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.