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Private Surgeon General Class Action Defender

Kimberly-Clark Corporation Wins Motion to Dismiss in Flushable Wipes Case

Posted in False Advertising Claims

Judge Phyllis J. Hamilton of the Northern District of California recently granted Kimberly-Clark’s motion to dismiss a case challenging the truthfulness of the defendant’s claims that its wipes are flushable. Davidson v. Kimberly-Clark Corp. et al. Case No. C 14-1783 PJH (N.D. Cal. Dec. 19, 2014). The court dismissed the plaintiff’s claims based on failure to plead Article III standing, and failure to plead her claims with Rule 9(b) specificity. The key takeaway is that plaintiffs must plead specific facts regarding their alleged injury, rather than rely on general allegations regarding the experience of third parties.

In Davidson, the plaintiff challenged the “Flushable” label on four Kimberly-Clark Corp. products: Kleenex® Cottonelle® Fresh Care Flushable Wipes & Cleansing Cloths; Scott Naturals® Flushable Moist Wipes; Huggies® Pull-Ups® Flushable Moist Wipes; and U by Kotex® Refresh flushable wipes. She alleged that the “flushable” representation was false because flushing the wipes “created a substantial risk” that a consumer would clog or damage her household plumbing or municipal sewer systems. The plaintiff brought claims for injunctive relief, restitution, punitive damages, actual damages, and statutory damages under the Consumer Legal Remedies Act (CLRA), the False Advertising Act (FAL), and California’s Unfair Competition Law (UCL) on behalf of herself and other members of a proposed class. Kimberly-Clark Corp. filed a motion to dismiss, which Judge Hamilton granted.

Lack of Article III Standing for Injunctive Relief

The plaintiff’s claim for injunctive relief was dismissed for lack of Article III standing. First, the court found that the plaintiff failed to plead that she personally suffered any injury by using the flushable wipes in her toilet. Instead, she pointed to general allegations that some wipes have caused clogs or blockages in local wastewater systems, and to a few consumer comments on Kimberly-Clark’s website. Second, the court found that the plaintiff failed to plead that there was a risk of future or imminent harm because she alleged that she would not purchase the defendant’s wipes in the future. As such, the court found her injunctive relief claim was based on a hypothetical injury insufficient to satisfy Article III standing.

Rule 9(b): Plaintiff Must Allege Facts Showing Why the Claim Is False

The plaintiff’s remaining claims under the CLRA, FAL and UCL were dismissed under Rule 9(b) for lack of specificity. The court found that the plaintiff had not alleged facts showing that the products were in fact falsely advertised as “flushable.” The court stated:

“It is not enough for [plaintiff] to simply claim that [the “flushable” representation] is false—she must allege facts showing why it is false.”

The court further found that the plaintiff’s citation to articles on the Internet discussing problems with clogs and blockages at wastewater treatment facilities, and comments by consumers posted on Kimberly-Clark’s website, were insufficient to meet Rule 9(b) requirements. The articles discussing the wastewater treatment issues suggested that other causes may have been responsible for the clogging, such as people flushing “non-flushable” materials down the toilet. As for the comments by consumers on the defendant’s website, those were vague and lacking in detail, and also appeared to involve damage to septic tanks, not municipal sewer systems.

Conclusion

Judge Hamilton’s order is a victory for companies defending against false advertising claims, as it requires plaintiffs to plead specific facts showing why a representation is false, rather than just claiming that it is false. In particular, relying on general allegations, such as articles on the Internet about third-party experiences, is not sufficient.

Judge Koh Awards Double Victory in “Natural” Labeling Class Action Against Dole, Granting Decertification and Summary Judgment

Posted in Misbranding

As the food “misbranding” litigation continues to fill courts’ dockets, Judge Lucy H. Koh recently put an end to the two-year battle against Dole’s packaged fruit labeling in the Northern District of California. Dole (represented by a team of MoFo litigators led by William Stern) was first successful in decertifying the Rule 23(b)(3) “damages” class, and then won its motion for summary judgment. The case is called Brazil v. Dole Packaged Foods, LLC, No. 12-cv-01831-LHK (N.D. Cal.).

Plaintiff sued Dole in 2012, claiming the label statement “All Natural Fruit” was false and misleading because Dole’s products contained citric acid and ascorbic acid. In May 2014, Judge Koh granted certification of a Rule 23(b)(3) “damages” class of California consumers, as well as a Rule 23(b)(2) “injunctive relief” class of nationwide consumers. The case was scheduled for trial in January 2015.

On November 6, 2014, however, the Court granted Dole’s motion to decertify the damages class, finding that plaintiff’s expert could not calculate the price premium attributable to the statement “All Natural Fruit” through his regression damages model. The model failed Comcast Corp. v. Behrend’s requirement that it be consistent with the plaintiff’s theory of liability. In this case, that meant that plaintiff’s model “must measure only those damages attributable to [Dole’s conduct].” The court found that the model failed to control other variables affecting price (such as advertising and prices of competing products), and plaintiff’s expert failed to corroborate many of the assumptions he made about non-Dole products’ labels. For example:

“if the model is unsure whether the non-Dole products actually made an “All Natural” labeling claim, then how can the Court know whether the price premium the model generates is based on Dole’s labeling claim rather than on some other factor? Put simply, it cannot.”

Then, on December 8, 2014, the court granted Dole’s summary judgment motion, finding that plaintiff had no evidence that a reasonable consumer would be misled by the label. The court found that plaintiff needed some form of extrinsic evidence of deception; the named plaintiff’s testimony was not enough. The court also adopted Dole’s interpretation of the FDA’s “natural” policy, requiring the standard to be based on what is “reasonably to be expected” to be found in food products. Again, plaintiff had no evidence. The court concluded:

“Where, as here, a plaintiff offers one isolated example of deception—i.e., [plaintiff’s]—summary judgment must be granted.”

The December 8 ruling is notable because it is the first “merits” ruling in the country to decide what the FDA’s “natural” policy means. “Natural” class actions have been a favorite of the plaintiffs’ bar over the past few years, likely because the FDA declined to define the term, instead offering an ambiguous informal “policy.” Judge Koh has made clear that there are no “natural” or “unnatural” ingredients—it depends on what is “reasonably to be expected” to be found in the food product.

Both rulings in Brazil present significant hurdles for plaintiffs in the many other pending “misbranding” class actions. Plaintiffs must present a damages model that can isolate a price premium attributable to the challenged label claim, and they must provide the court with extrinsic evidence that reasonable consumers would be deceived. Neither is a simple task. While these cases are easy to file, and often easy to get past a motion to dismiss, they are turning out to be quite difficult to prove. If other judges follow Judge Koh, plaintiffs’ attorneys may soon start looking for a new class action trend.

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.