Industry: Foods/Beverages

We’ve written before about the growing trend of “ethical sourcing” or “ethical production” class actions, which challenge manufacturers’ claims (or nondisclosures) about the humane (or inhumane) way their ingredients or materials are grown, caught, or harvested.  A recent decision out of the Southern District of New York in a case involving “free range” eggs typifies this litigation trend and the danger it poses to food and beverage manufacturers.

Earlier this month, this blog analyzed the preemption provisions of the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA), which together regulate the labeling of meat and poultry products.  We explained that trial courts in California and elsewhere routinely dismiss false advertising claims challenging statements on meat and poultry labels based on the statutes’ preemption provisions, which prohibit states from imposing requirements different from or in addition to federal law.  Courts have specifically focused on the FMIA and PPIA’s pre-approval requirements in concluding that such challenges are preempted.

In putative class actions alleging false advertising, plaintiffs often argue that class certification is appropriate because the language being challenged appeared on the defendant’s marketing materials or product label, thereby making the class members’ experience—and the question(s) to be resolved—common.  These plaintiffs invariably claim that individualized questions of deception and reliance do not defeat certification, because consumer protection statutes employ an objective, “reasonable consumer” test that does not turn on what each individual class member actually thought or believed.

In a recent decision, Ezaki Glico v. Lotte International American Corporation, the Third Circuit rejected a manufacturer’s claims of trade dress infringement regarding Pocky, a chocolate covered cookie stick which Ezaki Glico invented in the 1970s.[1] The court concluded that Pocky’s overall shape and look—cookie sticks partially coated in chocolate—were functional and thus not protected from competitor imitation.

Federal food-labeling laws preempt state laws that impose requirements different from or in addition to those established by federal law.  In some cases, the FDA has spoken directly to a labeling issue by regulation, and if the food manufacturer is in compliance with that regulation, any state-law liability should be preempted.  Careful plaintiffs often try to draft their allegations to get around a federal regulation that would otherwise preempt their claims.  For instance, in challenging a defendant’s representations concerning honey in a cereal, a plaintiff avoided the defendant’s compliance with the federal labeling regulation on “flavoring” by alleging she was deceived about the relative amount of honey as a sweetener (which is not covered by a specific FDA regulation), rather than the relative amount of honey as a flavoring agent (which is covered).  When courts allow creative pleading to circumvent a preemption defense, defendants are deprived of the protections that Congress intended to provide them under federal labeling law, at least at the outset of the case.  But as a recent decision shows, defendants may be able to renew and succeed on a preemption defense after discovery shows plaintiff’s artful allegations were just that.

Increasingly, consumers base their purchase decisions on facts about a company or its product that have nothing to do with the performance or quality of the product itself.  For example, does the manufacturer treat its workforce fairly?  Is it a responsible steward of the environment?  What are its stances on social issues like abortion or LGBTQ rights?  To which parties or candidates does it (or its officers) donate?  All of these facts—and countless others—are “material” to many consumers in the sense that they affect (or even dictate) purchase decisions.  Indeed, in recent years, ethical, moral, and political concerns like these have led to countless instances of boycotts and other forms of consumer speech—a welcome sign of a healthy body politic and liberal democracy.

Patrons of Ben & Jerry’s ice cream should be familiar with Woody, the bovine mascot touted by the company as “the most interesting cow in the world.”    Ben & Jerry’s packaging has long featured cartoon illustrations of Woody grazing beneath blue skies in bucolic green pastures.  This past year, however, Woody ambled into the sights of the plaintiffs’ class action bar.  Thankfully, she (and Ben & Jerry’s) emerged unscathed:  the district court (D. Vt.) dismissed the case at the pleadings stage, affirming both the authority of district courts to dismiss implausible consumer protection claims and the requirement that plaintiffs seeking injunctive relief demonstrate a probability of future injury.

“Whether reasonable consumers would be deceived by a challenged advertisement is a question of fact that can’t be decided on a motion to dismiss.”  This claim is one of the biggest sacred cows in false advertising litigation.  But as the Second Circuit has made clear twice in the past year, it’s just a load of bull.  Take, for example, Chen v. Dunkin’ Brands, Inc., --- F.3d ----, 2020 WL 1522826, which the Second Circuit decided unanimously earlier this week.  In Chen, the court doubled down on its June 2019 holding that a court can decide at the pleadings stage “whether a reasonable consumer would have been misled by a particular advertisement,”  Geffner v. Coca-Cola Co., 928 F.3d 198, 200 (2d Cir. 2019), affirming the dismissal of a false advertising claim involving the meaning of “steak.” In the process, the court also served up a tasty side dish of personal jurisdiction doctrine.

Grains of paradise (aframomum melegueta), are a peppery, citrusy spice indigenous to West Africa, related to ginger and cardamom.  The name purportedly derives from medieval merchants’ claims that the plant grew only in the Garden of Eden.  Common to West African cuisine, grains of paradise are also one of the botanicals sometimes used to give gin its characteristic flavor.

In Florida, however, an obscure 1868 law makes it a third-degree felony to “adulterate[] … any liquor” with certain specified substances, ranging from grains of paradise and capsicum (chili pepper) to potentially deadly opium and “sugar of lead.”  Fla. Stat. § 562.455.  Some have postulated that this law’s original intent was to prevent consumer deception, as the banned ingredients were once added to liquor to make it taste stronger (more alcoholic) than it actually was.  That same practice spurred an 1816 law of Parliament (56 Geo. III, ch. 58) making it illegal for brewers and dealers in beer to possess grains of paradise.  Unlike merrie olde England, however, the Sunshine State never got around to repealing its law.

This blog has previously examined the recent spate of so-called “slack-fill” lawsuits, in which consumers claim that a food (or other) product is misleadingly packaged because it contains excess air.  We noted that the growing trend is for courts to reject such suits at the motion-to-dismiss stage, for a variety of reasons.  For example, courts have found slack-fill complaints deficient for failing to allege, beyond conclusory platitudes, that the package’s empty space serves no legitimate function, or for failing to allege with plausibility that a reasonable consumer would actually be deceived.  Late last year, in Benson v. Fannie May Confections Brands, Inc., the U.S. Court of Appeals for the Seventh Circuit issued an important decision affirming the pleadings-stage dismissal of a slack-fill suit, but based on a distinct justification: the failure to plausibly allege any cognizable damages associated with slack-filled packaging.

In the latest development in the Lanham Act litigation between beer titans MillerCoors and Anheuser-Busch, the district court issued an order enjoining Bud Light from using the “No Corn Syrup” language and icon on product packaging, expanding the existing injunction covering the same claims in print and television advertisements.  MillerCoors v. Anheuser-Busch Cos. (MillerCoors II), No. 19-cv-218-wmc, 2019 U.S. Dist. LEXIS 149954 (W.D. Wis. Sept. 4, 2019).  However, the court permitted Anheuser-Busch to exhaust its existing supply of packaging with the enjoined image and language (assuming it can be done in 270 days, which Anheuser-Busch has signaled it will).  The decision offers an interesting analysis of implied comparative claims and how the defendant’s replacement costs may impact the “irreparable harm” inquiry at the preliminary injunction stage.

Many companies take pride in the geographic origin of their products (e.g., cars that are “Made in the USA”), or in their products’ capacity to evoke a certain region (e.g., “Hawaiian style” pizza).  Claims about the origin or provenance of products seem to pose a relatively low risk of consumer deception:  these typically do not implicate health or safety, nor do they convey anything concrete about the products’ qualities.  Nevertheless, these “origin” and “provenance” claims have drawn scrutiny from the Federal Trade Commission, state regulators, and – most recently – class action plaintiffs’ lawyers.   Below, we’ve highlighted some guidance from regulators and the courts that may be helpful to manufacturers when they consider highlighting their geographic origins in their product branding. 

A recent decision, MillerCoors v. Anheuser-Busch Cos., LLC, No. 19-cv-218-wmc, 2019 U.S. Dist. LEXIS 88259 (W.D. Wis. May 24, 2019), denied and granted in part a preliminary injunction enjoining a series of advertisements and commercials depicting corn syrup in MillerCoors’s beer.

Speak of the Devil and he doth appear. Today, it’s just a figure of speech.  In medieval England, by contrast, people meant it literally—as a warning that uttering the Prince of Darkness’s name would conjure his evil presence.  Maybe those Anglo-Saxons had a point.  A few weeks ago, we wrote a post about a remarkable string of defense victories in “slack-fill” cases—i.e., lawsuits complaining of too much empty space in product packaging.  In particular, we noted that “every slack-fill case to reach the class-certification stage ha[d] flunked Rule 23’s rigorous test for certification,” and we wondered aloud “how a slack-fill class could ever be certified.”  Well, speak of the Devil: just four days later, a California court certified a class in a slack-fill case for the first time ever.  We apologize for any causal role we may have had in this truly diabolical development.  The good news is that the decision may not stick—and even if it does, it’s likely to remain an outlier.

A recent decision from the Eastern District of New York, Hoth v. Gerber Prods. Co., 15-cv-2995 (E.D.N.Y.), granted class certification to purchasers of Gerber baby formula in Florida and New York who claimed to have been misled by representations that the formula reduced infants’ risk of developing allergies. The certified class is unusual, however, in that not all of its members actually purchased the product labeled with the alleged misrepresentation. Many courts have concluded that this lack of uniform exposure defeats certification by precluding a showing of classwide injury, but the Hoth court credited evidence that the general “advertising and labeling practice [regarding allergy prevention] allowed a price premium to be charged across the entire line of [challenged] products.” Op. at 41 (emphasis in original).

In Comcast v. Behrend, 569 U.S. 27 (2013), the Supreme Court held that a plaintiff cannot obtain class certification with an inadequate damages model.  In the years since, courts have diverged over how much a plaintiff must do to satisfy this requirement.  Often, plaintiffs seek class certification with nothing more than a skeletal proposal to develop and perform an analysis at some future point, using information they do not—and might never—possess.  While some courts have found such adumbrative “models” sufficient at the class certification stage, the better decisions require more.  As Comcast recognizes, Rule 23 “does not set forth a mere pleading standard.”  Rather, a plaintiff “must affirmatively demonstrate” through “evidentiary proof” that damages are measurable on a class-wide basis through a common methodology.  Faithful application of that principle obligates plaintiffs and their experts to offer a detailed methodology that is tailored to the facts of the case, and to show that any data that the model requires in fact exists and can be obtained.

In consumer cases alleging product mislabeling, one frequently litigated question is whether the plaintiff has standing to seek an injunction of the labeling practice that he or she claims is misleading.  Over the past decade, consumer protection defendants have often won on this issue by demonstrating that the plaintiff is at no risk of future injury.   But last year, in Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir. 2018), the Ninth Circuit made this issue tougher for defendants, adopting an exceptionally broad view of plaintiffs’ standing to seek injunctive relief in mislabeling cases.  Below, we discuss the aberrant holding in Davidson, and how Ninth Circuit defendants may still be able to distinguish its facts to defeat a claim for injunctive relief.