State Consumer Protection Laws
The U.S. District Court for the Northern District of Illinois grants defendant Whole Foods Market Group, Inc.’s motion to dismiss. Plaintiff alleged that the defendant’s private label “Long Grain & Wild Rice –Rice Pilaf” boxes deceive consumers because they contain large amounts of empty space, or “slack fill.” Plaintiff’s theory of deception failed as a matter of law because he did not dispute that the challenged packaging discloses accurate information about the weight and approximate yield of the prepared product. While a consumer might “reasonably expect to be able to estimate the approximate number of chocolates in a particular box based on the box size,” as in Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639 (7th Cir. 2019), the same is not true of a product like rice that must be cooked prior to consumption and that expands during cooking. With products like rice, “a reasonable consumer expects the size of the box to bear only a loose relationship to the amount of cooked product its content will yield,” and will necessarily look to the number of servings disclosed on the label. (Jacobs v. Whole Foods Mkt. Grp., Inc., 2022 WL 3369273 (N.D. Ill. Aug. 16, 2022)).
The U.S. District Court for the Middle District of Florida grants defendant Publix Markets, Inc.’s motion to dismiss. Plaintiff alleged that he bought a cough suppressant manufactured and sold by the defendant that was labeled as “non-drowsy.” Despite being labeled as “non-drowsy,” however, according to the plaintiff, the product contains an ingredient (dextromethorphan hydrobromide (“DXM”)), that is well known for causing drowsiness. Plaintiff claimed that he purchased the product relying on its “non-drowsy” labeling. Plaintiff alleged, among other things, (1) violation of the Florida Deceptive and Unfair Trade Practices Act; (2) violation of various other states’ consumer fraud statutes; (3) negligent misrepresentation; and (4) fraud. Defendant moved to dismiss on several grounds. First, it argued that the plaintiff had not sustained an injury-in-fact and, thus, lacked standing. Second, the defendant argued that the plaintiff's claims were expressly preempted by federal law. Finally, it asserted that the plaintiff failed to plead facts demonstrating that the “non-drowsy” statement on the product label was false, deceptive, or misleading. The court found that the plaintiff did not allege any future harm to himself. He only stated that he intended to purchase the product at some uncertain future date, which was not sufficient to allege of imminent future injury. Thus, he lacked standing to pursue injunctive relief. The court also held that the plaintiff’s state-law claims were preempted. The court discussed, first, whether the federal government has established requirements applicable to the product at issue. Defendant claimed that the FDA has issued a final monograph for antitussives that sets forth the specific disclosures that manufacturers must make on labels for products that contain DXM (the “Monograph”). The FDA’s Monograph for the “labeling of antitussive drug products” provided certain requirements for products containing DXM, including label warnings and dosages. The Monograph only mandated warnings about drowsiness for oral antitussives containing diphenhydramine citrate or diphenhydramine hydrochloride. Thus, the Monograph did not require a disclosure of “drowsiness” as a side effect for products that contain DXM. In light of these federal regulations, the court held that the federal government has established requirements applicable to the product. Therefore, the defendant argued that the plaintiff’s claims must be dismissed because the product label complied with the FDA Monograph, and the plaintiff could not use state law to impose additional, different, or non-identical labeling requirements. Plaintiff countered that, because the defendant voluntarily added the affirmative misrepresentation of “non-drowsy” to the product labeling, requiring it to remove this statement would impose no additional disclosure requirements. The court rejected that argument and held that all of the plaintiff's state-law claims were preempted by the federal Food, Drug and Cosmetic Act because they sought to impose a labeling requirement that is “different from or in addition to, or that is otherwise not identical with, a requirement” for OTC drugs in the applicable regulations. (Amara v. Publix Supermarkets, Inc., 2022 WL 3357575 (M.D. Fla. Aug. 15, 2022)).
The U.S. District Court for the Southern District of New York denies defendant Peloton Interactive, Inc.’s motion to dismiss, finding that the plaintiffs alleged sufficient facts to establish standing under Article III and to state a claim for both material misrepresentations and deceptive omissions under New York General Business Law (“NYGBL”) §§ 349 and 350. Plaintiffs’ claim was based on Peloton’s on-demand library. Peloton marketed its on-demand classes as “evergrowing” but in 2019, based on a copyright dispute, the company removed more than half of the classes from the library. Nevertheless, Peloton continued to charge the same amount for its subscription services. While the plaintiffs did not allege that they relied on or even saw the claims that Peloton’s library was “ever-growing,” they nevertheless claimed that they were injured under a “price premium” theory. Peloton first argued that the plaintiffs’ failed to plead a cognizable injury to support standing. However, the court rejected this argument, stating that it is immaterial for the purposes of Article III whether the plaintiffs relied on or valued the representation that drove up the prices of Peloton’s products and subscription. Rather, the plaintiffs’ allegations that they paid increased costs—a “price premium”—for these products as a result of Peloton’s claim that its library was ever-growing was sufficient to plead a cognizable injury. Additionally, this injury was fairly traceable to Peloton’s marketing campaign, even if the plaintiffs did not care about the allegedly misrepresented fact because Peloton purportedly charged a higher price based on the fact that its library was consistently increasing in size. Similarly, the Court held that these allegations were sufficient to show injury and causation for material representations under the NYGBL because (1) Peloton’s misleading or deceptive advertising campaign caused a price premium, (2) this premium was charged both to those who saw and relied upon the false representations and those who did not, and (3) as a result of the price premium, the plaintiffs paid a higher price that they would not otherwise have been charged but for the false campaign. Moreover, because the test is objective and turns upon the reasonable consumer, it was irrelevant if the plaintiffs bought the subscription based on the misrepresentation; instead, it only matters whether the deception could likely have misled someone. The court also allowed the plaintiffs’ claims for deceptive omissions to proceed because the plaintiffs sufficiently alleged that Peloton failed to disclose information that was material to the reasonable consumers, that it alone possessed, and that consumers did not have a means of obtaining. (Fishon v. Peloton Interactive, Inc., 2022 WL 3284670 (S.D.N.Y. Aug. 11, 2022)).
The U.S. District Court for the Southern District of New York dismissed two complaints, consolidated for the convenience of a single decision, against Cooperative Regions of Organic Producer Pools concerning the “vanilla” flavoring representations on its dairy product labels. Specifically, the plaintiffs took issue with two products: a milk shake and a coffee creamer. The milk shake label displays the words “Organic Valley,” “20g Protein per serving,” “High Protein Milk Shake,” “Vanilla,” and “USDA Organic,” alongside an image of a vanilla flower and beans. The creamer’s label displays the words “French Vanilla,” “Half & Half,” “Organic Valley,” “Ultra Pasteurized + Grade A,” “made with pasture-raised Organic Cream,” “USDA Organic,” and “Organic is always non GMO,” also alongside an image of a vanilla flower and beans. Plaintiffs’ allegations regarding each product were essentially the same. They argued that the labeling was materially misleading because it gives consumers the impression that the products contained a “non-negligible amount of extracts from vanilla beans” but that, in fact, the products contained “a de minimis amount” of the actual vanilla ingredient and, instead, had a “high level of synthetic flavoring.” Plaintiffs brought claims for deceptive acts or practices under New York General Business Law (“GBL”) §§ 349 and 350, as well as claims of negligent misrepresentation and fraud, among others. The court dismissed all of the claims, stating that, if it concluded as a matter of law that there was no material misrepresentation in this case, “none of Plaintiffs’ claims can survive the instant motion.” The court indeed held there was no material misrepresentation on the product labels at issue. First, it noted that the fact pattern in the complaint had “become altogether familiar in this District” and that “there is a burgeoning body of decisional law associated with the ‘Vanilla’ segment of consumer goods.” The court, quoting previous decisions in the Southern District on analogous “Vanilla” flavoring issues, explained that, when “consumers read vanilla on a product label, they understand it to mean the product has a certain taste.” Here, as the court stated, when consumers purchased the shake, “they expected the taste of vanilla, and that is what they received. No consumer was misled here.” With respect to the creamer, the court, again quoting a previous Southern District case, held that “a reasonable consumer would understand that ‘vanilla’ is merely a flavor designator, not an ingredient claim.” Plaintiffs attempted an alternative argument regarding the shake, contending that the representation, “USDA Organic,” was false and misleading because the product contained the synthetic flavoring ingredient “vanillin.” The court explained, however, that to prevail on such an argument, the plaintiffs would have to show that, although the shake was certified as organic pursuant to the Organic Foods Production Act (“OFPA”), the product was not actually organic under the Act. The court held that such an argument would undermine Congress’ purpose in enacting the OFPA because “Congress did not want to permit individual consumers to challenge certification decisions made pursuant to the OFPA.” The court dismissed the GBL §§ 349 and 350 claims, holding that the products’ labels were not misleading as a matter of law. The court further dismissed the remaining claims in the complaint because each claim was “also based on the assumption that the Products’ labels are ‘materially misleading.’” (Collishaw v. Coop. Regions of Organic Producer Pools, 2022 WL 3290563 (S.D.N.Y. Aug. 11, 2022)).
The U.S. District Court for the Northern District of California grants in part and denies in part defendant Matterport, Inc.’s motion for summary judgment in a case alleging that it misrepresented how its partner program could help consumers build their own lucrative, self-owned businesses by purchasing and using the defendant’s 3D cameras to create 3D scans. The court previously had denied class certification. Defendant argued that it was entitled to summary judgment on the plaintiff’s claims under California’s Unfair Competition Law and False Advertising Law because those statutes provide for equitable relief only, and the plaintiff had an adequate remedy of law. Finding that the plaintiff did not have an adequate legal remedy on all of its claims, the court rejected the argument. Defendant also argued that the plaintiff did not have Article III standing to seek injunctive relief. The court rejected that argument, holding that the defendant’s real concern was the possible breadth of any injunction. The court ruled that the plaintiff had no Article III standing to seek declaratory relief because he never developed the claim in the operative complaint. (Stemmelin v. Matterport, Inc., 2022 WL 3226973 (N.D. Cal. Aug. 10, 2022)).
Consumer Class Actions
The U.S. District Court for the Northern District of California denies defendant Van’s International Foods, Inc.’s (“Van’s”) motion to dismiss a putative class action alleging that Van’s mislabeled certain of its frozen waffles products. Plaintiff claimed that the waffles were not properly labeled for several reasons: (1) the waffles contained a front-of-pack protein content claim but did not include the digestibility-adjusted protein amount in the nutrition facts box in violation of 21 C.F.R. § 109(c)(7)(I) and 21 C.F.R. §§ 101.13(n) and (b); (2) the same conduct violated Section 101.9(c)(7)(i)-(iii); and (3) the front-of-pack claim was likely to mislead reasonable consumers because of the allegedly omitted digestibility-adjusted protein amount. The court, first, found that the plaintiff sufficiently alleged reliance on both the front-of-pack and the allegedly omitted labeling claims. Specifically, the plaintiff claimed to have purchased the challenged products after reading and relying on the front-of-pack claims and “would not have been drawn to the [waffles] and would not have purchased them” “[h]ad Defendant complied with the law and not made the protein claims on the front of its packages.” Moreover, the plaintiff alleged that she read the nutrition facts box on the products before purchasing them for the first time, and would have seen the omitted information, which she uses because “she will always choose the product that provides more of the recommended daily value of protein.” The court found these allegations sufficient, and further, found that the plaintiff’s reliance was reasonable. The court also permitted the common law fraud claim to proceed because the plaintiff adequately pled reliance. Finally, the court found that the plaintiff had met the heightened pleading requirements of Fed. R. Civ. P. 9(b). (Brown v. Van's Int'l Foods, Inc., 2022 WL 3590333 (N.D. Cal. Aug. 22, 2022)).
The U.S. District Court for the Southern District of Illinois grants in part and denies in part the defendants’ motion to dismiss. Plaintiff alleged in a putative class action that she was damaged because the defendant’s “Balloon Time Helium Tank” kits failed to keep balloons afloat for a “sufficiently long period of time” and that the balloons “tend to either not float or sink to the ground after a couple of hours.” The kits included a helium tank, packaged balloons, and ribbon. Plaintiff alleged, among other things, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) against the defendants because she was allegedly damaged by the statement “Made in the USA with global components,” with an American Flag printed on the product box, when the balloons were, in fact, made in Malaysia. The court dismissed the IFCA claim because no reasonable consumer would be misled by the “Made in the USA with global components.” The court agreed with the defendants that the product’s label, “Made in the USA with global components,” was truthful and substantiated. The label told the consumer that the product was made in the United States, but made no promise about the source of the product’s component parts, meaning that the parts could be sourced from any country in the world. Defendants further noted that the Federal Trade Commission (“FTC”), the agency that regulates U.S. origin product labels, permits qualified U.S. origin product labels such as the one at issue. The court rejected the plaintiff’s argument that the phrase, “with global components,” meant a product with parts from every country in the world. The Court noted that such argument was facially illogical and was the kind of “fanciful interpretation” that warrants dismissal. (Oettle v. Walmart, Inc., 2022 WL 3584944 (S.D. Ill. Aug. 22, 2022)).
The U.S. District Court for the Southern District of New York dismisses a putative class action against SFC Global Supply Chain, Inc. (“SFC”), which alleged that SFC’s frozen pizza labels misrepresented that the pizzas contained a “PRESERVATIVE FREE CRUST” and “NO ARTIFICIAL FLAVORS.” Plaintiff alleged that, despite those representations, the pizzas, in fact, did contain preservatives and artificial flavors, such as modified food start, hydrolyzed soy, corn protein, sodium stearoyl lactylate, enzymes, and mono-and diglycerides. Plaintiff alleged that she bought the products in reliance on these representations and would have bought less expensive pizzas had she known the representations were false or misleading. Plaintiff brought suit under New York General Business Law (“GBL”) §§ 349 and 350, and other common law claims. In her complaint, the plaintiff cited the FDA’s definition of “artificial flavor,” which is “[A]ny substance, the function of which is to impart flavor, which is not derived from a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, her, bark, bud, root, leaf or similar plant material . . .” The court found that the complaint failed to make any factually substantiated allegations that the flavors in the defendants’ products are not derived from natural sources, and, thus, the plaintiff failed to allege the presence of artificial flavors. The court held, “as the allegedly artificial flavors are not alleged to be derived from artificial sources, and are in fact derived from natural sources— soybeans, corn, and other plants—Plaintiff’s claim cannot stand.” Additionally, with respect to the allegation that consumers expect a “No Artificial Flavors” representation to mean that the product includes no chemically-altered flavors, even if those flavors are derived from natural sources, the court held that the complaint “merely offers the generalization that consumers are particularly vulnerable to these kinds of false and deceptive labeling and marketing practices,” and that “[s]uch unsubstantiated allegations do not pass muster.” As for the “Preservative-Free Crust” representation, the plaintiff, again, adopted the FDA’s definition, which defines “preservative” as “any chemical that, when added to food, tends to prevent or retard deterioration thereof, but does not include common salt, sugar, vinegars [or] spices.” Plaintiff claimed that sodium stearoyl lactylate, enzymes, and mono-and diglycerides are preservatives that function as an anti-staling agent in breads and baked goods to preserve the softness of the crust during the product’s shelf life. However, the court held that the plaintiff “does not explain how these ingredients operate as preservatives in Defendant’s product, frozen pizzas, as opposed to breads and baked goods.” Thus, the court found the allegations in the complaint concerning preservative-free representations to be insufficient to state a deceptive practices claim. Therefore, the court held as a matter of law that the plaintiff failed to plead a materially misleading representation under GBL §§ 349 and 350. (Zuchowski v. SFC Global Supply Chain, Inc., 2022 WL 3586716 (S.D.N.Y. Aug. 22, 2022)).
The U.S. District Court of the Northern District of California grants with prejudice defendant Madison Reed, Inc.’s motion to dismiss a second amended consumer class action complaint alleging that the defendant falsely advertised its hair care products as using ingredients that are less harsh on hair and the user. The court ruled that Ohio, not California law, governed the claims of one of the plaintiffs and dismissed the California claims as to that plaintiff. The court also ruled that many of the challenged statements were challenged outside the statute of limitations. It ruled that many of the remaining challenged statements are puffery. Considering statements neither barred by the statute of limitations nor barred as puffery, the court ruled that the plaintiffs did not plausibly allege a misrepresentation or omission likely to deceive the reasonable consumer. Further, they failed to allege with any specificity the asserted misrepresentations and did not allege an actionable omission. Finally, the court denied the plaintiffs’ request for leave to amend. ( Brown v. Madison Reed, Inc., -- F.Supp.3d --, 2022 WL 3579883 (N.D. Cal. Aug. 19, 2022)).
The U.S. District Court for the Northern District of Illinois grants defendant Hershey Company’s motion to dismiss for failure to state a claim in a putative class action. Plaintiff asserted, among other things, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), state consumer protection laws, negligent misrepresentation, and fraud. Plaintiff claimed she was misled to purchase, at a higher price than it would otherwise be sold, a product manufactured by the defendant that was labeled and marketed as “Hershey’s Hot Fudge Topping,” expecting the product to contain ingredients essential to hot fudge. However, the plaintiff claimed that the product lacked certain essential hot fudge ingredients and, instead, replaced those ingredients with lower quality and lower priced substitutes. In considering whether a proper ICFA claim had been stated, the court analyzed the interpretation of the fudge product’s description and labeling through the eyes of a reasonable consumer, and concluded that such a reasonable consumer would not expect a fudge product to contain milkfat, an ingredient claimed by the plaintiff to be essential to such a product’s composition. Additionally, the court noted that a “consistent” understanding of a product or ingredient composition is not the same as the “reasonable consumer” standard, and instead the focus should be placed on whether a “significant portion of the general consuming public acting reasonably in the circumstances could be misled.” The court also found that the plaintiff failed to allege that the fudge product labeling was deceptive; the plaintiff could not show that the product contained within the jar was inconsistent with the product depicted on the label, and her personal disagreement as to the label of “fudge” as compared to a lack of specific ingredients in the product was not enough to support her claim in consideration of the reasonable consumer standard. Finally, the court indicated that plaintiff’s negligent misrepresentation claims must also fail, as there was no plausible allegation that a false statement of material fact was made. (Lederman v. Hershey Co., 2022 WL 3573034 (N.D. Ill. Aug. 19, 2022)).
The U.S District Court for the Northern District of California grants defendant J.M. Smucker Company’s (“Smucker”) motion to dismiss a putative class action alleging that Smucker’s products are labeled with protein content claims, which inflate the amount of protein in the products because the protein contents were not calculated using the PDCAAS method. Specifically, the plaintiff alleges that Smucker’s product packaging violated 21 C.F.R. § 101.13, which prohibits false and misleading nutrient content claims, because Smucker’s front-of-pack protein claims stated the quantity of protein, such as “6 grams Protein.” The court rejected Smucker’s argument that “6 grams Protein” was not a nutrient content claim, finding that, under 21 C.F.R. § 101.13(c), information that can be included in the nutrition facts box “is a nutrient content claim and is subject to the requirements for nutrient content claims” if “such information is declared elsewhere on the label or in labeling.” The court, then, turned to Smucker’s argument that the plaintiff’s claims based on the front-of-pack protein statements was expressly preempted. The court found that they were: “FDA regulations do not require protein content claims on a package’s front label to be calculated using amino acid content testing or to be adjusted for digestibility.” Accordingly, the plaintiff’s attempts to force Smucker’s to calculate the protein content using one of the plaintiff’s preferred methods was an attempt to impose different requirements from the federal Food, Drug and Cosmetics Act. The complaint, thus, was dismissed. (Brown v. J.M. Smucker Co., 2022 WL 3348603 (N.D. Cal. Aug. 12, 2022)).
The Oregon Court of Appeals affirms the trial court’s order dismissing claims with respect to the four limited questions addressed on interlocutory appeal, and remanded the case. Plaintiffs, in their putative class action complaint, alleged that the defendant violated Oregon’s Unlawful Trade Practices Act (“UTPA”) by engaging in a “deceptive marketing campaign” by misrepresenting that “the dairy cows who provide milk for its products graze on pastures in Tillamook County,” and that the defendant’s “products are sourced from small family farms whose traditional farming practices are better for the environment, the local community, and of course the cows than are the industrial dairy facilities that Tillamook derides as ‘Big Food.’” The appellate court answered four questions on interlocutory appeal that represented the plaintiffs’ first two assignments of error, and concluded that, under several provisions of the UTPA, the plaintiffs and putative class members were “required to plead and prove that they observed and relied upon Defendant’s representations,” as well as plead and prove “reliance upon Defendant’s representations” for their UTPA claims that the defendant violated the federal Food, Drug and Cosmetic Act for selling “misbranded goods” or state law for disseminating a “false advertisement.” The appellate court also held that the plaintiffs’ “price-inflation” theory was not “viable” and concluded that the plaintiffs were required to plead reliance on the purported misrepresentations for “prohibited transaction” and inducement theories. Thus, the court rejected the plaintiffs’ first two assignments of error and affirmed the trial court’s order with respect to the limited issues under the four interlocutory questions. (Bohr v. Tillamook Cnty. Creamery Ass’n, -- P.3d --, 321 Or. App. 213 (Aug. 10, 2022)).
Federal Trade Commission (FTC) Litigation Decisions
The U.S. District Court for the Southern District of Georgia grants the FTC’s motion for summary judgment against corporate and individual defendants for deceptive marketing claims related to Rvalues for an insulation coating product. The FTC argued, among other things, that, under Section 5 of the FTC Act, “Defendants made R-value and testing claims that are material, likely to mislead consumers, and are both false and unsubstantiated.” With respect to the corporate defendants, the court found that the first and third elements for Section 5 liability were satisfied, when they did not dispute that “representations” were made about the R-value for the product, and when these claims were “clearly material” because the defendants used them in marketing materials and direct communications to customers and potential customers. For the second element, the Commission proceeded under falsity and reasonable basis theories to show that the claims were likely to mislead a reasonable customer. Defendants argued against both theories, but the court concluded that their claims were false and unsubstantiated, when the FTC’s expert’s multiple product tests established a lower R-value for the product than marketed. With respect to the individual defendant, the court concluded that he was liable because, as the “sole owner and only employee” for the corporate defendants, he directly participated in the deceptive acts and practices, had the authority to control them, and knew of the corporation’s improper practices based on the defendant’s admission that he “is the only person who takes any action” for the corporate defendants. Accordingly, the court also granted the FTC’s motion for permanent injunction after reviewing and, then, adopting the plaintiff’s proposed order. (FTC v. F&G Int’l Grp. Holdings, LLC, 2022 WL 3582493 (S.D. Ga. Aug. 19, 2022)).
Recent Filings
Putative nationwide class action filed in the U.S. District Court for the Central District of California against Amazon.com Inc., alleging violations of California’s Unfair Competition Law and Consumers Legal Remedies Act. According to the complaint, the defendant falsely advertises that shoppers with an eligible “Prime” membership will “earn 5% back at Amazon Fresh” when they use an “Amazon Prime Rewards Visa Signature Card” at its “Amazon Fresh” stores. Plaintiff explains that card holders, in reality, receive only 1% back at Amazon Fresh when they use their card. (Bargar v. Amazon.com Inc., No. 22-cv-1555 (C.D. Cal. filed Aug. 22, 2022)).
Putative nationwide class action filed in the U.S. District Court for the Northern District of California against the Honest Company Inc., alleging violations of California’s False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act. According to the complaint, the defendant’s labeling of its wipe products as “plant-based” is misleading because the products contain numerous ingredients that do not come from plants, including artificial or synthetic ingredients. Plaintiff alleges that the products contain ingredients that may have been originally derived from raw plant materials, but were subjected to substantial processing that materially altered their original plant composition. (Sida v. Honest Co. Inc., No. 22-cv-4602 (N.D. Cal. filed Aug. 10, 2022)).
