In July 2026, the 7th Circuit reinstated a lawsuit brought against the yogurt company, Chobani, which had previously been dismissed by a lower court. Specifically, the appellate court found that the district court had mistakenly relied on an FDA guidance when it ruled that a yogurt product containing allulose could bear the label “zero sugar.” To read the 7th Circuit’s decision in its entirety, click here.
Background of Case
In 2023, Plaintiffs Jason and Abigail Franco sued Chobani, LLC alleging the company had violated state consumer protection laws when it deceptively marketed its yogurt as having “no sugar” though it contained allulose. The case was brought in a federal court, however, because Plaintiffs were trying to bring a class action representing consumers in multiple states. The substantive legal question was whether the state consumer protection laws were preempted by federal law. Preemption is a legal doctrine that stems from the Supremacy Clause of the U.S. Constitution. This doctrine states that federal law is the “supreme law of the land” and invalidates state laws that contradict or interfere with federal laws. For more specific information on preemption, click here to read NALC article “Procedures: Federal Preemption.” That lawsuit was dismissed by the District Court for the Northern District of Illinois, on preemption grounds.
Particularly, in this case the Plaintiffs claimed that Chobani was violating the consumer-protection laws of 37 states when it sold yogurt that contained 4 grams of allulose, a type of sugar, but was labeled “zero sugar.” In response, Chobani argued that those state law claims were preempted because federal law permits a label of “zero sugar” on products that contain allulose. For this argument, Chobani relied on a Food and Drug Administration (FDA) guidance titled “The Declaration of Allulose and Calories from Allulose on Nutrition and Supplement Facts Labels: Guidance for Industry” (Allulose Guidance). In its Allulose Guidance, the FDA declared that it would exercise “enforcement discretion” by allowing companies to exclude allulose from the ‘total sugars’ and ‘added sugars’ counts on their product’s labeling. Ultimately, the lower court sided with Chobani and deferred to the FDA’s guidance by holding that allulose is not a sugar under federal law. Thus, the district court concluded that a product containing allulose but labeled as “no sugar” is preempted from enforcement under state consumer protection laws. Following the district court ruling, the Plaintiffs appealed to the 7th Circuit.
Background on Federal Law
Preemption occurs when federal and state laws conflict. Because federal law is the “supreme law of the land,” if a state law attempts to regulate an area that the federal government has already regulated, the federal law will prevail. Here, through the enactment of the Food, Drug, and Cosmetic Act (FDCA), Congress has authorized the FDA to be the final authority on disclosure requirements for packaged food products. 21 USC § 343-1(a). Specifically, the FDCA authorizes FDA to establish rules that govern the contents of the Nutrition Facts panel and set standards for disclosures on the amounts of certain nutrients in foods. Under this authority, the FDA issued rulemaking about both a food’s “total sugars” amount listed in the Nutrition Facts panel and when food may be labeled “sugar free.”
For the Nutrition Facts panel, 21 CFR § 101.9(c)(6)(ii) requires a “statement of the number of grams of sugars in a serving, except [. . .] for products that contain less than 1 gram of sugars in a serving if no claims are made about sweeteners, sugars, or sugar alcohol content.” The rule goes on to define “total sugars” as “the sum of all free mono- and di-saccharides (such as glucose, fructose, lactose, and sucrose).” Further, related to the label of “no sugar,” FDA requires that a food can only bear that label if it “contains less than 0.5 grams of sugars.” 21 CFR § 101.60(c)(1).
In its 2016 revisions to the Nutrition Facts panel, the FDA stated that “the final rule does not reach a decision as to whether allulose should be excluded from the [definition] of sugar.” However, the agency further clarified that allulose must be counted in food’s “total sugars” declaration. In 2020 though, the agency released its Allulose Guidance which stated that it would not enforce labeling requirements on manufacturers who excluded allulose from the amount of “total sugars” or “added sugars.”
What the 7th Circuit Found
The appellate court was tasked with determining whether the lower court erred when it concluded, based on the FDA’s Allulose guidance, that allulose isn’t a sugar. Though the legal question before the 7th Circuit was preemption, what it really turned on was whether allulose qualified as sugar under 21 CFR § 101.9(c)(6)(ii). Per the Court, “if it [does], then Chobani’s sugar free labels were likely prohibited by the FDA’s labeling requirements and the Franco’ state-law claims (seeking to enforce identical requirements) may proceed.”
FDA’s Amicus Brief
First, instead of strictly deferring to the agency’s Allulose Guidance, the 7th Circuit asked the FDA to weigh in. Through an amicus brief sent to the court, the agency stated that the text of § 101.9(c)(6)(ii) is not ambiguous, and that “allulose is a ‘sugar’ as that term is defined in” the regulations. Further, FDA weighed in on the parenthetical “such as” list found at the end of § 101.9(c)(6)(ii). The agency reasoned that it was a “list of non-exhaustive, illustrative examples.” This means that, according to the FDA, the definition of “total sugars” would not be limited to those listed in the parenthetical. Last, the FDA addressed the Allulose Guidance and clarified that it is not an interpretation of § 101.9(c)(6)(ii) but a statement of the agency’s enforcement position. Under this clarification, FDA is saying that the policy of the Allulose Guidance – nonenforcement against foods that did not count allulose in total sugars – is not the agency’s interpretation that allulose should not be counted in a total sugars amount. Instead, the agency claims the Allulose Guidance is just a notification to industry that FDA will not prosecute noncompliance.
The 7th Circuit agreed with FDA’s interpretation of § 101.9(c)(6)(ii) and held that since the “total sugars” definition includes “all free mono- and disaccharides,” allulose, as a monosaccharide, would count as a sugar under § 101.9(c)(6)(ii). The higher court reaches this conclusion based on a plain language reading of § 101.9(c)(6)(ii) and concurs that “all [. . .] monosaccharides” would include allulose. Further, the court finds that the “such as” parenthetical list does not restrict the definition of total sugars to what is listed or to substances that share physiological effects with those listed but is “merely a list of examples.” Thus, the 7th Circuit held that allulose is a sugar under § 101.9(c)(6)(ii).
Is deference to the Allulose Guidance appropriate?
The 7th Circuit then discussed the appropriateness of the lower court’s decision to defer to the Allulose Guidance. As previously mentioned, the lower court made the decision that allulose was not a sugar under § 101.9(c)(6)(ii) based on deference to the Allulose Guidance. To make this decision, the lower court relied on Auer deference, a legal doctrine that concludes that courts should defer to agency interpretations of their own ambiguous regulations. (NALC explainer here) Thus, the lower court believes that the Allulose Guidance was FDA’s interpretation of an ambiguous § 101.9(c)(6)(ii), and that it should rely on that guidance instead of making its own conclusions as to whether allulose is a sugar under the regulations.
However, the 7th Circuit found that deference was not appropriate. Specifically, the higher court stated that 1) § 101.9(c)(6)(ii) was not ambiguous, and 2) the Allulose Guidance is not FDA’s official position. The 7th Circuit holds that § 101.9(c)(6)(ii)’s clear statement that all monosaccharides count as “total sugars” creates an “absence of uncertainty” and “no plausible reason for deference.” Further, the higher court holds that an enforcement guidance is not an interpretation of an agency’s regulation, but an announcement of a change in policy. Consequently, the 7th Circuit found that the lower court’s reliance on Auer to defer to the Allulose Guidance was inappropriate.
Temporary Marketing Permit
The 7th Circuit also addressed Chobani’s argument that it received a temporary marketing permit from the FDA in reliance on the Allulose Guidance. A temporary marketing permit (TMP) is a mechanism where manufacturers may receive FDA approval to temporarily test, in the marketplace, a food product that deviates from an established standard of identity (SOI). The FDA establishes SOI to ensure the “characteristics, ingredients, and production processes of specific foods” meet consumer expectations. (NALC explainer here) Thus, a TMP allows a food that includes a feature different from its SOI to be tested in the marketplace for a temporary amount of time. A list of FDA granted TMPs can be found here. Included on that list is a TMP awarded to Chobani which allows the company to temporarily sell yogurt made with a dairy ingredient different from those permitted in the “yogurt” SOI. Importantly for this case though, in its application for a TMP, Chobani included a proposed “zero sugar” label nearly identical to the language on the products bought by the Francos. Chobani argues that FDA’s approval of the TMP is an approval of their use of “zero sugar” for a product that contains allulose.
Because it found that the state law claims were preempted through Chobani’s other arguments, the lower court did not make a judgement on this claim. However, it did mention in a footnote that the label in the TMP and the label at issue in the complaint are different because “no sugar” is presented with an asterisk on the TMP label. By mentioning that distinction, the lower court implied that the differences in labels might pose a challenge to using the TMP’s approval as an argument for preemption. The 7th Circuit was less generous. The higher court noted that “the agency’s marketing permit said nothing about state law consumer protection suits,” and stated that Chobani, as a “sophisticated actor,” should not have relied on FDA’s enforcement policy to immunize itself from state law. Thus, the 7th Circuit did not find that the FDA’s approval of a TMP preempted Chobani from state consumer protection laws.
Overall, the 7th Circuit found that allulose is a sugar under 21 CFR § 101.9(c)(6)(ii) and thus must be counted as part of a food’s “total sugars” amount listed on the Nutition Facts panel. Further, since allulose is a sugar under those regulations, it must also be held to the standards for “no sugar” claims listed in 21 CFR § 101.60(c)(1). Consequently, a product that claims “zero sugar” but contains equal or greater than 0.5 grams of allulose would not be preempted from a consumer protection lawsuit. As such, Chobani’s yogurt with 4 grams of allulose that bears a “zero sugar” label can be challenged under state consumer protection laws.
Effect of this case and next steps
This case is particularly notable because it shows that relying on an agency’s guidance might not be enough to protect a food company from consumer litigation based on state law. Further, perceived approval of a label, in reliance on that guidance, might not offer the protection that a company thought. As many states continue to enact new laws related to food and the FDA continues to shift its policies on food ingredients and labeling, this legal precedent is one for food manufacturers to take note of. Already in the past month since this decision came down, several lawsuits with similar allulose and “zero sugar” claims have been filed.
As for Franco v. Chobani, with the reversal of its dismissal, the case has been sent back down to the lower court for an actual determination on consumer deception. It will be up to the lower court to determine whether a reasonable consumer could be misled by Chobani’s labels.