, or other sugar-sweetened beverages.”
Under FDA’s interpretation of the rule at issue in Wilson, Odwalla’s label was compliant, so the court granted summary judgment for the defendant.
Given that private plaintiffs in many state-law food-labeling suits essentially stand in the shoes of federal food regulators, courts should determine FDA’s position on the relevant law or rule when assessing a claim’s merit. Failure to do so, especially in situations where the applicable rule is susceptible to different but equally plausible interpretations, would allow private parties and courts to undercut national uniformity with judge-made alternative regulations. And as long as Auer is binding precedent, defendants should continue to invoke its rule on judicial deference to help preserve regulatory uniformity, even if doing so leaves a saccharine taste in their mouths, as it does in ours.
Also published by Forbes.com on WLF’s contributor page.