Federal Court decides Ohio dairy labeling case

A federal court ruled on the Ohio dairy labeling case.

By Peggy Hall, Ohio State University Extension

The federal Court of Appeals for the Sixth Circuit has ruled in International Dairy Foods Assoc. v. Boggs, a controversial case long anticipated by Ohio’s agricultural interests.  At the center of the controversy is Ohio’s dairy labeling rule, adopted  by the Ohio Department of Agriculture in 2008.  Prior to the rule, many dairy producers who did not use the genetically engineered hormone called recombinant bovine somatotropin (rbST) included language on their product labels that indicated the product as “rbST free” or “from cows not treated with rbST.”  Many others in the agricultural and dairy industries objected to such language, claiming that it was false and misleading and suggested that  “rbST free” dairy products were superior to others.  In response to such concerns, Governor Strickland directed the ODA to “define what constitutes false and misleading labels on milk and milk products” and to require dairy producers claiming that they do not use rbST to submit supporting documentation and create labels containing representations consistent with the Food and Drug Administration’s findings that there is no significant difference between milk from rbST-treated and untreated cows.

The ODA rule, adopted  amidst much controversy that divided Ohio’s agricultural interests, states that:

(A) Pursuant to sections 917.05 and 3715.60 of the Revised Code, dairy products will be deemed to be misbranded if they contain a statement which is false or misleading.

(B) A dairy label which contains a production claim that “this milk is from cows not supplemented with rbST” (or a substantially equivalent claim) may be considered misleading on the basis of such language, unless:

(1) The labeling entity has verified that the claim is accurate, and proper documents, including, but not limited to, producer signed affidavits, farm weight tickets and plant audit trails, to support the claim, are made readily available to ODA for inspection; and

(2) The label contains, in the same label panel, in exactly the same font, style, case, and color and at least half the size (but no smaller than seven point font) as the foregoing representation, the following contiguous additional statement (or a substantially equivalent statement): “The FDA has determined that no significant difference has been shown between milk derived from rbST-supplemented and non-rbST-supplemented cows.”

(C) Making claims regarding the composition of milk with respect to hormones, such as “No Hormones”, “Hormone Free”, “rbST Free”, “rbGH Free”, “No Artificial Hormones” and “bST Free”, is false and misleading. ODA will not permit such statements on any dairy product labels.

(D) Statements may be considered to be false or misleading if they indicate the absence of a compound not permitted by the United States [F]ood and [D]rug [A]dministration to be present in any dairy product, including, but not limited to antibiotics or pesticides. Except as otherwise provided in this rule, accurate production claims will not be deemed false or misleading.

Ohio Admin. Code § 901:11-8-01.

The International Dairy Foods Association (IDFA) and Organic Trade Association (OTA) both challenged Ohio’s rule, claiming among other things that the rule is unconstitutional for violating their First Amendment rights to free speech and for violating the Commerce Clause.  On all but one claim at the trial level, the federal district court granted summary judgment in favor of the State and denied the request for injunctive relief; IDFA and OTA appealed the decision to the Sixth Circuit Court of Appeals.

In the appellate court’s opinion issued on September 30, 2010, the court addressed three issues:  whether the rule’s ban on any dairy composition claim violates the First Amendment;  whether the rule’s disclosure requirement for production claims violates the First Amendment, and whether the rule violates the Consitition’s Commerce Clause.  The court ruled as follows on each issue:

The rule’s ban on “composition” claims such as “rbST free” and ”hormone free.” Relying on the lack of scientific tests that can ascertain whether rbST exists in milk from either treated or non-treated cows, the court determined that a compositional claim such as “rbST free” is not inherently misleading since it “at best informs consumers of a meaningful distinction between conventional and other types of milk and at worst potentially misleads them into believing that a compositionally distinct milk adversely affects their health.”  The court also concluded that although the State’s purpose for the rule–to prevent consumer deception–is substantial, a record of such deception was merely hypothetical and the rule neither directly advanced that purpose nor was narrowly tailored to achieve the purpose.  Of importance to the court was the argument that producers should be permitted to use the “rbST free” language in conjunction with a disclaimer that would clarify that the hormone is definitively not in their milk but has not been detected in conventionally produced milk.  The court agreed that merely requiring producers to use a disclaimer would prevent deception and stated that a State “may not place an absolute prohibition on certain types of potentially misleading information…if the information also may be presented in a way that is not deceptive.”  The complete ban on composition claims thus violated IDFA and OTA’s First Amendment rights to conduct truthful commercial speech, held the court.

The rule’s disclosure requirement for production claims. The second issue concerned the rule’s requirement for producers who state that “this milk is from cows not supplemented with rbST” to also include on the product label, contiguously and in a particular font, that “the FDA has determined that no significant difference has been shown between milk derived from rbST-supplemented and non-rbST supplemented cows.”    The federal district court found that this disclosure requirement was “reasonably related” to the rule’s purpose of preventing deception.  IDFA and OTA argued that the district court should have used a more stringent standard of review for the disclosure requirement, rather than a review of whether the requirement was “reasonable.”  The appeals court disagreed, holding that reasonableness was the appropriate standard of review.  However, while the court held that a disclosure requirement is reasonably related to the purpose of preventing deception, it also determined that the rule’s strict requirements for the size, font and location of the disclosure had no rational basis or “demonstrable connection to ensuring that consumers are not misled.” Compelling to the court was an argument rejected by the federal district court–that the use of an asterisk on the label that would provide the disclosure elsewhere on the product, rather than the restrictive labeling requirements, would be less burdensome and would effectively inform the consumer.  The court of appeals reversed the federal district court’s prohibition on the use of an asterisk in lieu of the restrictive formatting mandates in the disclosure requirement.

The rule’s impact on interstate commerce. IDFA and OTA argued that Ohio’s rule created an undue burden on interstate commerce in violation of the Constitution’s Commerce Clause.  Legal precedent requires the court to determine first whether the rule has the impermissible effect of controlling commerce outside the state’s boundaries and second whether the result of the rule is preferential treatment for in-state economic interests.  If the answers to both are negative, the court may conclude that the rule is not invalid on its face but must then determine whether the rule burdens interstate commerce more than it benefits the State.  The appeals court quickly concluded that the rule was not invalid on its face because it did not mandate conduct outside Ohio, did not impede the free flow of milk products across the country and did not favor Ohio interests over outside interests.  The court proceeded to weigh the burdens and benefits of the rule and recognized the importance of the rule’s intended benefits– consumer protection–while noting that the potential burdens of the rule were diminished by the court’s invalidation of the more restrictive provisions in the rule.  Thus, the burdens did not outweigh the benefits and the rule was not in violation of the Commerce Clause, said the court.

The court of appeals remanded the case back to the federal district court for further proceedings.  Barring a request for review of the decision to the U.S. Supreme Court, the outcome of the case will likely yield a formal revision of Ohio’s dairy labeling rule.  We can expect to see a rule that does not prohibit the use of “rbST free” and similar language but requires disclosure that rBST has not been detected in conventional milk and allows the less restrictive use of an asterisk to disclose information that the FDA has not detected differences between products from rbST and non-rbST cows.

Read the Court of Appeals opinion in International Dairy Foods Assoc. v. Boggs here.

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