Yucatan Guacamole Class Action Lawsuit Survives Dismissal Bid

A California judge allowed a consumer class action lawsuit to proceed against Yucatan Foods, L.P., dismissing Yucatan’s motion to dismiss. The complaint, brought by lead plaintiffs Mary Swearington and Joshua Ogden,  stems from Yucatan’s labeling of its guacamole and other food products.

Between July 31, 2009, and the present, the plaintiffs purchased three Yucatan guacamole products — Authentic Guacamole, Spicy Guacamole and Ranch Guacamole — all containing “evaporated cane juice” on their label. The plaintiffs claim in the class action lawsuit that listing “evaporated cane juice” rather than “sugar” and/or “evaporated cane syrup” is misleading and violates California’s Sherman Law, both for the products purchased by the plaintiffs and for other Yucatan products that list “evaporated cane juice.”

The Sherman Law requires foods made of two or more ingredients to be labeled with their “common or usual name,” and the plaintiffs argue in the class action lawsuit that according to Food and Drug Administration (FDA) guidance, syrup and sugar are not classified as having a “juice” and should not be labeled as such. The plaintiffs further allege that Yucatan’s use of “evaporated cane juice” rather than “sugar” or “syrup” deceives health conscious consumers into purchasing their product, a violation of the Unfair Competition Law.

Yucatan moved to dismiss the class action lawsuit, arguing that the case should be brought in federal court and the claims brought under the California Sherman law are preempted by FDA regulations, as well as arguing that  the plaintiffs lack standing to sue, and plaintiffs failed to state a plausible claim.

On Feb 7, Judge Richard Seeborg issued a decision upholding the plaintiffs’ claims. The judge noted with respect to his court’s jurisdiction over the case, “[o]n its face, plaintiffs’ complaint meets the jurisdictional requirements … [Yucatan] is a Delaware corporation with its headquarters in Los Angeles, California.  Plaintiffs assert claims on behalf of over 100 members of a proposed class of consumers throughout the United States, including class members from states other than Delaware or California and an amount in controversy in excess of $5 million in the aggregate.  These assertions, unchallenged by Yucatan, are sufficient to establish a prima facie case for [jurisdiction].”

The judge further noted that Yucatan failed to provide a compelling argument for an exception to the California court’s jurisdiction over this case.

The judge said that Yucatan’s argument that federal FDA regulations preempt the California Sherman law was incorrect in this case as well, noting “[w]here a requirement imposed by state law effectively parallels or mirrors the relevant sections of the [Nutritional Labeling and Education Act], courts have repeatedly refused to find preemption.”

Further, the judge upheld the Unfair Competition Law (UCL) claims, stating “[a]s explained by the state appellate court, ‘[T]here are three varieties of unfair competition: practices which are unlawful, unfair or fraudulent.’… ‘By proscribing ‘any unlawful’ business practice, [UCL] borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.’… a plaintiff proceeding under the ‘unlawful’ prong need only plead facts to show it is plausible the defendant broke the law because the legislature has already determined the conduct to be ‘unfair’ by virtue of legislative prohibition. Plaintiffs, therefore, need not allege deception to proceed with this claim.”

Product mislabeling claims are common within the California court system. This decision is evidence of the divide between the courts over the lack of formal guidance concerning evaporated cane juice.

The plaintiffs are represented by Ben F. Pierce Gore of Pratt & Associates and by David P. Wilson of Provost Umphrey Law Firm LLP.

The Yucatan Guacamole Class Action Lawsuit is Swearingen, et al. v. Yucatan Foods LP, Case No. 3:13-cv-03544, in the U.S. District Court for the Northern District of California.

UPDATE: A federal judge dismissed the Yucatan guacamole class action lawsuit on May 20, citing the U.S. Food and Drug Administration’s pending review of the term “evaporated cane juice.”