Consumer Class Actions
The U.S. District Court for the Southern District of Illinois grants defendant Kellogg Sales Co.’s (“Kellogg”) motion to dismiss a putative class action, alleging claims of, among other things, deceptive business practices in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, negligent misrepresentation, and fraud. Plaintiff alleged that Kellogg overexaggerated the amount of strawberries contained in its “Frosted Strawberry Toaster Pastries” and “tricked” consumers into believing there was a higher concentration of strawberries in the filling by using a red synthetic food coloring. According to the plaintiff, this was false, misleading, and deceptive because the pastries contained a relatively significant amount of non-strawberry fruit ingredients, such as pears and apples. In dismissing the claim, the court applied its ruling from Floyd v. Pepperidge Farm, Inc., 2022 WL 203071 (S.D. Ill. Jan. 24, 2022). There, the court rejected a plaintiff’s claim that the name “Golden Butter” crackers was misleading because, even though there were other ingredients in the crackers, there were no “untruths on the packaging” or deception because the crackers were golden-colored and contained butter. So too here, the court reasoned, the Pop-Tarts label was not deceptive on its face because the filling does contain some strawberries and would not lead to confusion with a reasonable consumer. As a result, the plaintiff’s claim under all theories failed and were dismissed with prejudice. (Harris v. Kellogg Sales Co., 2022 WL 1641439 (S.D. Ill. May 24, 2022)).
The U.S. District Court for the Northern District of Illinois grants defendant Prairie Farms Dairy (USA) Inc.’s motion to dismiss in a putative class action alleging, among other things, violations of Illinois’s Fraud and Deceptive Business Practices Act (“IFCA”). In reviewing the operative complaint, the court found that the plaintiff had asserted the equivalent of flavorless ice cream: a complaint without proper factual allegations to support the claims. In claiming that the defendant’s product packaging was misleading, the plaintiff asserted only that the ice cream, described as “Premium Vanilla” ice cream with “natural vanilla flavorings,” misled consumers as it contained a negligible amount of vanilla, instead, receiving most of its flavor from artificial flavorings. The court did not find this allegation and factual support within the complaint as adequate to plausibly allege a deceptive act or practice. Instead, the court noted several earlier cases where food and drink were properly described by their flavor, and such description did not translate to a reasonable consumer’s expectation as to the product’s specific ingredients. The court agreed with earlier decisions, noting that consumers concerned with the ingredients of ice cream themselves could read the ingredients list, and using a description of flavor alone, such as “vanilla” or even “premium vanilla,” did not automatically suggest that an ice cream’s flavor derives exclusively from a vanilla bean or other natural ingredient. Furthermore, the use of “premium” in describing the flavor did not further a reasonable expectation of flavor made “entirely or substantially [from] natural vanilla beans.” The remainder of plaintiff’s claims were found to be premised on accusations of false, deceptive, and misleading labeling, and, because the court found no basis for the assertions, all other claims were dismissed. (Wach v. Prairie Farms Dairy, Inc., 2022 WL 1591715 (N.D. Ill. May 19, 2022)).
The U.S. District Court, Eastern District of Wisconsin grants Defendant Ralph Lauren Corp.’s (“RLC”) motion to dismiss plaintiff’s class action complaint, alleging that that some RLC products contain less pima cotton than advertised. Plaintiff asserted claims for, among other things, negligent misrepresentation, fraud, and violations of the Wisconsin Deceptive Trade Practices Act (“WDTPA”) and Iowa Consumer Fraud Act. Specifically, the plaintiff claimed that, sometime between September 2019 and September 2020, she purchased “one or more clothing items,” which purported to contain a certain percentage of pima cotton. She further alleged that a laboratory analysis of the products showed that they contained “significantly less” pima cotton than indicated on the labels. The court held that the plaintiff failed to state a plausible claim under WDTPA, reasoning that the complaint offered only conclusory allegations that “unidentified RLC products contained an unspecified amount of pima cotton less than an unspecified amount represented by RLC, all discovered by an unspecified laboratory analysis.” Plaintiff did not identify the product she purchased or what specific representation RLC made with respect to that product. Plaintiff also failed to assert that the product that she purchased was tested. As such, the plaintiff offered “purely speculative allegations that fail to establish anything more than the mere possibility of misconduct.” The court dismissed the claims under other state consumer fraud acts under the same analysis. (Cota v. Ralph Lauren Corp., 2022 WL 1597631 (E.D. Wis. May 19, 2022)).
The U.S. District Court for the Northern District of California grants a motion to dismiss a consumer class action complaint alleging that defendant Van’s International Foods deceptively labels the amount of protein per serving on its frozen waffles and pancakes products, and denies the defendant’s motion to stay. Plaintiff alleged that a front-of-pack statement identifying the grams of protein per serving was deceptive because the gram amount was not adjusted for the digestibility of the protein. Plaintiff separately alleged that the product’s “Nutrition Facts” box was missing a required statement that provides a digestibility-adjusted percent of one’s daily value of protein that the product’s plant-based protein provides. The court rejected the plaintiff’s two theories of liability. As for the challenge to the front-of-pack quantitative statement of grams of protein in a serving of the product, the court ruled that the plaintiff’s theory—challenging the statement for not being digestibility-adjusted—is expressly preempted because the plaintiff was attempting to impose requirements for the statement that are not identical to the federal regulations governing the statement. Dismissal of the claims based on the preempted theory challenging the front-of-pack quantitative statement was with prejudice. As for the challenge to the missing percent daily value statement in the Nutrition Facts box, the court ruled that the plaintiff did not allege the requisite reliance on the missing statement (she didn’t allege seeing it or that it was material to her purchasing decision). That, in turn, meant that she did not state a claim for relief as to the percent daily value statement and did not meet Fed. R. Civ. P. 9(b)’s particularity requirement for the fraud claim. That dismissal was without prejudice. The court rejected the defendant’s alternative argument that the plaintiff’s challenge to the missing percent daily value statement was impliedly preempted. Defendant had argued that plaintiff was impermissibly attempting to enforce FDA regulations, for which there is no private right of action, as opposed to a preexisting state common law or statutory duty. The court held there was no implied preemption because the plaintiff was using a violation of California’s Sherman Law as the predicate for a violation of California’s Unfair Competition Law, not a violation of FDA regulations promulgated under the federal Food, Drug and Cosmetics Act as amended by the Nutrition Labeling and Education Act. The court also rejected the defendant’s Article III standing argument, concluding that the plaintiff did allege a cognizable injury. The court further ruled that the plaintiff sufficiently alleged standing for injunctive relief because she pled a threat of future harm by claiming that she will be unable to rely on the products’ advertising and label in the future and, thus, won't be able to purchase the product again even though she’d like to. The court left for a later stage the defendant’s argument that the plaintiff may not seek equitable remedies because she does not allege that she lacks an adequate legal remedy. Finally, the court denied the defendant’s request for a stay pending the Ninth Circuit’s decision in an appeal in a similar case filed by the same plaintiffs’ attorneys (Chong v. KIND), ruling that the prejudice to this plaintiff from a stay outweighed the possible judicial efficiency. Plaintiff filed an amended complaint on May 31, 2022. (Brown v. Van’s Int’l Foods, Inc., 2022 WL 1471454 (N.D. Cal. May 10, 2022)).
The U.S. District Court for the Northern District of California grants defendant Apple Inc.’s motion to dismiss. Plaintiffs alleged that Apple deceived consumers into buying products that use “iCloud” and ultimately misrepresented the cost of iCloud by leading consumers to believe that they can easily maintain their data for free. In reality, the plaintiffs claimed, iCloud users quickly exceed the free 5GB of storage and, then, must pay for an increasingly costly service. Based on these allegations, the plaintiffs brought a consumer class action asserting claims for, among other things, violations of California’s Automatic Renewal Law (“ARL”), Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. First, the court determined that the plaintiffs had Article III standing because at least some of them alleged that they lost money paying for varying levels of an iCloud subscription, and that this injury was caused by their reliance on Apple’s representations and its omissions in iCloud’s terms and conditions and emailed disclosures. And, while Apple argued that standing was lacking, as at least two named plaintiffs never exceeded the free storage limit and, thus, never had to pay, the court reasoned that those plaintiffs did not impact its standing analysis, because only one named plaintiff needs to have standing for the case to proceed. However, the court determined that the plaintiffs did not state a claim under the ARL because all consumers knowingly consented to the 5GB storage upgrade based on the iCloud Terms and Conditions. The court also reasoned that iCloud clearly and conspicuously disclosed its cancellation policy, shielding Apple from other potential ARL claims. Finally, the court dismissed the plaintiffs’ consumer fraud claims under Fed. R. Civ. P. 9(b)’s heightened standard, ruling that none of the allegations met that standard. Specifically, the court faulted the plaintiffs for failing “to allege where or when Apple in any way indicated that consumers will require more or less than 5GB of data storage.” The court granted leave to amend, and on May 27, 2022, the plaintiffs filed their second amended complaint. (Rutter v. Apple Inc., 2022 WL 1443336 (N.D. Cal. May 6, 2022)).
The U.S. District Court for the Western District of Wisconsin grants defendant Kraft Heinz Food Company’s (“Kraft”) motion to dismiss the plaintiff’s putative class action complaint for failure to state a claim. Kraft manufactures and sells the pizza bagel food product, “Bagel Bites.” The cover of the Bagel Bites package at issue states, “Mozzarella Cheese” in bold font, with smaller print below reading, “mini bagels with mozzarella cheese and tomato sauce,” and also contains the phrase “MADE WITH REAL CHEESE.” The back of the package contains an ingredient list, which includes the following ingredients: (1) “cheese blend (part-skim mozzarella cheese [partskim milk, cheese cultures, salt, enzymes], modified food starch, skim milk)”; and (2) “sauce (water, tomato paste, invert cane syrup, modified corn starch, salt, methylcellulose, citric acid, potassium chloride, ammonium chloride, spice, yeast extract, natural flavor, calcium lactate).” Plaintiff alleged that the representations on the package deceive consumers because the product does not contain real mozzarella cheese and tomato sauce, as these foods are understood and expected by consumers. Plaintiff asserted that he purchased the Bagel Bites “on multiple occasions” because of the representations that it contained mozzarella cheese and tomato sauce, and that he would not have done so absent those “misrepresentations.” Specifically, he claimed that reasonable consumers “do not expect a cheese blend with modified food starch where the front label promises ‘Mozzarella Cheese’ and ‘REAL’ cheese.” The court, holding that the federal Food Drug and Cosmetic Act (“FDCA”) applies, found that the defendant’s product labelling conforms with FDCA labelling standards, which define “mozzarella cheese as a ‘food prepared from dairy ingredients’ that may include not just ‘dairy ingredients,’ but also ‘clotting enzymes’ and ‘salt.’” The court also distinguished the facts from a case on which plaintiff relied—Bell v. Pubix Super Markets, Inc., 982 F.3d 468, 473 (7th Cir. 2020)—where the product at issue was represented as “100% Grated Parmesan.” The court here explained that, unlike the defendant in Bell, Kraft did not claim its Bagel Bites contained 100% mozzarella cheese. Second, the plaintiff argued that the front packaging was misleading because it claimed to contain “Mozzarella Cheese,” not “partskim mozzarella cheese” as disclosed in the ingredients list. The court, considering the applicable FDA law, held that part-skim mozzarella cheese is nevertheless mozzarella cheese and the representation of “mozzarella cheese” is not misleading. The court discussed a few cases cited by the plaintiff, and either distinguished the present case from them or simply found them uninstructive because the applicable laws in those cases operated differently than the applicable FDCA statute here. Finally, the plaintiff took issue with the representation that Bagel Bites contain “tomato sauce” when the ingredients list shows it is actually a mixture of water, tomato paste, invert cane syrup, modified corn starch, salt, methylcellulose, citric acid, potassium chloride, ammonium chloride, spice, yeast extract, natural flavor, and calcium lactate. The court, agreeing with the defendant, cited an FDA Compliance Policy Guide that says, “no standard of identity has been established for tomato sauce” and, instead, requires that sauce and constituent ingredients be displayed in the ingredient list. Ultimately, the court held that the plaintiff did not plausibly allege that a reasonable consumer won’t receive the mozzarella cheese and tomato sauce provided on the front of the Bagel Bites package. Therefore, the plaintiff failed to state a claim, and the case was dismissed. (Lemke v. Kraft Heinz Food Co., 2022 WL 1442922 (W.D. Wis. May 6, 2022)).
Consumer Financial Protection Bureau (CFPB) Litigation Decisions
The U.S. Court of Appeals for the Ninth Circuit affirms in part, vacates in part, and remands a California district court’s decision on the parties’ cross-appeals, concluding that the district court “correctly found liability but erred in assessing the penalty and in evaluating whether to grant restitution.” The defendants-appellees took issue with the finding of liability, while the CFPB insisted that the district court should have granted a larger civil penalty and ordered restitution, where the corporation, its affiliates, and its CEO were involved in an “unfair, deceptive, or abusive” high-interest consumer loans scheme as the corporation collected consumer loan payments under the pretense that they were legally enforceable obligations but were invalid under state law. Although the loan agreements included a choice of law provision under Tribal law that made the loans valid, the Ninth Circuit, applying choice of law principles under federal common law, determined the loans were invalid under the states’ laws that would apply instead. The Ninth Circuit rejected the corporation’s argument that “a finding of a deceptive practice under the Consumer Financial Protection Act (“CFPA”) is impermissible when the deception involves state law” and found that the corporation’s act falls under the CFPA’s prohibition. The Ninth Circuit found that the district court did not err when deciding that the CEO was personally liable despite his reliance on counsel’s preliminary advice. Also, the Ninth Circuit vacated and remanded the district court’s civil penalty based on a lower penalty tier, holding such application was “clearly erroneous” as the law violation was “so obvious” that the corporation “must have been aware of it.” In turn, the Ninth Circuit concluded that the district court abused its discretion when denying restitution, and vacated and remanded the issue. (CFPB v. CashCall, Inc., 2022 WL 1614930 (9th Cir. May 23, 2022)).
Recent Filings
Putative California class action filed in the U.S. District Court for the Central District of California against Retail Ecommerce Ventures, LLC claiming that the company violated California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. According to the complaint, the defendants engage in a false and misleading reference price scheme in the marketing and selling of its products on its e-commerce website, dressbarn.com. (Hernandez v. Retail Ecommerce Ventures LLC (C.D. Cal. filed May 18, 2022)).
Putative California class action filed in the U.S. District Court for the Northern District of California against Albertsons Companies, Inc. and others claiming that the company violated California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. According to the complaint, the defendants falsely advertise several of their acetaminophen drugs with a “Rapid Release” feature despite the drugs actually dissolving slower than “Signature Care”-branded non-rapid release acetaminophen products. (Morgan v. Albertsons Cos., Inc. (N.D. Cal. filed May 18, 2022)).
Putative nationwide class action filed in the U.S. District Court for the Eastern District of New York against Wendy’s International LLC and McDonald’s Corp., alleging violations of the consumer protection laws of the fifty states and the District of Columbia. According to the complaint, the defendants’ advertising of their menu items is misleading because the menu items are materially smaller than advertised. Plaintiff explains that the advertising displays hamburgers with bigger patties and more toppings than what customers are actually served. Plaintiff further alleges that absent the misleading advertisements, consumers would not have purchased the menu items. (Chimienti v. Wendy's Int’l LLC, et. al, No. 22-cv-2880 (E.D.N.Y filed May 17, 2022)).
Putative nationwide class action filed in the U.S. District Court for the Southern District of California against Ghost LLC, 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 “Ghost Greens Superfood Supplements,” which come in lime, guava, and iced tea lemonade flavors, as “naturally flavored” is misleading because the products contain artificial flavoring, including the synthetic petrochemical malic acid. Plaintiff alleges that absent the misleading label, he would have paid a substantially reduced price for the products or would not have purchased the products at all. (Helems v. Ghost LLC, No. 22-cv-674 (S.D. Cal. filed May 13, 2022)).