A trio of recent cases challenging disparate food and beverage labels offers a few common substantive and procedural lessons for companies. First, the back panels – when considered in light of U.S. Food and Drug Administration (FDA) regulations – are a powerful defense against claims of deception, but they are not foolproof. Second, plaintiffs are unlikely to succeed at stating class action claims based on the law of states where none of the plaintiffs reside. Third, counsel should consider a motion for judgment on the pleadings when it comes to preemption arguments. Fourth, requests for a court to take judicial notice of labels and public documents can be key to the outcome of motions to dismiss. Last, injunctive relief is not ordinarily available to consumers once they claim advertising is false.
Trio of Cases
We looked at three recent federal cases. In Richburg v. Conagra Brands, Inc., No. 22 CV 2420, 22 CV 2421, 2023 WL 1818561 (N.D. Ill. Feb. 8, 2023), the plaintiffs sued over Orville Redenbacher’s® and Angie’s BOOMCHICKAPOP® microwave popcorn products, claiming they create a “unique risk” of exposure to per- and polyfluoroalkyl substances (PFAS) from food contact materials; i.e., microwave popping bags. In Sinatro v. Mrs. Gooch’s Natural Food Markets, Inc., No. 22-cv-03603-TLT, 2023 WL 2324291 (N.D. Cal. Feb. 16, 2023), the plaintiffs sued over alleged slack-fill boxes of Whole Foods 365 Shells & Cheese, Whole Foods 365 Organic Shells & Cheese and Whole Foods 365 Organic Macaroni & Cheese. In Crawford v. Arizona Beverages USA LLC, No. 22-cv-220-DWD, 2023 WL 1100260 (S.D. Ill. Jan. 30, 2023), the plaintiff sued over the “Lite” and patriotic representations on a bottle of “Arnold Palmer Half & Half Iced Tea Lemonade.”
The back panel on packaging is often enough to convince a court that a reasonable juror would not be misled by other statements on product packaging, but not always and not without leaving a few claims in play. For example, in Sinatro, the plaintiffs argued that they plausibly alleged that the products’ packaging containing 48 percent to 56 percent nonfunctional slack-fill is deceptive to the reasonable consumer in violation of the California Unfair Competition Law (UCL) and the California False Advertising Law (FAL) and California Consumers Legal Remedies Act (CLRA). But the court disagreed because the products at issue include on their labels the correct net weight, serving size, number of servings, preparation instructions and approximate yield. The court considered the last of these the most important because, in its view, a reasonable consumer of boxed macaroni and cheese would rely on the approximate yield, since “neither the volume nor the weight is telling of how much [macaroni and cheese] the mix ultimately produces.’ ”
The court dismissed the plaintiffs’ claims under the UCL, FAL and CLRA based on consumer deception. The court also dismissed the plaintiffs’ negligent misrepresentation claim under the economic loss rule because the plaintiffs did not allege “any misconduct independent of the contractual relationship between the parties — the sale and purchase of the products at issue.” The court ruled, however, that the plaintiffs sufficiently pled a claim under the unfair prong and unlawful prong of the UCL because defendants did not fit within a safe harbor exception for slack-fill, and the court refused to dismiss the plaintiffs’ fraud and intentional misrepresentation claims in light of the “size of the packaging for the products at issue, combined with the actual amount of product in the package… .”
As another example, the Richburg case underscores the power of the label when viewed in light of FDA regulations. The defendant labeled its Redenbacher products as containing “only real ingredients” and “100% ingredients from natural sources” and its BOOMCHICKAPOP products as containing “only real ingredients,” “ingredients sourced from nature,” and “Real, Simple Ingredients. Nothing Fake.” The plaintiffs argued that this is at odds with the unique PFAS risk posed by packaging. They believe PFAS migrates into the popcorn. As a result, the popcorn allegedly contains non-incidental, harmful PFAS levels that consumers ingest. Assuming the truth of these allegations, the court nevertheless ruled the plaintiffs failed to state a claim because the FDA exempts migratory substances from the mandated list of “ingredients” on food product packaging. See 21 C.F.R. § 101.100(a)(3)(iii). Without deciding whether the plaintiffs’ claims are preempted by federal statute, the court determined that the representation about “ingredients” on the packaging is correct as a matter of law because PFAS is not an ingredient. The court dismissed the plaintiffs’ claims with prejudice.
Not all courts are persuaded that the back panel does the trick. In Crawford, the label proclaimed “Lite” without express comparison to a similar drink. The plaintiff complained that the drink actually contained about as much sugar and calories as soda. The product also featured a map of the United States covered in the image of the American flag and surrounded by the words “An American Company – Family Owned and Operated.” The defendant argued no reasonable consumer would be misled because of the information contained on the nutritional facts panel and statement below the barcode that it was a “Product of Canada,” but the court disagreed. The plaintiff also complained because the bottle contained 20 ounces, but it featured dual nutrition facts for 12 ounces and 20 ounces. The plaintiff called the 12-ounce label deceptive as a buyer would naturally consume the full 20 ounces. The defendant maintained that FDA regulations require it to include nutrition information in terms of a 12-ounce serving size, while also allowing it to include a statement based upon the 20-ounce container. But the court ruled that a motion for judgment on the pleadings is the appropriate tool for a preemption argument and denied the defendant’s motion to dismiss.
You Don’t Reside There
The plaintiffs in all three cases brought claims under the laws of states where they did not reside or purchase the products in question. The defendants argued that the court did not have to wait until class certification to dismiss these claims. In Richburg, the court agreed because the plaintiffs failed to allege an injury in fact in multiple states. Likewise, the court in Sinatro ruled the plaintiffs alleging nationwide claims lacked Article III standing to bring claims on behalf of putative class members outside their states of residence. The court observed, “While the Ninth Circuit has not definitively answered whether named plaintiffs have standing to pursue class claims under the common laws of states to which the named plaintiffs have no connection, district courts in this Circuit routinely hold that they do not.” The court in Crawford denied the defendant’s motion to dismiss, but added, “The court is aware that prudential concerns and potential Rule 23 issues may stand in the way of permitting Plaintiff to represent potential members of a class to which he himself does not belong or to maintain claims that are different from those of other potential members.”
Take Judicial Notice
Judicial notice was an important tool that the defense used in two of the cases. In Richburg, the defendant asked the court to take judicial notice of the FDA’s document on PFAS, which states that “the FDA has authorized specific PFAS for use in specific food contact applications” – including microwave popcorn bags. Ruling for the defendant, the court repeatedly returned to the FDA document. In Sinatro, the court took judicial notice of product labels (both of the products at issue and cited in cases by the parties) and even of the existence of a declaration by one of the parties denying that it is the distributor of the products at issue, leading the court to determine it lacked jurisdiction over the entity.
Standing for injunctive relief requires plaintiffs to demonstrate that they have suffered or are threatened with a concrete and particularized legal harm, coupled with a sufficient likelihood that they will again be wronged in a similar way. Threat of future harm was especially difficult for the consumers to prove in the three cases. The court in Crawford ruled, “[N]ow that he is aware of the deception, it is unlikely Plaintiff will be misled again.” Likewise, the court in Sinatro doubted the alleged slack-fill box would again mislead the plaintiffs: “Plaintiffs did not allege why they cannot recall the amount of product they received in their previous purchase given the same product package and ‘disclosures of net weight and serving sizes in ounces, grams, or cups.’ ” Last, in Richburg, the court denied the plaintiffs’ injunctive relief, noting that they presupposed it rather than sought to compel it by alleging that they would purchase the products at issue in the future only if defendant took corrective action.
Irrespective of the federal court, food or beverage label at issue, or the particular claim of deception, these three recent cases reveal common substantive and procedural lessons for companies. The content of product packaging and especially back panels is key, but defense strategies are also important to include pre-class certification efforts to dismiss claims premised upon the law of states where the plaintiffs do not reside, considering a motion for judgment on the pleadings to make preemption arguments, requesting judicial notice of public records, and challenging requests for injunctive relief. For more information or questions about a specific situation involving product labeling compliance or defense efforts at your organization, please reach out to the author or another member of Holland & Knight’s Food and Beverage Litigation Team.