United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 09-2762
___________
In re: Aurora Dairy Corp. *
Organic Milk Marketing and *
Sales Practices Litigation *
____________________ *
*
Kristine Mothershead, individually *
and on behalf of all others similarly *
situated; Leonie Lloyd, individually *
and on behalf of all others similarly *
situated, *
*
Appellants, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Aurora Organic Dairy, doing business *
as Aurora Organic Dairy; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Robert Edward Koch, individually and *
on behalf of those similarly situated, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Maya Fiallos, individually and on *
behalf of all others similarly situated, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Rebecca Freyre, on behalf of herself *
and all others similarly situated; *
Fernanado Freyre, on behalf of himself *
and all others similarly situated, *
*
Appellants, *
*
v. *
*
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Aurora Dairy Corporation; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Mona Still; Helen Phillips; Eve Hana; *
Jeanmarie Zirger; Kim King; Noelle *
Fincham; Oksana Jensen; Gabriela *
Waschewsky; Laurelanne Davis; *
Debbie Millikan; Joan Scheutz; *
Sandie Regan; Steve Shriver; Mary *
Elbertai; Eileen Ptak; Cynthia *
Roche-Cotter; Kristen Finnegan; Amy *
Forsman; Joy Beckner; Naomi *
Mardock; Olive Knaus; Liana Hoodes; *
Donita Robinson; Ilene Rachford; *
Lisa Hopkins; Caryn Poirier; Erin *
Diserens; Tammy Coselli; Debra *
Haines; Debra Schmidt; Hans Kueck, *
*
Appellants, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
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*
Ilsa Lee Kaye, individually and on *
behalf of all others similarly situated, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corp., doing business *
as Aurora Organic Dairy; Quality *
Assurance International, Inc.; Case *
Vander Eyk, Jr., doing business as *
Case Vander Eyk, Jr. Dairy; Publix *
Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Patrick Hudspeth, individually and on *
behalf of a class of all others similarly *
situated; Caryn Hudspeth, individually *
and on behalf of a class of all others *
similarly situated, *
*
Appellants, *
*
v. *
*
Target Corp.; Quality Assurance *
International, Inc.; Case Vander Eyk, *
Jr., doing business as Case Vander Eyk, *
Jr. Dairy; Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
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Paul Bowen, individually and on *
behalf of all others similarly situated, *
*
Appellant, *
*
v. *
*
Wal-Mart Stores, Inc.; Quality *
Assurance International, Inc.; Case *
Vander Eyk, Jr., doing business as *
Case Vander Eyk, Jr. Dairy; Publix *
Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Elizabeth Cockrell, individually and *
on behalf of a class of all others *
similarly situated, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Jim Snell; Steve Clark; John Barrera; *
Joseph Villari; Elida Gollomp; *
Claire M. Theodore; Elizabeth Banse, *
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on behalf of themselves and all others*
similarly situated, *
*
Appellants, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Wild Oats Market, Inc.; Costco *
Wholesale Corporation; Safeway, Inc.; *
Wal-Mart Stores, Inc.; Quality *
Assurance International, Inc.; Case *
Vander Eyk, Jr., doing business as *
Case Vander Eyk, Jr. Dairy; Publix *
Super Markets, Inc.; Whole Foods *
Market Group, Inc., *
*
Appellees, *
____________________ *
*
Vicki M. Tysseling-Mattiace, *
individually and on behalf of a class *
of all other similarly situated, *
*
Appellant, *
*
v. *
*
Wild Oats Market, Inc.; Quality *
Assurance International, Inc.; Case *
Vander Eyk, Jr., doing business as *
Case Vander Eyk, Jr. Dairy; Publix *
Super Markets, Inc.; Whole Foods *
Market Group, Inc., *
*
Appellees, *
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____________________ *
*
Margot A. West, individually and *
on behalf of a class of all others *
similarly situated; Richard E. Ehly, *
individually and on behalf of a class *
of all others similarly situated, *
*
Appellants, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Quality Assurance International, Inc.; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
Publix Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Channing Hesse, individually and *
on behalf of a class of all others *
similarly situated, *
*
Appellant, *
*
v. *
*
Costco Wholesale Corporation, a *
Washington corporation; Quality *
Assurance International, Inc.; Case *
Vander Eyk, Jr., doing business as *
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Case Vander Eyk, Jr. Dairy; Publix *
Super Markets, Inc., *
*
Appellees, *
____________________ *
*
Hillary White, individually and *
on behalf of all others similarly *
situated; Lynn Michalson, individually *
and on behalf of all others similarly *
situated, *
*
Appellants, *
*
v. *
*
Aurora Dairy Corp., doing business *
as Aurora Organic Dairy; Publix *
Super Markets, Inc., *
*
Appellee, *
____________________ *
*
Fayetta Cowan, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Wal-Mart Stores, Inc.; Publix *
Super Markets, Inc., *
*
Appellees, *
____________________ *
*
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Nicolle DiSimone, individually and *
on behalf those similarly situated, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation, doing *
business as Aurora Organic Dairy; *
Case Vander Eyk, Jr., doing business *
as Case Vander Eyk, Jr. Dairy; *
QAI, Inc., doing business as Quality *
Assurance International, Inc.; *
Does, 1-100, inclusive; Publix Super *
Markets, Inc., *
*
Appellees, *
____________________ *
*
Brenda Gallardo, *
*
Appellant, *
*
v. *
*
Aurora Dairy Corporation, a Delaware *
Corporation, doing business as Aurora *
Organic Dairy, *
*
Appellee, *
____________________ *
*
Shawn Riley, individually and *
on behalf all others similarly situated, *
*
Appellant, *
*
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v. *
*
Safeway, Inc., *
*
Appellee, *
____________________ *
*
Theadora King, individually and on *
behalf of all others similarly situated, *
*
Appellant, *
*
v. *
*
Safeway, Inc., *
*
Appellee. *
____________________ *
*
Public Citizen, Inc.; The Center for *
Food Safety and Organic Consumers *
Association; The Humane Society of *
the United States, *
*
Amici on behalf of *
Appellants, *
____________________ *
*
The Organic Trade Association; *
Grocery Manufacturers Association, *
*
Amici on behalf of *
Appellees. *
___________
Submitted: February 9, 2010
Filed: September 15, 2010
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___________
Before RILEY, Chief Judge,1 SMITH and SHEPHERD, Circuit Judges.
___________
RILEY, Chief Judge.
In this appeal we are called upon to determine whether, and to what extent, the
Organic Foods Production Act of 1990 (OFPA), 7 U.S.C. § 6501 et seq., preempts state
consumer protection law. The OFPA establishes national standards for the sale and
labeling of organically produced agricultural products, and creates a certification
program through which agricultural producers may become certified to produce
organic products. The OFPA also provides for the accreditation of certification agents,
who inspect producers and make recommendations to the United States Department
of Agriculture (USDA) regarding certification. Pursuant to the OFPA, the USDA
promulgated regulations, known as the National Organic Program (NOP), 7 C.F.R. pt.
205, defining which agricultural products qualify as organic.
One certifying agent, QAI, Inc. (QAI), certified Aurora Dairy Corporation’s
(Aurora) dairy farm to produce organic milk. Aurora’s certified organic milk was later
sold to consumers at retail stores owned by Costco Wholesale Corporation (Costco),
Safeway Inc. (Safeway), Target Corporation (Target), Wal-Mart Stores, Inc. (Wal-
Mart), and Wild Oats Markets, Inc. (Wild Oats) (collectively, the retailers), under the
retailers’ store brands or Aurora’s “High Meadow” brand.
Various plaintiffs (collectively, class plaintiffs) brought nineteen class action
lawsuits on behalf of organic milk consumers against Aurora, the retailers, and QAI
(collectively, appellees) in federal district courts throughout the nation, claiming
1
The Honorable William Jay Riley became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on April 1, 2010.
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violations of state law arising from Aurora’s alleged failure to comply with the OFPA
and NOP. The United States Judicial Panel on Multi-District Litigation (JPMDL)
consolidated these cases in the Eastern District of Missouri. The district court granted
appellees’ motions to dismiss, finding the OFPA preempted all of the class plaintiffs’
claims, and this appeal followed. We affirm in part and reverse in part.
I. BACKGROUND
Dissatisfied with the patchwork of state regulation governing organic products
that existed in the 1980s, Congress enacted the OFPA in order “(1) to establish national
standards governing the marketing of certain agricultural products as organically
produced products; (2) to assure consumers that organically produced products meet
a consistent standard; and (3) to facilitate interstate commerce in fresh and processed
food that is organically produced.” 7 U.S.C. § 6501 (emphasis omitted). Congress
intended the OFPA would establish a uniform standard “so that farmers know the rules,
so that consumers are sure to get what they pay for, and so that national and
international trade in organic foods may prosper.” S. Rep. 101-357 (1990) (reprinted
in 1990 U.S.C.C.A.N. 4656, 4943).
The OFPA provides that “a person may sell or label an agricultural product as
organically produced only if such product is produced and handled in accordance with”
the OFPA. 7 U.S.C. § 6505(a)(1)(A). The OFPA creates a certification program,
requiring producers of agricultural products marketing their products as “100 percent
organic,” “organic,” or “made with organic” ingredients (collectively, OFPA Terms)
to be certified by the USDA or pay a civil penalty of up to $10,000. See §§ 6505(a)(2);
6519(a); 7 C.F.R. §§ 205.303, 205.304. The OFPA authorized the USDA to propose
regulations implementing Congress’s plan, see 7 U.S.C. § 6521(a), and the USDA
ultimately adopted the NOP, a detailed set of implementing regulations, see 7 C.F.R.
§§ 205.1-205.699.
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The OFPA contemplates the accreditation of certifying agencies to review
applications for certification and to determine whether individual applicants qualify for
organic certification under the OFPA and NOP. See 7 U.S.C. § 6513; 7 C.F.R.
§§ 205.400-205.406. The NOP creates a process for accrediting certifying agents. See
7 C.F.R. §§ 205.500-205-510. QAI is one such accredited certifying agent.
Since 2003, Aurora has continuously held certifications from either QAI or the
Colorado Department of Agriculture (CDA) for the agricultural operations at issue in
this case. Aurora is a large dairy which operates several farms and a milk processing
plant. Each of Aurora’s facilities is operated according to an Organic System Plan
(OSP), which is “[a] plan of management of an organic production or handling
operation that has been agreed to by the producer or handler and the certifying agent
and that includes written plans concerning all aspects of agricultural production or
handling” in the OFPA and NOP for the particular facility. 7 C.F.R. § 205.2. Aurora’s
certification has never been suspended or revoked. Aurora sells milk through various
retail stores under its High Meadow brand, or supports private labels for the retailers.
The term “private label,” sometimes known as “private brand,” refers to store
brands. These are brands sponsored by a wholesaler, retailer, dealer, or merchant
(usually a large one), as distinguished from a brand bearing the name of the
manufacturer or producer. Private label products are typically priced lower than major
brands at retail and may or may not consistently come from the same source.
Typically, although not invariably, the manufacturer furnishes all packaging for retail
sale and affixes the private label to the product for the volume purchaser. The retailers
purchased milk from Aurora and sold it under their private labels or under Aurora’s
previously mentioned High Meadow brand.
In April 2007, the USDA proposed revoking Aurora’s organic certification. The
notice stated the USDA “identified willful violations of [the OFPA] and the regulations
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thereunder.” An attachment to the notice detailed fourteen alleged violations by
Aurora, including multiple cases of using nonorganic cows to produce organic milk,
allegations Aurora willfully “sold, labeled and represented milk as organically
produced, when such milk was not produced and handled in accordance with the
[NOP] . . . regulations,” failed to notify its certifying agent it had terminated its
contract with a pasture and livestock management services provider, and failed to
report and keep records in accord with the OFPA and NOP.
In August 2007, Aurora and the USDA entered into a consent agreement
addressing the concerns raised in the revocation proposal and terminating the agency
action. In the consent agreement, Aurora agreed to retire and remove some of its
allegedly nonorganic cows, ensure all animals in one of its organic milking herds were
under continuous organic management from the last third of gestation, reduce the size
of its herds and ensure daily access to pasture in the growing season, remove the
certification of its Woodward facility in Greeley, Colorado, address all other issues
raised in the notice in its amended organic systems plans, and submit to further review
the next year.
Various plaintiffs filed sundry class action lawsuits against Aurora in federal
district courts around the country. The first such action was filed in the Eastern
District of Missouri. The plaintiffs in one of the actions petitioned the JPMDL,
pursuant to 28 U.S.C. § 1407, for centralization of the cases against Aurora in the
United States District Court for the District of Colorado. Aurora opposed
centralization.
The JPMDL found centralization of the cases would “eliminate duplicative
discovery; prevent inconsistent pretrial rulings (particularly with respect to the issue
of class certification); and conserve the resources of the parties, their counsel and the
judiciary.” The JPMDL then found the Eastern District of Missouri was an appropriate
forum for the litigation because of its relative convenience given the geographic
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dispersal of the initial actions before the panel and “potential tag-along actions.”
Nineteen class action cases were transferred to the Eastern District of Missouri for
disposition.
After a scheduling conference, the district court entered several housekeeping
orders, including an order that the class plaintiffs file a consolidated complaint within
30 days of appointing lead counsel. The class plaintiffs filed their Consolidated Class
Action Complaint (CCC) on July 18, 2008.
The CCC alleges numerous facts regarding each of the appellees’ private labels.
The class plaintiffs allege the milk cartons of Aurora’s “High Meadow” brand,
Costco’s “Kirkland” brand, Safeway’s “O Organics” brand, Target’s “Archer Farms”
brand, Wal-Mart’s “Great Value” brand, and Wild Oats’s store brand all market the
milk they contain as organic when in fact it is not.
The class plaintiffs also allege that Aurora and each of the retailers knowingly
made various other false statements in labeling their milk cartons. For example,
several of the cartons featured depictions of pastoral scenes with cows grazing in
pastures, and advertised the idyllic conditions under which the dairy cows lived.
Aurora advertised, “As producers of organic milk, our motto is ‘Cows First,’” and,
“We believe that animal welfare and cow comfort are the most important measures in
organic dairy.” (Emphasis omitted.) Wal-Mart represented its milk was produced
without the use of antibiotics or pesticides, and organic farmers are committed to the
humane treatment of animals. Safeway asserted its dairy cows “enjoy a healthy mix
of fresh air, plenty of exercise, clean drinking water and a wholesome, 100% certified
organic diet.” Target declared, “Our milk comes from healthy cows that graze in
organic pastures and eat wholesome organic feed.” The class plaintiffs allege these
representations are false.
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The class plaintiffs also allege false advertising other than the milk cartons
themselves. For example, Costco included an article in its Costco Connection
magazine, which stated, in part:
When I was asked by Costco to learn about organic products, one
question I had was “What makes organic milk so special?” To answer
this, I visited one of the farms that produced Costco’s Kirkland Signature
organic milk.
The cows on the farm have quite the life. They feed on a balanced
organic vegan diet and have access to organic pastures for grazing.
On October 17, 2008, appellees filed a joint motion to strike the CCC and three
separate (Aurora, retailers, and QAI) motions to dismiss the case, each attacking the
CCC. On December 8, 2008, the class plaintiffs moved for leave to amend the CCC.
On June 3, 2009, the district court granted appellees’ motions to dismiss and denied
the motions to strike and to amend the CCC as moot, entering judgment the same day.
The class plaintiffs appeal the district court’s grant of the motions to dismiss. This
court has jurisdiction over the district court’s final judgment pursuant to 28 U.S.C.
§ 1291.
II. DISCUSSION
A. Standard of Review
We review de novo a district court’s grant of a motion to dismiss for failure to
state a claim. See Blankenship v. USA Truck, Inc., 601 F.3d 852, 853 (8th Cir. 2010).
“Under Federal Rule of Civil Procedure 12(b)(6), we accept [the class plaintiffs’]
factual allegations as true and grant every reasonable inference in [the class plaintiffs’]
favor.” MM&S Fin., Inc. v. Nat’l Ass’n of Sec. Dealers, Inc., 364 F.3d 908, 909 (8th
Cir. 2004). “Dismissal is proper when the . . . complaint fails to state a claim upon
which relief can be granted.” Hawks v. J.P. Morgan Chase Bank, 591 F.3d 1043, 1049
(8th Cir. 2010) (quoting Northstar Indus., Inc. v. Merrill Lynch & Co., 576 F.3d 827,
831-32 (8th Cir. 2009)). “Dismissal is not proper when ‘the factual allegations in a
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complaint, assumed true . . . suffice to state a claim to relief that is plausible on its
face.’” Id. (quoting Northstar Indus., 576 F.3d at 832). In order to survive a motion
to dismiss, the class plaintiffs must “nudge[] [their] claims across the line from
conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
B. Claims Under Review
At the outset, we must confront the question of which complaint is under review
in this appeal. As noted above, this multi-district litigation (MDL) case consists of
nineteen class action cases, each of which began with its own complaint and case
number. The district court ordered the class plaintiffs’ lead counsel to file a
consolidated complaint. On July 18, 2008, the class plaintiffs filed the CCC. On
October 17, 2008, the appellees moved to strike the CCC, arguing the CCC included
new claims and otherwise materially amended the complaints in the underlying cases,
rather than simply consolidating them as ordered. That same day, Aurora, the retailers,
and QAI each separately moved to dismiss the case, attacking the allegations in the
CCC. The class plaintiffs later moved for leave to amend the CCC on December 8,
2008.
The district court granted Aurora’s, the retailers’, and QAI’s motions to dismiss
and denied the motions to strike and to amend the CCC “as moot.” The district court
stated:
Because the Court finds that the basis for all of [the class p]laintiffs’
claims is preempted, the Court will not address [the motions to strike and
to amend]. The Court lists these causes of action from the [CCC],
because it is the Complaint to which the Motions to Dismiss are directed.
This does not indicate that [the class p]laintiffs’ alteration of the claims
and parties in this action have been approved or accepted by the Court.
Aurora and the retailers argue the CCC is therefore not “operative” and the nineteen
original class action complaints in the underlying cases are the only complaints
properly before this court.
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In effect, Aurora and the retailers ask this court to resolve their motion to strike
and the class plaintiffs’ motion to amend before reviewing the district court’s
judgment.2 The district court explicitly granted the motions to dismiss at issue in this
appeal based on the allegations in the CCC, not the complaints in the underlying
actions. The district court may not have approved or accepted the CCC, but it did base
its rulings for the motions to dismiss on the CCC. And it is those rulings that are
before us today. Because the district court ruled on the motions to dismiss based upon
the CCC, and because the motions to strike and to amend were denied as moot and no
party appealed those denials, the only complaint relevant to this appeal is the CCC.
“[I]t has long been the general rule ‘that a federal appellate court does not consider an
issue not passed upon below.’” Al-Zubaidy v. TEK Indus., Inc., 406 F.3d 1030, 1037
(8th Cir. 2005) (quoting Singleton v. Wulff, 428 U.S. 106, 120 (1976)). We see no
reason to create an exception to this rule where, as here, any prejudice to the appellees
was caused by their own failure to file an appeal.
C. Preemption
The district court dismissed all the class plaintiffs’ claims, which arise under
state law, as preempted by the OFPA. The general law of preemption is grounded in
the Constitution’s command that federal law “shall be the supreme Law of the Land.”
U.S. Const. art. VI, cl. 2. “Thus state law that conflicts with federal law has no effect.”
Jones v. Vilsack, 272 F.3d 1030, 1033 (8th Cir. 2001) (citing Maryland v. Louisiana,
451 U.S. 725, 746 (1981)).
Whether a particular federal statute preempts state law depends upon
congressional purpose. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 485-86 (1996). In
2
The retailers fault the class plaintiffs for not appealing the district court’s
denial of their motion to amend the CCC, but the retailers did not appeal the district
court’s denial of their motion to strike. Neither issue is therefore properly before this
court. “What is sauce for the goose is sauce for the gander.” United States v.
Vasquez-Garcia, 449 F.3d 870, 873 (8th Cir. 2006).
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interpreting the presence and scope of preemption, courts entertain two presumptions.
First,
Congress does not cavalierly pre-empt state-law causes of action. In all
pre-emption cases, and particularly in those in which Congress has
“legislated . . . in a field which the States have traditionally occupied,” we
“start with the assumption that the historic police powers of the States
were not to be superseded by the Federal Act unless that was the clear and
manifest purpose of Congress.”
Id. (citations omitted). Second, congressional purpose is “the ultimate touchstone” in
every preemption case. Id. Preemptive intent may be indicated “through a statute’s
express language or through its structure and purpose.” Altria Group, Inc. v. Good,
555 U.S. ___, 129 S. Ct. 538, 543 (2008). A state law is expressly preempted when
a federal statute states the congressional intention to preempt state law by defining the
scope of preemption. See Pet Quarters, Inc. v. Depository Trust & Clearing Corp., 559
F.3d 772, 780 (8th Cir. 2009).
Implied preemption exists where a federal statutory or regulatory scheme
is so pervasive in scope that it occupies the field, leaving no room for
state action—this is termed field preemption. Implied preemption also
occurs where state law has not been completely displaced but is
superseded to the extent that it conflicts with federal law—this is known
as conflict preemption.
Id. (internal citations omitted). In determining the congressional intent behind a
statute, courts may consider the statute itself and any regulations enacted pursuant to
the statute’s authority. See U.S. Dep’t of Justice v. Reporters Comm. for Freedom of
Press, 489 U.S. 749, 765 (1989). Because of the tension between the presumption
against preemption and the possibility of implied preemption, “[i]t is often a perplexing
question whether Congress has precluded state action or by the choice of selective
regulatory measures has left the police power of the States undisturbed except as the
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state and federal regulations collide.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218,
230-31 (1947) (citations omitted).
1. Express Preemption
Aurora briefly argues the OFPA expressly preempts the class plaintiffs’ claims
in this case. Express preemption exists where Congress uses “explicit pre-emptive
language” to express its purpose. Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S.
88, 98 (1992) (plurality opinion). Congress expressly preempted independent state
certification laws in the OFPA. See 7 U.S.C. § 6507 (providing for potentially more
restrictive state organic certification regulations, but only with USDA approval).
Congress did not expressly preempt state tort claims, consumer protection statutes, or
common law claims. Aurora fails to support its argument with citation to any language
in the statute or regulations which could show Congress’s intent to preempt the claims
at issue here. The district court correctly recognized express preemption does not bar
any of the class plaintiffs’ claims.
For their part, the class plaintiffs and amici The Humane Society of the United
States argue, because the OFPA contains express preemptive language which does not
address state law claims, the class plaintiffs’ claims are not preempted. It is well
settled that a “pre-emption provision, by itself, does not foreclose (through negative
implication) ‘any possibility of implied . . . pre-emption.’” Geier v. Am. Honda Motor
Co., 529 U.S. 861, 869 (2000) (quoting Freightliner Corp. v. Myrick, 514 U.S. 280,
288 (1995)). The existence of a limited preemption provision at least shows Congress
considered preemption in its drafting of the law. We therefore find the OFPA’s
inclusion of a limited preemption provision, 7 U.S.C. § 6507, while not foreclosing any
possibility of implied preemption, is relevant to and is a factor in deciding whether
Congress impliedly intended to preempt state law. See Freightliner Corp., 514 U.S. at
289 (explaining while a preemption provision does not categorically foreclose the
possibility of implied preemption, it may “support[] an inference that an express
pre-emption clause forecloses implied pre-emption”).
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2. Field Preemption
Field preemption exists “where the scheme of federal regulation is ‘so pervasive
as to make reasonable the inference that Congress left no room for the States to
supplement it.’” Gade, 505 U.S. at 98 (plurality opinion). The district court found the
OFPA statutory scheme similar to the Occupational Safety and Health Act of 1970
(OSHA), 29 U.S.C. § 651 et seq., at issue in Gade, because “the only way a State may
regulate an OSHA-regulated occupational safety and health issue is pursuant to an
approved state plan.” Gade, 505 U.S. at 99 (plurality opinion) (quoting Fidelity Fed.
Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 152-53 (1982)). Because of the
OFPA’s supposed likeness to OSHA, the district court concluded “it is clear that the
area in which state regulation is permitted is narrow.”
The OFPA bears minimal resemblance to OSHA. Although both statutes require
agency approval of state regulation in their respective fields, the scope of the fields are
dissimilar. OSHA requires states to submit plans to the agency if the state “wishes to
‘assume responsibility’ for ‘development and enforcement . . . of occupational safety
and health standards relating to any occupational safety or health issue with respect to
which a Federal standard has been promulgated.’” Id. The OFPA, on the other hand,
requires states to seek approval from the USDA only if the State wishes to operate an
organic certification program. See 7 U.S.C. § 6507. OSHA’s scope is more imposing
than OFPA’s. The contrast between the scope of the two statutes is even sharper when
viewed in light of their purposes. While OSHA contemplates “a comprehensive
regulatory scheme designed ‘to assure so far as possible . . . safe and healthful working
conditions’ for ‘every working man and woman in the Nation,’” Martin v.
Occupational Safety & Health Review Comm’n, 499 U.S. 144, 147 (1991) (quoting 29
U.S.C. § 651(b)), the OFPA more modestly contemplates a certification program
designed to effect national standards and to eliminate the preexisting “havoc for the
industry” caused by balkanized state regulations, see S. Rep. 101-357 (reprinted in
1990 U.S.C.C.A.N. 4656, 4943).
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By “agree[ing] with [appellees] that [the class p]laintiffs’ claims are barred by
the doctrine of field preemption,” the district court necessarily assumes nothing more
can be done to regulate the organic foods industry than the administration of a
certification program. As noted above, in analyzing claims of preemption, courts are
to “start with the assumption that the historic police powers of the States were not to
be superseded by the Federal Act unless that was the clear and manifest purpose of
Congress,” “particularly in those [cases] in which Congress has ‘legislated . . . in a
field which the States have traditionally occupied.” Medtronic, 518 U.S. at 485-86.
“Consumer protection is quintessentially a ‘field which the States have traditionally
occupied.’” Watters v. Wachovia Bank, N.A., 550 U.S. 1, 35-36 (2007) (Stevens, J.,
dissenting), see also Gen. Motors Corp. v. Abrams, 897 F.2d 34, 41-42 (2d Cir. 1990)
(“[C]onsumer protection law is a field traditionally regulated by the states.”). In view
of the OFPA’s text and purpose, the narrowness of its express preemption provision,
the presumption against preemption and the tradition of state regulation, we conclude
the OFPA’s regulatory scheme is not “so pervasive as to make reasonable the inference
that Congress left no room for the States to supplement it.”
3. Conflict Preemption
The district court also held conflict preemption bars the class plaintiffs’ claims.
“Conflict preemption exists where a party’s compliance with both federal and state law
would be impossible or where state law would pose an obstacle to the accomplishment
of congressional objectives.” Pet Quarters, 559 F.3d at 780. As noted above, “[t]here
is a presumption against preemption in areas of traditional state regulation,” Wuebker
v. Wilbur-Ellis Co., 418 F.3d 883, 887 (8th Cir. 2005) (citing Egelhoff v. Egelhoff ex
rel. Breiner, 532 U.S. 141, 151 (2001)), which “is overcome if it was the ‘clear and
manifest purpose of [the agency]’ to supersede state authority,” Id. (quoting Rice, 331
U.S. at 230).
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The district court dismissed the class plaintiffs’ claims because
[i]f [they] were permitted to proceed, . . . Aurora’s certifications, valid
under federal law, would nevertheless be subject to challenge under the
statutes and common laws of all fifty states. Any claimant merely
suspecting that part of a producer’s operation was in any way out of
organic compliance, or motivated to interfere with a compliant certified
operation, could bring lawsuits such as this. Permitting such suits would
pose a clear “obstacle to the accomplishment of congressional
objectives.” [Pet Quarters, 559 F.3d at 780.]
When Congress enacted the OFPA, one of its objectives was to replace the
patchwork of existing state regulations with a national standard defining organic food.3
State law that poses an obstacle to the establishment of the national standard should
therefore be preempted. To carry out its objectives, Congress established a statutory
certification scheme and authorized the USDA to propose regulations to carry it out.
See § 6521(a). The OFPA also created the National Organic Standards Board, which
assists “in the development of standards for substances to be used in organic
production and to advise the Secretary [of Agriculture],” see § 6518, and granted the
USDA authority to accredit certifying agents to certify farms and handling operations,
see § 6514. QAI is one such accredited certifying agent.
3
It is the purpose of this chapter –
(1) to establish national standards governing the marketing of certain
agricultural products as organically produced products;
(2) to assure consumers that organically produced products meet a
consistent standard; and
(3) to facilitate interstate commerce in fresh and processed food that is
organically produced.
7 U.S.C. § 6501.
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a. All Claims Against QAI are Preempted
QAI certified Aurora as an organic supplier and never suspended or revoked the
certification.4 Aurora’s certification allows it to sell or label products using the OFPA
Terms without penalty. See § 6519(a). The penalty for knowingly selling or labeling
a product as organic without certification is $10,000. Id. The decision to certify rests
with the certification agent, and the OFPA sets forth an administrative procedure for
appeals of the certification agent’s decisions. See § 6520(a).
Even a cursory review of the OFPA reveals the nationalization of the decision
to certify businesses in order to carry out the statute’s purposes. The method the OFPA
uses to achieve its purpose is to allow some producers of agricultural products (those
that comply with all the requirements set forth in the OFPA and NOP) to sell and label
their goods as organic and to prohibit others from doing so. The OFPA achieves this
objective by certifying agricultural operations to use the OFPA Terms to sell or label
their products. The certifying agents decide whether to certify a particular
business—whether they may or may not sell or label their products as organic.
The district court correctly decided, to the extent state law permits outside
parties, including consumers, to interfere with or second guess the certification process,
the state law is an “obstacle to the accomplishment of congressional objectives” of the
OFPA. This court’s decision in Pet Quarters is in accord. See Pet Quarters, 559 F.3d
at 780 (“Accordingly, any of Pet Quarters’s state law claims that challenge the
existence or operation of the program or its rules are federally preempted.”).
The district court dismissed the class plaintiffs’ claims against QAI because the
claims “directly contradict the OFPA and NOP.” After reviewing the claims against
4
Whether there was a suspension or revocation was disputed in the district
court, but Aurora apparently abandoned the argument on appeal. In any event, the
court can take notice of the official certifying document.
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QAI, the district court reasoned “[e]ssentially, Plaintiffs are asserting that . . . QAI
should have revoked . . . Aurora’s certifications.” A review of each of the counts
reveals all the claims against QAI challenge conduct the OFPA and NOP contemplated
QAI would undertake in executing its responsibilities pursuant to the statute. As the
district court analyzed in detail, it would be impossible, on the one hand, for QAI to
comply with the OFPA and its regulations, which detail the process for revoking
certifications, and, on the other hand, to comply with any additional state law duty and
process to revoke certifications.
The class plaintiffs argue Congress’s inclusion of a provision in the OFPA
stating that certifying agents must “agree to hold the [USDA] harmless for any failure
on the part of the certifying agent to carry out the provisions of this chapter” amounts
to a recognition that subjecting certifying agents like QAI to liability does not conflict
with the purposes of the OFPA. See 7 U.S.C. § 6515(e)(1). Section 6515 sets forth
various requirements necessary for accreditation as a certifying agent, including,
among other things, the ability to implement the requirements, employment of
sufficient inspectors, and rules regarding record keeping and access, confidentiality,
and conflicts. See generally § 6515. One of those requirements is the hold harmless
provision. Under § 6515(e)(1), QAI is required to hold the USDA harmless from all
claims arising out of QAI’s failure to carry out the program. The most likely claims
to be brought against a certifying agent (at least from the perspective of Congress)
probably were not consumer claims such as those at issue here, but claims arising from
denials of certification to agricultural businesses. Not surprisingly, § 6515(e)(2)
requires agents to “furnish reasonable security . . . for the purpose of protecting the
rights of participants in the applicable organic certification program . . . .” While
§ 6515(e) may be effective, vis-à-vis QAI, against an otherwise successful consumer
protection claim against the USDA, the intent of the provision was not to create, and
does not support an argument for, authorizing such a claim against QAI.
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Lastly, the class plaintiffs suggest QAI misled the organic milk consuming
public when it allowed its “mark of excellence” seal to be affixed to Aurora’s milk.
But the “mark of excellence” is nothing more than a mark identifying QAI as the
certifying agent, which generally is required pursuant to 7 C.F.R. § 205.303(b)(2)
(“Agricultural products . . . must . . . identify the name of the certifying agent that
certified the handler of the finished product and may display the business address,
Internet address, or telephone number of the certifying agent in such label.”), and
specifically allowed by § 205.303(a)(5) (“Agricultural products . . . may display . . .
[t]he seal, logo, or other identifying mark of the certifying agent which certified the
production or handling operation producing the finished product.”). This argument has
no merit.
Because all of the class plaintiffs’ claims against QAI stand in conflict with the
OFPA, we affirm QAI’s dismissal as a party to this lawsuit.
b. Claims Attacking Aurora’s Certification are Preempted
For similar reasons, the class plaintiffs’ claims that Aurora and the retailers sold
milk as organic when in fact it was not organic are preempted because they conflict
with the OFPA. “Even where concurrent regulation is not totally precluded . . . state
and local enactments are nullified to the extent that they actually conflict with federal
law.” ENSCO, Inc. v. Dumas, 807 F.2d 743, 745 (8th Cir. 1986). The class plaintiffs
argue the defendants must be both certified and compliant with the underlying
requirements in order to comply with the OFPA. Viewed in light of the OFPA’s
structure and purpose, compliance and certification cannot be separate requirements.
Compliance with the regulations may lead to certification, and failure to comply with
the regulations may lead to nonapproval, suspension, or revocation of certification, see
7 C.F.R. §§ 205.405, 205.660, but compliance with the regulations is not a separate
requirement independently enforceable via state law.
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In arriving at this conclusion, we need look no further than the purposes
articulated in the OFPA itself. The first purpose, “to establish national standards
governing the marketing of certain agricultural products as organically produced
products,” would be deeply undermined by the inevitable divergence in applicable state
laws as numerous court systems adopt possibly conflicting interpretations of the same
provisions of the OFPA and NOP. See § 6501(1). While the addition of state
enforcement mechanisms may assist in “assur[ing] consumers that organically
produced products meet a consistent standard,” any added assurance comes at the cost
of the diminution of consistent standards, as not only different legal interpretations, but
also different enforcement strategies and priorities could further fragment the uniform
requirements. See id. at (2). The natural result of these differences in interpretation
and enforcement would be an increase in the “consumer confusion and troubled
interstate commerce,” S. Rep. 101-357, that characterized the period before the OFPA,
which stands in direct conflict to the OFPA’s third purpose of “facilitat[ing] interstate
commerce in fresh and processed food that is organically produced,” § 6501(3).
The structure of the OFPA, and particularly its remedial scheme, also support
our conclusion that to the extent state laws challenge Aurora’s certification they are
preempted. Title 7, United States Code, Section 6505(a)(1)(A), specifically allows “a
person [to] sell or label an agricultural product as organically produced . . . if such
product is produced and handled in accordance” with the OFPA and NOP. The only
penalty for noncompliance with the OFPA subjects persons “who knowingly sell[] or
label[] a product as organic” to a civil penalty of up to $10,000. § 6519(a). The role
of the certifying agent is to “certify a farm or handling operation that meets the
requirements of” the OFPA. § 6503(d). As noted above, Aurora maintained its
certification at all times relevant to this appeal. Therefore, any attempt to hold Aurora
or the retailers liable under state law based upon its products supposedly not being
organic directly conflicts with the role of the certifying agent as set forth in § 6503(d).
To the extent the class plaintiffs, relying on state consumer protection or tort law, seek
to set aside Aurora’s certification, or seek damages from any party for Aurora’s milk
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being labeled as organic in accordance with the certification, we hold that state law
conflicts with federal law and should be preempted. Accordingly, we affirm the
district court’s dismissal of the class plaintiffs’ claims based upon Aurora’s and the
retailers’ marketing, representing, and selling milk as organic when, allegedly, it was
not.
c. Claims Not Interfering with Aurora’s Certification are
Not Preempted
It is important to distinguish between state law challenges to the certification
determination itself, which conflict with the OFPA, and state law challenges to the
facts underlying certification. Aurora correctly points out “certification allows the
producer or handler to market, label and sell its products as organic unless and until
those certifications are subsequently suspended or revoked by the USDA or its
certifying agents” (emphasis added). But in contrast to state law challenges to
certification itself, challenges to the underlying facts do not necessarily conflict with
the OFPA’s purposes.
Aurora and the retailers5 advance the argument that if OFPA certification is to
mean anything, it must mean the certified products have met all the requirements
included in the OFPA and NOP. They contend, because the class plaintiffs’ claims are
based upon allegations that Aurora, despite its certification, knowingly failed to
5
There is no reason preemption should be broader for the retailers than it is for
Aurora. It is true the retailers are specifically exempt from the OFPA; it is Aurora’s
responsibility to maintain conditions supporting its certification; the retailers may
have had a right to rely upon Aurora’s certification; and the OFPA assigns the retailers
no duty to investigate whether Aurora was complying with the regulations. However,
these are facts related to the degree of fault and the defenses the retailers may pursue
under the various state law claims. Because the class plaintiffs’ claims do not arise
under the OFPA, the extent to which the retailers have fewer duties than Aurora under
the statute suggests federal preemption is less, not more, applicable to the retailers
than to Aurora.
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comply with provisions of the OFPA and NOP upon which certification is based, those
claims must be dismissed, because certification means that Aurora complied with the
statute and regulations.6 This is an attractive argument, but its beauty is only skin deep.
Our task is not to determine what certification means, but rather whether
Congress intended for the OFPA to preempt state law when the claims rely on proof
of facts that, if found by the certification agent, would preclude certification. For
example, one requirement for certification is that “producer[s] must establish and
maintain preventive livestock health care practices, including . . . [p]rovision of a feed
ration sufficient to meet nutritional requirements, including vitamins, minerals, protein
and/or amino acids, fatty acids, energy sources, and fiber (ruminants).” 7 C.F.R.
§ 205.238(a)(2). We believe, in enacting the OFPA, Congress did not intend for
requirements such as this to preclude a State from prosecuting a certified organic
producer for violating the State’s animal cruelty statute by abusing its livestock.
Certification relies upon inspection and observation of only a portion of a producer’s
operations, and thus, the evidence which supported certification could, and very likely
would, be different from the evidence which supports a state cause of action.
We begin our analysis by again noting “that the historic police powers of the
States were not to be superseded by the Federal Act unless that was the clear and
manifest purpose of Congress” and that “the purpose of Congress is ‘the ultimate
touchstone’ in every preemption case.” Medtronic, 518 U.S. at 485. As discussed
above, the argument for broad preemption of state consumer protection, fraud, and tort
6
The retailers cite 7 C.F.R. §§ 205.2 and 205.303 for the proposition that
“regulations extend to ‘any labeling or market information concerning the product’
as well as ‘all written, printed or graphic material’ that ‘accompanies’ or is ‘about’ an
organic product.” This statement is misleading. The regulations refer to where the
terms “organic,” “USDA organic,” and “made with organic ingredients” may be
placed. These regulations do not purport to regulate anything else that appears on the
packaging.
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claims finds no support in the OFPA’s express preemption provision. See 7 U.S.C.
§ 6507.
Nor can support for this broad factual preemption view be found in the OFPA
or NOP’s structure. The NOP allows many of its requirements to be satisfied in
alternative ways. For example, the requirement that farm producers manage crop
nutrients and soil fertility through, among other things, the application of plant and
animal materials may be met through the application of some kinds of raw animal
manure, composted plant and animal materials, or uncomposted plant materials. See
7 C.F.R. 205.203(b), (c). Although not dispositive, this use of the disjunctive tends to
show Congress expected the requirements for certification could be met in various
ways, which implies Congress lacked intent to give preclusive effect to any particular
determination. Indeed, “the OFPA contemplates that there will be a National List
through which non-organic substances can be approved for use in organic products.”
Harvey v. Johanns, 494 F.3d 237, 238 (1st Cir. 2007) (citing 7 U.S.C. § 6517).
The purposes of the OFPA are not furthered by preempting state law claims like
those at issue here. Preempting state law claims unrelated to the decision to certify,
and certification compliance, does not advance the purpose of establishing national
standards for organic foods. Nor does preemption of the facts underlying certification
advance the goals of assuring consumers that organics meet a consistent standard, or
in facilitating interstate commerce in organics. To the contrary, preemption of state
consumer protection law may actually diminish consumer confidence that organic
products meet consistent standards as consumers become aware that otherwise
meritorious claims are being preempted because the certifying agent has not suspended
the certification in spite of clear facts to the contrary. Similarly, although broad factual
preemption may increase organic production in the short term, consumers may well
elect to avoid paying the premium for organic products upon realizing preemption
grants organic producers a de facto license to violate state fraud, consumer protection,
and false advertising laws with relative impunity, because the OFPA’s only remedy for
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noncompliance is recourse to the USDA for revocation of certification and possibly for
a civil penalty. See 7 U.S.C. § 6519. We do not believe the OFPA’s purpose is
advanced by extending preemption this far.
The resolution of whether the class plaintiffs’ individual claims interfere with
the OFPA’s certification, as discussed above, is a matter which should best be resolved
in the first instance by the district court. This is so because our conclusion that some
of the class plaintiffs’ claims should not have been dismissed renders Aurora and the
retailers’ motion to strike the CCC and the class plaintiffs’ motion to amend the CCC
no longer moot. We do not wish to interfere with the district court’s discretionary
determination as to how the motions should be resolved, and we are unable to engage
in a meaningful review of the class plaintiffs’ claims until they are. In the interests of
efficiency and justice, we must first determine whether any of the parties dismissed by
the district court are entitled to have that dismissal affirmed based upon the principles
articulated above. Therefore, if a single claim against each defendant could have
survived dismissal we will reverse and remand as to that defendant.
D. Remand is Appropriate as to Aurora and the Retailers
Except for QAI, at least one claim against each defendant in the CCC could
survive preemption. Many of the claims against Aurora seek to hold it accountable for
representing its products as organic when in fact the products were not. As discussed
above, all of these claims are preempted by the OFPA. However, claims against
Aurora for other conduct, particularly other representations it made in marketing its
High Meadow brand milk, fall outside the scope of preemption. For example, the class
plaintiffs allege Aurora engaged in various deceptive trade practices in violation of the
Colorado Consumer Protection Act (CCPA), Colo. Rev. Stat. § 6-1-105(1).
Among other things, the CCPA defines deceptive trade practices to
include “advertis[ing] goods . . . with the intent not to sell them as advertised” and
“[f]ail[ing] to disclose material information concerning goods . . . which information
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was known at the time of an advertisement or sale if such failure . . . was intended to
induce the consumer to enter into a transaction.” Id. at (i), (u). The class plaintiffs
allege Aurora engaged in deceptive advertising practices by, among other things,
“misrepresenting the manner in which its dairy cows were raised and fed,” and
“suppressing or omitting material facts regarding the production of its ‘organic’ milk
or milk products, specifically that . . . the dairy cows were not raised at pasture.” This
claim sufficiently states a cause of action at this stage of the proceedings. The district
court’s dismissal of defendant Aurora from the lawsuit must be reversed.
The analysis of the deceptive advertising claims against Costco, Safeway,
Target, and Wild Oats is identical to the analysis of the claims against Aurora. Each
defendant is alleged to have misrepresented the manner in which the dairy cows were
raised and fed in violation of various state deceptive trade practices laws and is alleged
to have suppressed or omitted material facts regarding the production of its products.
We hold at least one claim could have survived a motion to dismiss as to each of these
defendants, again at this stage of the case.
The class plaintiffs accuse Wal-Mart of the same activity as the other retailers.
Wal-Mart allegedly advertises that its milk is antibiotic and hormone free. The class
plaintiffs also allege Wal-Mart made knowing false statements on its packaging about
the humane treatment of cows. There is evidence some of the organic cows at Aurora
were put in herds with ordinary cows, potentially subjecting them to injections of
antibiotics and hormones. Our review of the allegations against Wal-Mart confirms
the allegations are sufficient to state at least one plausible claim for relief, at this stage.
E. Instructions on Remand
On remand, the district court should first consider Aurora’s and the retailers’
motions to strike and the class plaintiffs’ motion to amend the CCC. Having
determined which claims are properly before it, the court should next consider which
of the class plaintiffs’ claims survive preemption in accordance with this opinion.
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III. CONCLUSION
For the foregoing reasons, we (1) affirm the dismissal of defendant QAI from
this lawsuit, (2) affirm the dismissal of those claims challenging Aurora’s certification
and appellees’ use of the OFPA Terms, (3) reverse the dismissal of all remaining
claims against Aurora, Costco, Safeway, Target, Wild Oats, and Wal-Mart, and
(4) remand for further proceedings consistent with this opinion. Although this task
may be difficult in application, we are confident the district court and the parties will
be able to apply these holdings.
______________________________
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