No Slow Down to Class Action Lawsuits in California Regarding Food Labeling and Marketing
By California litigators Tom Woods and Melissa Jones
Consumer class action plaintiffs remain very active in California, with cases continuing to be filed against food manufacturers and suppliers regarding alleged misleading labeling and marketing claims. Just this week, plaintiffs filed a class action lawsuit against Trader Joe’s alleging that it falsely advertised and sold cookies and apple juice as “All-Natural” even though the products contained synthetic ingredients. In the past few months alone, several other large companies have been sued over allegedly false “All Natural” claims in lawsuits involving ice cream, juice, granolas, energy bars, and cereal. In the same time period, other class actions have been filed in California regarding the marketing of products that are made from genetically modified plants and grains, such as cooking oil.
These actions are most commonly brought under California’s unfair competition law (referred to as the “UCL” or § 17200 of the California Business and Professions Code). The problem for companies sued under California’s UCL is that it is difficult to get claims dismissed at an early stage. Lawsuits frequently survive the pleading stage because claims are evaluated from a subjective, and not objective, standard. Cases are allowed to proceed even though only one plaintiff establishes standing to sue by showing they actually relied on a company’s statement. Finally, preemption defenses are frequently inapplicable.
Companies should get proactive in light of this litigation trend, which isn’t going away, and examine their labels to minimize the risk of litigation. Those that have been sued should consider creative ways to address these class actions by developing and preserving constitutional challenges. Despite recent California cases making it easier for plaintiffs to maintain their lawsuits at an early stage, aggressive discovery may prevent plaintiffs from certifying the proposed class.
Dismissal of "I Can't Believe It's Not Butter" Claims: Another Example of Iqbal/Twombly Succeeding Where Preemption Cannot
Judge James Ware dismissed on an FRCP 12(b)(6) motion putative class claims against Unilever alleging violations of the California Consumers Legal Remedies Act , Unfair Competition Law, and False Advertising Law . Judge Ware's decision can be found here. Plaintiff alleged that Unilever misrepresented the ingredients of its butter-substitute product through its advertising and product labeling.
The heart of plaintiff's complaint was Unilever's marketing of the product as "Made with a Blend of Nutritious Oils." Plaintiff alleged that "[t]his message . . . is misleading and deceptive because Defendant's Product contains a highly unhealthy, non-nutritious oil known as partially hydrogenated oil."
Unilever's preemption argument was rejected. The court followed what's becoming a familiar line of reasoning that while federal law governs the labeling of the product, state advertising and marketing claims are not preempted:
Although the "oils" referred to in the advertisement on the label are the same oils that are subject to the NLEA labeling requirement, the Court finds that there is no inherent conflict in allowing relief under state law with respect to what is said in the advertisement on a label about characteristics of those oils that are not regulated by the NLEA.
Judge Ware dismissed the claims against Unilever on the basis of the plausibility pleading standards articulated by the Supreme Court in the Iqbal and Twombly cases. He ruled that plaintiff's claims concerning the oils were "conclusory" and explained that the "implausibility of Plaintiff's allegations can more readily be seen if the allegations are expressed as a categorical syllogism:"
For the representation "blend of nutritious oils" to be true, all constituent oils
must be nutritious. One of the constituent oils in the product [partially hydrogenated oil] is not nutritious. Therefore, the product representation is false.
The court went on to explain why plaintiff's claims, even if accepted as true, were implausible. The court found faulty the logic underlying plaintiff's complaint about the use of partially hydrogenated oil in the "blend of nutritious oils." The court found that plaintiff's argument suffered from (1) “petitio principii (begging the question)”, (2) the "fallacy of composition" and (3) the "fallacy of division." In short, the Unilever case demonstrates that without a solid scientific and factual basis, consumer fraud claims are frequently vulnerable to attack on an early motion to dismiss (though maybe not for preemption).
