9th Circ. Won't Revive False Ad Suit Over 'Natural' Chicken

The Ninth Circuit has refused to revive two nonprofits' suit alleging that Sanderson Farms Inc.'s chicken is falsely labeled as "100% natural," ruling Wednesday that the groups haven't shown that they diverted any resources to address the purported false advertising.

The Center for Food Safety and Friends of the Earth had claimed that Sanderson's chicken is misleadingly labeled and advertised as all "natural" when it actually contains antibiotics. A California federal judge threw out the case in August 2019, ruling that the nonprofits' own testimony revealed that they would've advocated against the antibiotics even if Sanderson had never aired the advertisements underlying the dispute.

On appeal, the groups questioned the district court's interpretation of their testimony and other evidence. And in any event, they said their claim under California's Unfair Competition Law should proceed because they were also challenging Sanderson's husbandry practices — not just its advertising.

But the Ninth Circuit disagreed Wednesday, noting that in order to establish standing, the advocacy groups needed to show that the challenged conduct "frustrated their organizational missions and that they diverted resources to combat that conduct." And during the relevant time period, the groups didn't publish action alerts, launch any campaigns, put out press releases, or petition or protest Sanderson's advertising specifically, the three-judge panel said.

"Once Sanderson's misleading advertisements were brought to the attention of the advocacy groups, they simply continued doing what they were already doing — publishing reports on and informing the public of various companies' antibiotic practices," the Ninth Circuit said.

The panel also criticized the groups' evidence, adding, "After nearly two years and mountains of discovery, the advocacy groups could meaningfully offer only a single conclusory, contradictory and uncorroborated statement as evidence of diverted resources."

The Ninth Circuit also rejected the groups' position on their unfair competition claim, holding that Sanderson's husbandry practices are not relevant in their own right, but only as related to the alleged misrepresentations in the advertising.

"For this reason, the UCL claim is entirely tethered to the representations," the panel said. "Consequently, no claim survives dismissal."

Sanderson sells its products to supermarkets and restaurant chains around the country. According to the nonprofits' initial June 2017 complaint, testing by the U.S. Department of Agriculture has revealed that Sanderson's products contain synthetic drug residues.

The groups said Sanderson gives its chickens antibiotics and keeps them in confined "agro-industrial conditions," and that a reasonable consumer would think such practices run counter to the "100 percent natural" promise on its labels, advertisements and webpage.

In December 2018, U.S. District Judge Richard Seeborg declined to throw out the suit, finding that a revised complaint sufficiently backed the groups' claims that the company's marketing is deceptive.

But Judge Seeborg tossed the suit the following year, finding that "the record confirms they were incurring ordinary program costs regardless of Sanderson's advertising, and such expenses cannot be transformed into an injury-in-fact under Article III."

And "perhaps the most damaging" testimony to the claims is the groups' own depositions, the judge added at the time.

Counsel for the parties didn't immediately return requests for comment Wednesday.

U.S. Circuit Judges M. Margaret McKeown and Jacqueline H. Nguyen and District Judge Robert H. Whaley sat on the panel for the Ninth Circuit.

The nonprofits are represented by Gretchen Elsner of Elsner Law & Policy LLC.

Sanderson is represented by Michael A. Glick, Gregg F. LoCascio, Paul J. Weeks and Erin E. Cady of Kirkland & Ellis LLP.

The case is Organic Consumers Association et al. v. Sanderson Farms Inc., case number 3:17-cv-03592, in the U.S. District Court for the Northern District of California.