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Private Surgeon General Class Action Defender

Judge Illston Finds Proof of Injunctive Standing and Consumer Deception Lacking in Consumer Challenge to Mott’s 100% Apple Juice Labels

Posted in Misbranding

Judge Illston’s recent summary judgment ruling in Rahman v. Mott’s LLP, Case No. CV 13-3482 SI (N.D. Cal. Oct. 14, 2014), highlights courts’ varied approaches to the level of proof required to demonstrate Article III injunctive standing and consumer deception.  The court’s opinion also represents a significant win for defendants facing food labeling claims.

In Mott’s, the plaintiff challenged the “No Sugar Added” statement on Mott’s 100% Apple Juice, claiming the statement misled him into believing the product was healthier than other juices and caused him to buy more juice than he would have absent the statement.  Plaintiff brought claims for injunctive relief and damages under the unlawful, unfair, and fraudulent prongs of California’s Unfair Competition Law (UCL), California’s False Advertising Law (FAL), California’s Consumers Legal Remedies Act (CRLA), and for negligent misrepresentation, and breach of quasi-contract.  Mott’s moved for summary judgment.

Judge Illston granted Mott’s motion as to plaintiff’s claim for injunctive relief and his claims under the CLRA, FAL, and the fraud and unfair prongs of the UCL, and for negligent misrepresentation.

Injunctive Relief – Proof of Future Purchase Insufficient; Proof of Future Deception Required.

In considering Mott’s argument that plaintiff lacked Article III standing for injunctive relief, Judge Illston held that the plaintiff’s knowledge of allegedly unlawful or misleading conduct precludes Article III injunctive standing, as the plaintiff cannot be misled by the statement in the future.  Under California’s consumer protection laws, a plaintiff must prove reliance on unlawful or deceptive conduct to suffer a cognizable injury, past or present.   In detailing how Mott’s “No Sugar Added” label was deceptive, plaintiff could not plausibly allege that he would be misled by the challenged statement again.  His alleged intent to purchase the products again was insufficient:

Absent showing a likelihood of future harm, a plaintiff may not manufacture standing for injunctive relief simply by expressing an intent to purchase the challenged product in the future.

Given that any future deception was implausible, plaintiff could not meet his burden to demonstrate Article III injunctive standing.

Reasonable Consumer Standard – Proof of Individual Deception Insufficient; Survey Evidence Required. 

Judge Illston also found that the plaintiff failed to meet his burden in showing that reasonable consumers would likely be deceived by Mott’s “No Sugar Added” label.  The court first detailed divergent approaches to the “reasonable consumer” analysis, comparing three courts that required a plaintiff to produce extrinsic evidence, such as a consumer survey, to meet his burden of proof, with three courts adopting “a less data-driven approach,” instead requiring a plaintiff show that “reasonable minds could differ” as to the statement’s deceptiveness.

Although stating she need not resolve the conflict, Judge Illston all but adopted the former position.  First, she noted that plaintiff’s evidence that he was deceived failed to raise a triable issue of classwide deception, as “testimony of a single consumer in a putative class of potentially millions is not enough to meet [plaintiff’s] burden.”  Second, she found plaintiff’s expert’s report also failed to raise triable issues.  The expert did not conduct a consumer survey, but rather stated he could perform one.  “A general description of the methodology of a proposed study, standing alone, is not evidence of whether a reasonable consumer is likely to be deceived . . .”  Relying only on this evidence, plaintiff failed to raise a triable issue that consumers would be deceived by the “No Sugar Added” statement.  The court therefore dismissed plaintiff’s claims under the CLRA, FAL, and unfair and fraud prongs of the UCL, as well as his claim for negligent misrepresentation.  The court let stand plaintiff’s claim under the UCL’s “unlawful” prong, however, finding that plaintiff raised a triable issue as to whether he relied on Mott’s “No Sugar Added” statement, which allegedly violated federal regulations.

Conclusion

Judge Illston’s holding represents a major win for companies defending against mislabeling claims, as it requires plaintiffs to offer more proof to keep their claims alive.  It remains to be seen whether more courts will follow Judge Illston’s direction, reaching consensus and raising the bar for mislabeling plaintiffs, or whether the dividing lines will only grow deeper.

Pom Wonderful Drops Ninth Circuit Appeal of State Claims Filed Against Coca-Cola

Posted in False Advertising Claims, Misbranding, Preemption

On September 19, 2014, Pom Wonderful, LLC dropped its Ninth Circuit appeal of a ruling that dismissed its state deceptive advertising and unfair competition claims against Coca-Cola, a sibling case to a recent Supreme Court decision.  (See prior Pom Wonderful blog post here.)  Accordingly, the Ninth Circuit will not revisit whether Pom Wonderful’s state court claims were preempted by the FDCA.

Pom Wonderful originally brought both state and federal claims claiming Coca-Cola misleadingly labeled a product which contained 99% apple and grape juice as a pomegranate-blueberry juice.  Pom Wonderful’s federal claims under the Lanham Act reached the Supreme Court, which ruled this summer that even if a company’s food label meets the requirements of the federal Food, Drug, and Cosmetic Act (FDCA) and FDA regulations, that does not necessarily immunize the company from a competitor’s Lanham Act claims for false advertising.  Pom Wonderful, LLC v. The Coca-Cola Co., 134 S.Ct. 2228 (2014).  Notably, the Court stated the case did not “raise the question of whether state law is pre-empted by federal law.”

Pom Wonderful’s state law claims were dismissed by a judge in the Central District of California in February 2013, on the grounds that they were expressly preempted by the FDCA.  Pom Wonderful appealed the decision in May 2013, but the case was stayed pending the Supreme Court’s ruling on the Lanham Act claims.

Pom Wonderful’s decision not to pursue the appeal means that the Ninth Circuit will not address the preemption of state claims in the wake of the Supreme Court’s ruling.

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.