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Another One Bytes the Dust: Court Dismisses Flash Drive False Advertising Suit Based On Back-Of-Package Clarifying Disclosures

A few months ago, we wrote about courts’ inconsistent application of the “reasonable consumer” standard when labeling statements are claimed to be false or misleading, despite clarifying information elsewhere on the product label.  In Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008), the Ninth Circuit (in)famously held that a “reasonable consumer” should not be “expected to look beyond misleading representations on the front of the box to discover the truth … on the side of the box.”  Id. at 939-40.  As we explained in our prior post, Williams is in tension with longstanding authority that “reasonable consumers” are expected to read the entire advertisement, including disclaimers and clarifying language.  We observed that numerous lower-court decisions, recognizing Williams’ shaky foundation, have sought to distinguish it and narrow it to its facts.

Add to this list Dinan v. SanDisk LLC, No. 5:18-cv-5420 (BLF), 2019 U.S. Dist. LEXIS 91633 (N.D. Cal. May 31, 2019), a recent decision out of the Northern District of California.  While Dinan was not a food, drug, or cosmetic case, its discussion of Williams and the “reasonable consumer” test bears directly on such cases, and should help manufacturers dispatch some false advertising claims at the pleadings stage when their packages include proper clarifying disclosures. 

The defendant in Dinan, SanDisk, manufactures USB flash drives, with varying storage capacities prominently noted on the front of the packaging (“64 GB,” “128 GB,” etc.):

Plaintiff Dinan’s false-advertising theory was based on the fact that the tech world uses two different systems to measure data-storage capacity.  In the binary system, a gigabyte contains 1,073,741,824 (2^30) bytes.  By contrast, in the decimal system, a gigabyte contains just 1,000,000,000 (10^9) bytes.  Dinan claimed that, in purchasing a SanDisk flash drive, he believed he was receiving binary GBs rather than decimal GBs, and so received 6.7% less actual storage capacity than he expected.  SanDisk moved to dismiss the complaint, arguing that a reasonable consumer would not be misled as Dinan alleged.

The district court took judicial notice of several facts in deciding the motion.  First, and most critically, the front-of-package storage capacity claim included an asterisk next to the term “GB,” which linked to a disclosure on the back of the package stating that “1 GB = 1,000,000,000 bytes”: