Self-Made ‘No GMO’ Label Fails Court Scrutiny

Advertising Law

A California judge allowed a false advertising class action against Nestlé to move forward, denying the defendant’s motion to dismiss. The lawsuit challenges the company’s creation and use of a “No GMO Ingredients” seal on multiple food products.

Jennifer Latiff filed a putative class action in 2018, alleging that Nestlé’s self-created seal duped her and other consumers into believing that products such as Lean Cuisine Marketplace frozen meals and Coffee-Mate Natural Bliss creamer are free of genetically modified organisms, commonly referred to as GMOs.

At the heart of the lawsuit is Nestlé’s use of a self-created “No GMO Ingredients” seal, which according to the plaintiff impersonated the seal of the Non-GMO Project. The Non-GMO Project is an independent nonprofit organization that operates an industry-standard third-party verification program for non-GMO food and products.

The plaintiff argued that the use of the self-created seal was misleading and deceptive because (1) many of the ingredients in Nestlé’s products were actually made from animals fed with GMO feed, and (2) the seal misrepresents to consumers that the defendant’s products had been certified by a neutral third party, when in fact the defendant’s standards are “far less than” those required to earn the third-party verified seal.

Nestlé moved to dismiss, arguing that the plaintiff suffered no injury. But U.S. District Judge Otis D. Wright II disagreed. The U.S. Court of Appeals for the Ninth Circuit has previously held that the injury-in-fact requirement is met when consumers suffer an economic injury as a result of false advertising claims when they purchase a product they otherwise would not have, the court said.

Latiff claimed that she purposely chooses non-GMO products verified by third parties when making purchasing decisions and that she would not have purchased the Nestlé products bearing the “No GMO Ingredients” seal had she known that the defendant was using misleading labels.

“Since Plaintiff alleges that she relied on Defendant’s label, thereby paying higher market prices than she would have otherwise paid, Plaintiff has standing,” the court wrote.

The court also determined that Latiff sufficiently stated claims under the state’s Consumers Legal Remedies Act, False Advertising Law and Unfair Competition Law. For example, the plaintiff alleged that Nestlé’s “No GMO Ingredients” seal was deceptive because ingredients in the products are derived from GMOs, such as milk from cows fed with GMO grains.

“These products would not qualify for the Non-GMO Project’s seal,” Judge Wright said. “As such, if products are made with milk from animals fed with GMO feed and contain[] a No GMO Ingredients Label, it is plausible that consumers would be misled.”

To read the order in Latiff v. Nestlé USA, Inc., click here.

Why it matters: Using a self-designed seal can be tricky for advertisers, as demonstrated by the class action against Nestlé. While the court declined to go into detail about its ruling, it found that a reasonable consumer could be deceived by the “No GMO Ingredients” label, which the plaintiff said was designed to mimic a third-party verified seal with higher standards. While this case does not stand for the proposition that an advertiser cannot create its own seal program, advertisers should use caution when creating such a program, especially if other seal programs are similar to the advertiser’s proposed program.