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In Baking Chips Decision, District Court Holds Consumer Survey Gets “White” Claim Wrong

The past few months have witnessed a veritable sugar rush of decisions dismissing consumer class action complaints alleging that baking chips and candies labeled as “white” falsely imply the presence of actual white chocolate.  See, e.g., Prescott v. Nestle USA, Inc., 2020 WL 3035798 (N.D. Cal. June 4, 2020); Rivas v. Hershey Co., No. 19-CV-3379(KAM)(SJB), 2020WL 4287272 (E.D.N.Y. July 27, 2020); Cheslow v. Ghirardelli Chocolate Co., 2020 WL 4039365 (N.D. Cal. July 17, 2020).  Each of these decisions is noteworthy for holding, at the pleadings stage, that a consumer’s purported interpretation of a labelling claim is unreasonable as a matter of law.  But Cheslow is particularly instructive, as it recognizes that even consumer survey evidence cannot convert an implausible interpretation of a labeling claim into a reasonable one.

In Cheslow, the plaintiffs alleged that the packaging of Ghirardelli’s “Premium Baking Chips Classic White Chips” falsely communicated that the product contained real white chocolate, when in fact it did not.

As the plaintiff explained, real “white chocolate” contains cocoa butter from the cacao bean, whereas Ghirardelli’s “white chips” contained only palm oil.  Crucially, however, Ghirardelli’s product packaging did not include the words “chocolate” or “cocoa,” and the ingredient list did not mention chocolate, white or otherwise.

In its first motion-to-dismiss decision, the court concluded that Ghirardelli’s packaging would not mislead reasonable consumers into believing the product contains chocolate.  Cheslow v. Ghirardelli Chocolate Co., 2020 WL 1701840 (N.D. Cal. Apr. 8, 2020).

At the outset, the court noted that the term “white chips” on the packaging was an accurate description of the product’s physical characteristics.  Citing the dictionary definition of “white” in the context of food and drink products, the court recognized that the “adjective ‘white’ in ‘white chips’” “defines the color of the food,” not “the [ingredients of the] food itself.”  Given this “common definition and understanding of the word white,” crediting plaintiff’s proffered interpretation of that term would improperly require “bas[ing] liability off of a misunderstanding” of the term.  In other words, “[s]imply because some consumers unreasonably assumed that ‘white’ in the term ‘white chips’ meant white chocolate chips does not make it so.”  Id. at *5 (emphases added).

The court further recognized that, given the absence of an “affirmative statement of misrepresentation” that the products contained white chocolate, consumers are not “free to ignore the ingredient list that does not include the words chocolate or cocoa.” Id. at *8.  In so concluding, the court distinguished the Ninth Circuit’s oft-cited decision in Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008), which held that a defendant “cannot mislead consumers and then rely on the ingredient list to correct those misinterpretations.”  (We had a few choice words about Williams here.)  Unlike in Williams, where the defendant’s packaging affirmatively depicted fruits that the product did not contain, there was no similar deceptive statement or image on Ghirardelli’s packaging for the ingredient list to “correct.”  However, notwithstanding its “skeptic[ism]” that the complaint could be amended to state a claim, the court granted leave to replead.

In their amended complaint, the plaintiffs sought to persuade the court that their initial interpretation of “white” as implying “white chocolate” had been reasonable all along.  To that end, they appended a consumer survey they had commissioned purporting to show that more than 90% of respondents believed that the product contained white chocolate, and that more than 60% would be less satisfied and less likely to purchase the product again if they learned, subsequent to purchasing, that the product did not contain white chocolate.  Surely, the plaintiffs contended, this survey evidence showing that many consumers interpreted “white” just as they did meant they had now pleaded a plausible claim of deception.  Cheslow v. Ghirardelli Chocolate Co., 2020 WL 4039365, at *1 (N.D. Cal. July 17, 2020).

The court was not persuaded.  In granting Ghirardelli’s second motion to dismiss, the court began by restating its prior holding—that a reasonable consumer would not have assumed from Ghirardelli’s product packaging that the product contained white chocolate—and then addressed the core question in dispute: “whether a consumer survey can shift the prevailing reasonable understanding” that “white” chips, without more, “does not [signify] chocolate.” Id. at *6 (emphasis added).   The court concluded in the negative, for two reasons.

First, citing the Ninth Circuit’s decision in Becerra v. Dr. Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019), the court held that a survey, on its own, could not show that an otherwise unreasonable interpretation of a labeling claim satisfies the reasonable consumer test.  In Becerra, the plaintiff claimed that the word “diet” in the name of Diet Dr. Pepper was misleading because it falsely implied that drinking the product would help one lose weight.  Relevantly, the plaintiff’s complaint had summarized a consumer survey purportedly finding that many soft-drink consumers indeed believed that “diet” soft drinks would help them lose weight, consistent with her alleged interpretation of “diet.”  Id. at 1230.  But the Ninth Circuit held that this survey could “not shift the prevailing reasonable understanding of what reasonable consumers understand the word ‘diet’ to mean”—i.e., fewer calories than regular Dr. Pepper—“or make plausible the [otherwise unreasonable] allegation that reasonable consumers are misled by the term ‘diet.’” Id. at 1231. The same logic, the Cheslow court held, required rejecting the plaintiffs’ proffered survey about the meaning of the term “white”: as the court read Becerra, a consumer survey cannot “transform an unreasonable understanding of a product into a reasonable one.”  Cheslow, 2020 WL 4039365 at *6.

Second, the court held that, in any event, the survey was fatally defective.  It had showed respondents only the front of the Ghirardelli package, not the back panel containing the ingredient list.  But in its prior order, the court had already held that the package—including the ingredient list—must be evaluated in its entirety, and that the absence of the word “chocolate” from the ingredient list was part of the reason why reasonable consumers would not be deceived.  Thus, “[b]ecause the survey d[id] not address the ingredient list (by omitting the back panel),” it “deprived respondents of relevant information”—and thus, it “undermine[d], rather than support[ed], plaintiffs’ claims.” Id.  This time, the court granted dismissal with prejudice.

Cheslow’s holding is a principled application of the rule set forth in Becerra: that even at the motion-to-dismiss stage, where a complaint’s allegations must generally be accepted as true, a plaintiff cannot rely on a consumer survey to lend plausibility to her objectively unreasonable interpretation of product labeling.  At first blush, it may seem remarkable that a court would substitute its judgment as a matter of law for that of actual consumers in determining whether a product’s packaging is plausibly misleading.  But this approach is entirely consistent with the objective nature of the legal inquiry, which focuses on whether “a significant portion” of consumers, “acting reasonably in the circumstances, could be misled.”  Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2019) (emphasis added).  In that vein, courts have repeatedly cautioned that the fact that a labeling statement “might conceivably be misunderstood” by some consumers who interpret a term unreasonably does not state a claim for relief. Id.  The soundness of this approach is underscored by how easy it is for a plaintiff to bias a consumer survey’s outcome in her own favor—as the facts of Cheslow plainly reflect.

Instead, as the Cheslow court found, the most reliable source of a term’s objectively reasonable meaning is ordinarily its dictionary definition, which no consumer survey can rewrite.  As the Seventh Circuit explained twenty years ago, when a false advertising plaintiff sought to introduce a consumer survey to show how consumers construe the claim “1st Choice of Doctors”:

[N]ever before has survey research been used to determine the meaning of words, or to set the standard to which objectively verifiable claims must be held. Dictionaries themselves are a form of survey; lexicographers determine how words have been used in both scholarly and popular texts. But philologists and others who contribute to dictionaries devote their lives to discovering usage and interpreting nuance. It would be a bad idea to replace the work of these professionals with the first impressions of people on the street, especially because consumers’ sketchy understanding of science means that survey results are apt to present firms with unrealistic demands for verification.

Mead Johnson & Co. v. Abbott Labs., 201 F.3d 883 (7th Cir. 2000). 

We hope courts will continue to follow decisions like Becerra, Cheslow, and their ilk in rejecting attempts to normalize idiosyncratic interpretations of ordinary labeling terms with consumer surveys.  It benefits all players in the marketplace—manufacturers, retailers, and consumers alike—when courts reaffirm the objective meaning of shared language.  Such an approach gives sellers advance notice of what words they may use, rather than forcing them to speculate about how their words might one day be redefined.  And it ensures that buyers, whatever their personal experiences or biases, have a straightforward and reliable way of determining what label claims actually mean.