Header graphic for print

Private Surgeon General Class Action Defender

FTC Warns Advertisers to Check the Fine Print in “Operation Full Disclosure”; Shot Across the Bow Could Signal Law Enforcement Actions to Come

Posted in False Advertising Claims

The Federal Trade Commission (FTC) announced this week that it sent warning letters to more than 60 national advertisers regarding the inadequacy of disclosures in their television and print ads.  The letters are part of an initiative named “Operation Full Disclosure,” which the FTC implemented to review fine print disclosures and other disclosures that it believed were difficult to read or easy for consumers to overlook, yet included critical information that consumers would need to avoid being misled.

Read our client alert.

Vermont GMO Food Labeling Law Challengers Seek Preliminary Injunction

Posted in GMO

In the court battle to have Vermont’s genetically modified organism (GMO) food labeling law (Act 120) overturned, plaintiff trade associations filed a motion for preliminary injunction on September 11, 2014, seeking to enjoin Vermont government officials from implementing the law until the “litigation has run its course.” Grocery Manufacturers Association et al. v. William H. Sorrell et al., No. 5:14-cv-00117 (D. Vt.). The GMO labeling law creates Vermont-specific labeling requirements for “genetically engineered foods” sold in the state. The plaintiffs are trade associations representing food manufacturers.

The underlying allegations of the lawsuit and basis for seeking preliminary injunctive relief are that the Vermont GMO labeling law is (1) unconstitutional—allegedly violating the First Amendment “because it is a politically motivated speech regulation that does not serve a legitimate governmental interest”—and (2) preempted by federal laws, such as the Federal Food, Drug, and Cosmetic Act, the Federal Meat Inspection Act, and the Poultry Products Inspection Act, which regulate food labeling and do not require GMO disclosures. 

Plaintiffs assert that food manufacturers will be irreparably harmed if the law’s implementation is not enjoined because of the considerable time and money that would be expended attempting to comply with the law by the July 1, 2016 effective date, which could not be recouped. According to plaintiffs, the law would require “product-by-product review, followed by fundamental changes in manufacturers’ supply chains (which are not adapted to segregate the products of genetically engineered plants) and their distribution chains (which are not adapted to segregate products bound for Vermont).” Plaintiffs claim that downstream changes would be required “in the form of building out Vermont-specific supply and distribution chains that do not exist.” 

The outcome of this case and whether the preliminary injunction is granted could have a considerable effect on other states’ efforts to implement or pass similar GMO food labeling requirements on an individual state-by-state basis.

Plaintiffs Sent Back to the Drawing Board in Mislabeling Suit Over “All Natural” and “Fat Free” Claims on Frito-Lay Rold Gold Pretzels

Posted in False Advertising Claims, Misbranding

Judge Samuel Conti of the Northern District of California recently issued another blow to class action plaintiffs—this time at the motion to dismiss stage—in Figy v. Frito-Lay N. Am., Inc., Case No. 13-3988-SC (N.D. Cal. Aug. 12, 2014) (See post for Judge Conti’s defense-friendly class certification decision in In Re Clorox Consumer Litigation, Case No. 12-00280-SC (N.D. Cal. July 28, 2014)).  Plaintiffs alleged that Frito-Lay’s “All Natural,” “Fat Free,” and “Low Fat” pretzel labels were deceptive and misleading in violation of state and federal law.  Judge Conti disagreed, dismissing plaintiffs’ injunctive, misbranding, and deception claims as legally deficient.

Injunctive Relief: Subject Matter Jurisdiction Lacking

Relying on Frito-Lay’s declarations demonstrating that the company no longer printed the allegedly offending labels at the time of plaintiffs’ complaint, Judge Conti found that the court lacked subject matter jurisdiction to address Plaintiffs’ injunctive claims.  Defendant could offer declarations at the pleading stage, the court noted, to facially attack the court’s jurisdiction.  This, in turn, triggered Plaintiffs’ obligation to present evidence rebutting the attack.  Plaintiffs presented no evidence, however, demonstrating that the court possessed subject matter jurisdiction over their injunctive claims.  The court thus dismissed those claims with leave to amend. 

Unlawful Claims: Reliance Required

Judge Conti also reiterated his prior holding in Wilson v. Frito-Lay North America, Inc., 961 F. Supp. 2d 1134, 1141-42 (N.D. Cal. 2013), that Plaintiffs must plead reliance to bring a claim under the “unlawful” prong of California’s Unfair Competition Law (UCL).  Plaintiffs’ allegations that Frito-Lay’s products were misbranded and therefore “legally worthless” failed to meet this standard.  Moreover, the court rejected Plaintiffs’ argument that reliance under the UCL may be presumed based on alleged regulatory violations.  Having rejected a virtually identical misbranding theory in Wilson, Judge Conti dismissed Plaintiffs’ unlawful claims with prejudice here.

Deception Claims: “Utterly Implausible” 

Finally, Judge Conti found “utterly implausible” Plaintiffs’ allegations that Frito-Lay’s “All Natural,” “Fat Free,” and “Low Fat” pretzel labels would deceive consumers into believing that the products were altogether healthy.  As for their “All Natural” claims, Plaintiffs failed to meet Federal Rule of Civil Procedure 9(b)’s heightened pleading standard because they did not plead what they believed “All Natural” meant or describe how or why the allegedly offending ingredients were unnatural.  Plaintiffs’ “conclusory assertion” that they believed “Natural” meant that the product was composed of only natural ingredients would not suffice.  As Judge Conti stated:

It is insufficient under Rule 9(b) to simply assert, no matter how foreign or synthetic-sounding an ingredient’s name might be, that an ingredient is unnatural.  Rather, Plaintiffs must plead why these allegedly offending ingredients are unnatural.

Similarly, Plaintiffs failed to demonstrate that a reasonable consumer would interpret an objectively true statement like “Fat Free” as indicating the product was healthier than products without such claims.  As such, the court dismissed their claims with leave to amend. 

Judge Conti’s decision in Frito-Lay demonstrates that at least some courts are prepared to toss, at the pleading stage, those misbranding/mislabeling claims that lack specifics regarding why labels are misleading or how plaintiffs were deceived.  This comes as welcome news to companies defending against food misbranding lawsuits.  However, as long as courts dismiss with leave to amend, as Judge Conti did, plaintiffs will get another chance to prove their allegations.

Class Action Suit Against Sunflower Seed Manufacturer Dismissed as Implausible

Posted in False Advertising Claims, Misbranding

In a recent food mislabeling case, Judge Manuel Real of the Central District of California dismissed a proposed class action lawsuit finding the plaintiffs’ claims to be implausible as a matter of law. Last year, Judge Real and Judge George Wu dismissed class actions challenging the labeling of food and cosmetics on this same basis. (See December 26, 2013 post.)

In Weiss v. The Kroger Co., No. 2:14-cv-03780, plaintiffs claimed that the label for Kroger Sunflower Seeds was deceptive because it listed the sodium content for the “edible portion” of the product—i.e., the seed, not the shell—which misled consumers into believing they were consuming less salt than they actually were. The claim was based on the premise that sunflower seed consumers generally place the entire seed, including the shell, into their mouths before spitting out the empty shell and, in so doing, they ingest the salt on the shell.

Judge Real found plaintiffs’ claims implausible because the label identified the amount of sodium contained in the “edible portion” of the product. He dismissed the case with prejudice, ruling that:

[T]he presence of the words “edible portion” on the label means that the label obviously contemplated and communicated that there was an inedible portion of the product. What did Weiss think was the inedible portion that the nutrition label omitted if not the shell?

Judge Real also rejected plaintiffs’ claim that Kroger deceptively marketed its sunflower seeds as a “good” snack, which consumers might construe as “healthy,” despite the allegedly high sodium content. He found the label statement upon which this claim was based—“[t]here’s a whole lot of goodness contained in each and every tiny sunflower seed”—to be non-actionable puffery. Weiss v. The Kroger Co., No. 2:14-cv-03780 (C.D. Cal., Dkt. No. 33, Aug. 18, 2014).

Since Williams v. Gerber, 552 F.3d 934 (9th Cir. 2008), discussed here, courts have been hesitant to dismiss food mislabeling cases on the pleadings, instead finding plausibility to be a question of fact. This opinion, together with the earlier Judge Real opinion in Balser v. The Hain Celestial Group, Inc., No. CV-13-5604-R (C.D. Cal., Dkt. No. 38, Dec. 18, 2013), and the Judge Wu opinion in Shaker v. Nature’s Path Foods Inc. et al., No. CV-13-1138-GW (OPx) (C.D. Cal., Dkt. No. 40, Feb. 7, 2014), suggest that raising implausibility at the pleading stage can still be worthwhile.

Class Certified in Homeopathic Products Case

Posted in Class Certification, False Advertising Claims

The plaintiffs’ theory of harm drove a recent decision from the Central District of California certifying a nationwide class of purchasers of ten homeopathic products. Allen v. Hyland’s Inc., Case No. 12-01150 (C.D. Cal. Aug. 1, 2014) (Docket No. 291). The Allen plaintiffs contend that Hyland’s Inc.’s homeopathic products were mislabeled as to their uses and effectiveness because the products’ active ingredients are so diluted that the products are ineffective. In her certification order, Judge Gee relied on this theory in finding commonality, typicality, and predominance, including that damages are subject to classwide proof.   

Commonality: As to commonality, the court explained that if the plaintiffs prove that homeopathy is nothing more than “pseudoscience” and that the products do not perform as advertised, the class will be entitled to relief. The court rejected the argument that the plaintiffs’ claims would require analysis of each putative class member’s symptoms and the active ingredient of each challenged product: if the plaintiffs’ theory is correct—that Hyland “made material misrepresentations about products which do not work and cannot possibly work as a matter of scientific principle”—then the court need not conduct any individual inquiries. 

Typicality: Next, the class satisfied typicality because any differences between the named plaintiffs and the putative class—such as symptoms, shopping habits, and litigiousness—did not affect the plaintiffs’ ability to prove liability under their theory that the products do not work. 

Predominance: The court’s predominance analysis likewise turned on the plaintiffs’ theory that homeopathy is spurious. The defendant suggested that different proof would be required to contest the effectiveness of each product at issue. Hyland’s also argued that the challenged products have different rates of dilution and work for some people. The court found these arguments to miss the mark in light of the plaintiffs’ contention that none of the products can possibly be effective due to the high rates of dilution. 

Damages Model: As for a viable damages model, the court rejected the defendant’s claim that damages are not subject to classwide proof. The court explained that the plaintiffs’ position that they are entitled to full restitution of the product price is properly linked to their theory that the products are entirely ineffective. And that amount can easily be calculated from the defendant’s sales data and an average retail price.

Here, the alleged complete lack of efficacy of the products at issue led the court to certify the class despite the potential individual issues raised by the defendant.