Brown et al v. The Hain Celestial Group, Inc.

Filing 79

Order by Magistrate Judge Laurel Beeler granting 60 Motion for Leave to Appeal; denying 60 Motion to Stay.(lblc1, COURT STAFF) (Filed on 9/24/2012)

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UNITED STATES DISTRICT COURT

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Northern District of California

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San Francisco Division

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For the Northern District of California

UNITED STATES DISTRICT COURT

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ROSMINAH BROWN and ERIC LOHELA,
on behalf of themselves and all others
similarly situated,

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Plaintiffs,
v.

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THE HAIN CELESTIAL GROUP, INC., a
Delaware Corporation,

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Defendant.
_____________________________________/

No. C 11-03082 LB
ORDER GRANTING DEFENDANT’S
MOTION TO CERTIFY THE COURT’S
AUGUST 1, 2012 ORDER RE
PREEMPTION AND PRIMARY
JURISDICTION FOR
INTERLOCUTORY APPEAL AND
DENYING DEFENDANT’S MOTION
TO STAY CASE PENDING APPEAL
[ECF No. 60]

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I. INTRODUCTION
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On August 1, 2012, the court issued an order denying Defendant The Hain Celestial Group,
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Inc.’s (“Hain”) motion to dismiss for lack of subject matter jurisdiction (“Order”). ECF No. 58.1 On

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August 9, 2012, Hain moved the court to amend the Order and certify it for interlocutory appeal
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pursuant to 28 U.S.C. § 1292(b). ECF No. 60. Hain also asks the court to stay this case pending the
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appeal. Id. Plaintiffs Rosminah Brown and Eric Lohela oppose Hain’s request. ECF No. 70.
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The court grants Hain’s request to certify the case for interlocutory appeal because the order
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presents a controlling question of law about which there are substantial grounds for difference of
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opinion, and an immediate appeal may materially advance the ultimate termination of the litigation.
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Citations are to the Electronic Case File (“ECF”) with pin cites to the electronicallygenerated page numbers at the top of the document.

C 11-03082 LB (ORDER)

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The court denies Hain’s request for a stay while the appeal is pending.

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II. BACKGROUND TO INSTANT MOTION

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Plaintiffs Brown and Lohela are suing The Hain Celestial Group, a manufacturer and distributor

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of cosmetic products (also referred to as personal care products) that are marketed, labeled, and sold

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in California as “organic.” First Am. Compl. (“FAC”), ECF No. 68, ¶ 1. Hain sells cosmetic

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products under the Jason and Avalon Organics brands. Id. Plaintiffs allege that Hain markets,

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labels, and sells these products (the “Products”) as “organic,” even though they are not

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predominately made from organic ingredients. Id. Plaintiffs allege that they purchased the Products

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because they were organic and they would not have purchased them, at least for the same price, but

Alameda County Superior Court, alleging causes of action under the California Organic Products

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For the Northern District of California

for Hain’s allegedly false and misleading claims. Id. Plaintiff Rosminah Brown filed suit in

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UNITED STATES DISTRICT COURT

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Act of 2003 (“COPA”), Cal. Health & Safety Code § 110810, et seq., specifically § 111910(a),

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California’s Unfair competition Law, Cal. Bus. & Prof. Code § 17200, et seq., California’s

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Consumers Legal Remedies Act, Cal. Civ. Code § 1750, et seq., and for breach of express warranty

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under Cal. Com. Code § 2313.

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On March 2, 2012, Hain filed a motion to dismiss for lack of subject matter jurisdiction, arguing

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that the Organic Foods Production Act of 1990 (“OFPA”), 7 U.S.C. §§ 6501-24, expressly

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preempted COPA, which, Hain argued, was the basis for all of Brown’s claims. See Mot. to

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Dismiss, ECF No. 27 at 10.

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At the hearing on the motion to dismiss, the court told the parties its view that OFPA expressly

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preempts state certification requirements but does not expressly bar state law claims that do not

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conflict with OFPA’s provisions. During oral arguments, Hain raised additional arguments

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regarding the primary jurisdiction doctrine that were not briefed previously. Hain subsequently

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sought leave to submit post-hearing briefs regarding the motion to dismiss. See Mot. for Leave,

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ECF No. 41 at 2. The court permitted the parties to submit post-hearing briefs on the narrow issue

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of the applicability of the primary jurisdiction doctrine to this case. Order, ECF No. 47. The parties

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then submitted post-hearing briefs. ECF Nos. 49, 51. On August 1, 2012, having considered the

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parties’ pre- and post-hearing briefs, the court denied Hain’s motion to dismiss on preemption and

C 11-03082 LB (ORDER)

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primary jurisdiction grounds. ECF No. 58.
On August 9, 2012, Hain filed this motion to certify the court’s August 1 order for interlocutory

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appeal and to stay. ECF No. 60. While that motion was pending, Plaintiff Rosminah Brown filed an

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amended complaint adding Eric Lohela as a co-plaintiff. ECF No. 68.

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III. LEGAL STANDARD

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Section 1292(b) provides a means for litigants to bring an immediate appeal of a non-dispositive

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order with the consent of both the district court and the court of appeals. 28 U.S.C. § 1292(b); In re

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Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). A district court may certify an

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interlocutory appeal pursuant to 28 U.S.C. § 1292(b) “only in exceptional situations in which
allowing an interlocutory appeal would avoid protracted and expensive litigation.” Id. (citing U.S.

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Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966)

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For the Northern District of California

UNITED STATES DISTRICT COURT

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The district court may certify an order for interlocutory appellate review under section 1292(b) if

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the following three requirements are met: “(1) there is a controlling question of law, (2) there are

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substantial grounds for difference of opinion, and (3) an immediate appeal may materially advance

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the ultimate termination of the litigation.” Id.

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The Ninth Circuit defines a controlling question as one in which “the resolution of the issue on

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appeal could materially affect the outcome of litigation in the district court.” In re Cement Antitrust

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Litig., 637 F.2d at 1027. A question may be controlling even though its resolution does not

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determine who will prevail on the merits. But it is not controlling simply because its immediate

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resolution may promote judicial economy.

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With regard to the second factor, “[c]ourts traditionally will find that a substantial ground for

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difference of opinion exists where the circuits are in dispute on the question and the court of appeals

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of the circuit has not spoken on the point, if complicated questions arise under foreign law, or if

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novel and difficult questions of first impression are presented.” Couch v. Telescope, Inc. 611 F.3d

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629, 633 (9th Cir. 2010) (quotations omitted).

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Finally, the Ninth Circuit has not expressly defined material advancement of the ultimate

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termination of the litigation. Still an immediate appeal will not materially advance the ultimate

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termination of litigation where the appeal might postpone the scheduled trial date. See Shurance v.

C 11-03082 LB (ORDER)

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Planning Control Int’l, Inc. 839 F.2d 1347, 1348 (9th Cir. 1988).

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III. DISCUSSION

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As discussed below, Hain argues that the issues presented for certification meet all three of the

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section 1292(b) requirements. ECF No. 60 at 8. In addition, Hain suggests that appellate review

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would conserve judicial and party resources and provide guidance to the organic products industry.

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Id. Below, the court analyzes the parties’ arguments as to the three factors for permissive

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certification and concludes that certification is appropriate.

provisions of [COPA] are preempted and inoperative unless reviewed and approved by the [USDA]

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under [OFPA];” and (2) whether OFPA “requires administrative exhaustion of the claims in this case

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to avoid undercutting national organic standards.” Mot., ECF No. 60 at 6.

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For the Northern District of California

Hain requests the court certify two issues for interlocutory appeal: (1) whether “[t]he relevant

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UNITED STATES DISTRICT COURT

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A. Whether the Relevant Provisions of COPA are Preempted Unless Approved by USDA

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Hain argues that the preemption issue is a controlling question of law because reversal of the

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court’s decision would, in Hain’s view, mandate dismissal of the entire action. Mot., ECF No. 60 at

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8-9. In opposition, Plaintiffs argue that certification of an issue for interlocutory appeal is improper

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where the appeal will not resolve at least most of the claims in the lawsuit. Opp’n, ECF No. 70 at

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11. Plaintiffs point out that Hain seeks review of only the legal question whether COPA’s cosmetic

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labeling provisions are preempted without USDA approval and does not seek review of the factual

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question of whether any particular COPA provisions were actually approved. Opp’n, ECF No. 70 at

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10-11. And even if the Ninth Circuit were to go beyond that question and determine that COPA is

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preempted, this would not necessarily dispose of all of Plaintiffs’ claims. Id. at 11. Because at least

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some of Plaintiffs’ claims would survive reversal of this court’s order, they argue the issue is not

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controlling. Id.

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In reply, Hain seems to recast the question for certification as whether COPA is actually

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preempted and then argues that such a ruling would significantly narrow the issues and advance the

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resolution of the case. ECF No. 72 at 9-10. Hain also disputes Plaintiffs’ assertion that certification

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is appropriate only where a successful appeal would completely resolve plaintiff’s claims. Id. at 10.

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The court disagrees with Hain’s opinion that an appellate decision would remove jurisdiction

C 11-03082 LB (ORDER)

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over most of the case. As previously explained, the court does not read Plaintiffs’ claims as

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narrowly as Hain. Nonetheless, the court agrees with Hain and the weight of authority that

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certification is appropriate where a successful appeal would materially advance, though not

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completely dispose of, the litigation. If the court’s order were reversed on appeal, it would limit the

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legal theories under which Plaintiffs could prove their case. Accordingly, the court finds that the

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preemption question presents a controlling question of law.

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Next Hain argues that there are substantial grounds for difference of opinion regarding the

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preemption issue. Mot., ECF No. 10-13 Hain characterizes the dispute as presenting novel and

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difficult questions of first impression. Mot., ECF No. 60 at 11. For example, California is the only

there are no reported cases involving COPA as the predicate for consumer protection claims. Id.

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For the Northern District of California

state with a statutory scheme that regulates the composition and labeling of organic products and

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UNITED STATES DISTRICT COURT

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Hain also argues that there are strong arguments on both sides of the preemption issue. Id. at 11-13.

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Plaintiffs respond that the issue presented is not so complex as Hain maintains and that its novelty is

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a function of its spuriousness. Opp’n, ECF No. 70 at 8-10. Plaintiffs also unpersuasively argue,

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based on out-of-circuit precedent, that interlocutory appeal is appropriate only if there is genuine

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doubt as to the correct legal standard. Opp’n, ECF No. 70 at 8 (citing Cardona v. General Motors

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Corp., 939 F. Supp. 351, 353 (D. N.J. 1996)). In the absence of any evidence of Congressional

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intent to preempt, the court does not believe that there are strong arguments for Hain’s preemption

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position. Nonetheless, the issue Hain seeks to certify does involve a complex interplay between

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federal and state law that has not previously been addressed by the Ninth Circuit. Accordingly, the

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court finds that there are sufficiently substantial grounds for difference of opinion to justify

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certifying the question under 28 U.S.C. § 1292(b).

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Finally, the parties devote relatively little attention to the question of whether interlocutory

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review will materially advance the termination of the litigation. Hain merely restates its conclusion

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that “[a] successful interlocutory appeal of the Order would result in dismissal of all of Plaintiff’s

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claims and terminate the action.” Mot., ECF No. 60 at 15. Hain also argues that an interlocutory

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appeal is not likely to significantly delay this litigation because trial is not scheduled for eight

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months. Id. While the court does not share Hain’s view that a successful appeal would necessarily

C 11-03082 LB (ORDER)

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result in dismissal of all of Plaintiff’s claims, that is one possible outcome. Thus, interlocutory

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appeal could materially advance termination of the litigation. And an interlocutory appeal will not

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delay this litigation because, as discussed below, the court denies Hain’s motion to stay.

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Accordingly, the court GRANTS Hain’s motion to certify the first issue for interlocutory appeal.

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B. Whether OFPA Requires Administrative Exhaustion of Plaintiffs’ Claims

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The second issue for which Hain seeks certification under 28 U.S.C. § 1292(b) is whether OFPA

standards. Mot., ECF No. 60 at 6. Before analyzing whether this issue meets the section 1292(b)

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factors, the court addresses Plaintiffs’ initial objection. Plaintiffs argue that the administrative

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exhaustion question is inappropriate for interlocutory review because it was neither briefed nor

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decided by the court. Opp’n, ECF No. 70 at 12. Instead, Plaintiffs point out, the parties’ briefing

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For the Northern District of California

requires administrative exhaustion of the claims in this case to avoid undercutting national organic

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UNITED STATES DISTRICT COURT

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and the court’s Order addressed whether the court should defer to the USDA under the primary

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jurisdiction doctrine. Id. Primary jurisdiction is a discretionary doctrine “triggered when

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administrative proceedings involve an issue also involved in the district court litigation.” Verizon

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Nw., Inc. v. Portland Gen. Elec. Co., CIV. 03-1286-MO, 2004 WL 97615 (D. Or. Jan. 13, 2004).

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On the other hand, “[e]xhaustion is not concerned with merely issues but with whether the ultimate

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relief sought in the district court would be available in administrative proceedings. Id.

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As Hain points out in reply, however, the parties and the court addressed whether Plaintiffs

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needed to exhaust their administrative remedies before filing suit. See Reply, ECF No. 72 at 8

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(collecting citations). Accordingly, the court finds that the issue is ripe for appellate review.

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Turning to the section 1292(b) elements, Hain argues that the exhaustion issue involves a

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controlling question of law because reversal by the Ninth Circuit would, in Hain’s view, mandate a

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stay or dismissal of the entire action. See Mot., ECF No. 60 at 9-10 (discussing, as analogous, Pom

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Wonderful LLC v. Coca Cola Co., 679 F.3d 1170, 1178 (9th Cir. 2012)). Plaintiffs do not directly

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address Hain’s arguments on this element, which the court agrees Hain has established.

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The exhaustion issue also presents novel and difficult questions of first impression sufficient to

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meet the second 1292(b) element. Initially, Hain argues that substantial grounds for a difference of

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opinion are established by the recent decision in All One God Faith, Inc. v. The Hain Celestial

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Group, Inc., No. C 09-3517 SI, 2012 WL 3257660 (N.D. Cal. Aug. 8, 2012), in which the court

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deferred to the USDA under the primary jurisdiction doctrine. Hain argues that this opinion

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constitutes contradictory precedent. See Mot., ECF No. 60 at 14. Plaintiffs point out, however, that

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case involves Lanham Act claims, which the court has already determined are distinguishable from

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the state law claims at issue in this case. Opp’n, ECF No. 70 at 13.

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Nonetheless, the court still finds that this issue presents substantial grounds for a difference of

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opinion with respect to the exhaustion issue. The court’s ruling on the related primary jurisdiction

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question was largely premised on practical considerations, including deference to the apparently

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copacetic coexistence between state and federal authorities with respect to the interaction of COPA

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Finally, appellate resolution of the exhaustion issue in Hain’s favor could materially advance the

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For the Northern District of California

UNITED STATES DISTRICT COURT

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and the National Organic Program. See Order, ECF No. 58 at 24.

ultimate termination of the litigation by significantly paring down the issues for judicial

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determination.

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C. Whether the Case Should Be Stayed Pending Appeal

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Section 1292(b) states that an application for an appeal shall not automatically stay the

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proceedings but permits the court to order a stay. 28 U.S.C. § 1292(b). Hain contends that a stay

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pending appeal is appropriate “where it will ‘promote economy of time and effort for itself, for

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counsel, and for litigants.’” Mot., ECF No. 60 at 16 (quoting Ritz Camera & Image, LLC, v.

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SanDisk Corp., No. 10-cv-02787 (JF), 2011 WL 3957257, at *3 (N.D. Cal. Sept. 7, 2011)). Hain

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argues that a stay is appropriate because the interlocutory appeal will challenge the court’s

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jurisdiction, discovery in this case will likely be burdensome on the parties and the court, and a stay

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will not prejudice Plaintiffs. Id. at 16-18.

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Plaintiffs oppose a stay pending appeal, particularly where it seems relatively unlikely that

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appellate resolution would dispose of the entire case. Opp’n, ECF No. 70 at 14. They ask that the

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court balance the hardships facing the parties, which they contend favors proceeding with discovery.

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Id. at 15. Plaintiffs dispute Hain’s characterization of their discovery requests as particularly

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burdensome, and they suggest that Hain seeks a stay simply to delay responding to their reasonable

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discovery as long as possible. Id. at 16.

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The court has reviewed Plaintiffs’ discovery requests and found them to be generally reasonable.

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See, e.g., Order Re: Joint Discovery Letter, ECF No. 64. For much of this litigation, Hain has

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unilaterally imposed a stay of discovery that has unnecessarily delayed the proceedings. The court

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DENIES Hain’s request to stay discovery pending interlocutory appeal.

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IV. CONCLUSION
While certification pursuant to § 1292(b) is to be used sparingly, on balance, the court finds that

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its order meets all of the necessary criteria for the reasons discussed above and is appropriate for

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certification. Accordingly, the court GRANTS Hain’s motion to certify. The court amends its

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order, ECF No. 58, to add the following sentence: “The court certifies the for immediate
interlocutory appeal pursuant to 28 U.S.C. § 1292(b).” And due to the extensive discovery delays

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thus far, the court DENIES Hain’s motion to stay this case during the pendency of the appeal.

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For the Northern District of California

UNITED STATES DISTRICT COURT

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This disposes of ECF No. 60.

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IT IS SO ORDERED.

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Dated: September 20, 2012
_______________________________
LAUREL BEELER
United States Magistrate Judge

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C 11-03082 LB (ORDER)

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