The Franchise Memorandum

A trial court in the District of Columbia recently held that claims alleging a franchisor had violated the district's Consumer Protection and Procedure Act (CPPA) by misrepresenting the nutritional quality of its products were not preempted by Food and Drug Administration laws. Nat'l Consumer's League v. Doctor's Assocs., Inc., 2014 D.C. Super. LEXIS 15 (D.C. Super. Sept. 12, 2014). The plaintiff, NCL, argued that the
franchisor employed marketing tactics designed to mislead consumers about the nutritional content of certain varieties of bread offered by Subway. Subway moved to dismiss NCL's complaint, arguing, among other things, that its claims were preempted by FDA laws regulating food labeling and advertising. The court disagreed.

The court noted that the relevant FDA statutory scheme preempted only those state laws purporting to regulate labeling requirements expressly covered by FDA law. Because NCL's claims relate to representations concerning health content information not expressly regulated by FDA law, NCL's consumer protection claim was not preempted. The court also rejected Subway's attempt to dismiss or stay NCL's suit under the doctrine of primary jurisdiction. That doctrine provides a court with the discretion to decline to exercise its jurisdiction over a matter that implicates issues that "have been placed within the special competence of an administrative body." The court held that a determination of whether consumers were misled by product marketing did not require the application of the FDA's specialized knowledge. Finally, following other courts in the jurisdiction, the court held that Rule of Civil Procedure 9(b)'s heightened pleading requirements do not apply to claims under the CPPA. With one exception, the court determined that NCL had sufficiently pled its claims under the CPPA.