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.

As many readers probably know, when a food or beverage manufacturer gets a consumer class action alleging that its labeling violated state law, one of the first things it should do is consider whether the disputed aspect of the labeling is covered by the federal Food, Drug and Cosmetic Act (“FDCA”).  Many provisions of that statute—and, by extension, their implementing regulations—expressly preempt non-identical state-law regulations.  If a putative class of consumers is asking a manufacturer to do something different with its labeling than those provisions do, there is a strong argument that the case is preempted:  federal law (the FDCA) trumps state law (the relevant consumer protection statute).

Ninth Circuit Endorses RICO Claims For Prescription Pharmaceutical Promotion

The Racketeer Influenced and Corrupt Organizations Act (RICO) was meant to help take down the Mafia.  For years, however, plaintiffs have attempted to contort it into a federal false advertising regime for prescription pharmaceuticals, complete with treble damages and attorney’s fees.  The Ninth Circuit recently gave plaintiffs a boost in that effort, permitting RICO claims to proceed against pharmaceutical companies based on allegedly improper labeling and promotion of their prescription medications. 

Patterson partner and Misbranded contributor Jonah Knobler recently critiqued the Ninth Circuit’s decision—and pharmaceutical RICO suits generally—at Drug and Device Law.  Check out that post here.

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. 

California has long been considered a hospitable place to bring a class action, and accordingly it’s also been a popular one.  But some class action plaintiffs in the Golden State have encountered an unlikely hurdle:  the unavailability of equitable remedies when there is an adequate remedy at law. 

Last month, Misbranded co-editors Josh Kipnees, Jonah Knobler, and Jane Metcalf presented a live-streamed webinar via Bloomberg Law titled “Hot Topics in Consumer False Advertising Litigation.”  The free hour-long webinar, now available on demand, covers the following subjects, some of which should be familiar to regular readers of this blog:

• “Natural” / “no artificial ingredients” claims

• “No preservatives” claims

• Ingredient claims (“made with [X]”)

• Geographic origin claims (e.g., “Made in the USA”)

• Slack-fill claims

• Claims involving nondisclosure of morally troubling/offensive facts

• What’s next in consumer false advertising litigation?

We encourage you to check it out (and obtain some CLE credit in the process).

A frequent target of consumer class actions are “structure/function” claims made in connection with dietary supplements.  These claims describe a nutrient or dietary ingredient and its role in the body’s structure or function: for example, “glucosamine promotes healthy joints.”  Plaintiffs may allege that a product’s labeling is misleading because the typical consumer already receives enough of the nutrient or ingredient from her diet.  At the same time, those plaintiffs will seek a refund on behalf of everyone who bought the product—even if many in the class have received a benefit.  A recent decision out of the Southern District of California, Alvarez v. NBTY, Inc., 2019 U.S. Dist. LEXIS 87420 (May 22, 2019), suggests that this disconnect between the proposed class and the plaintiffs’ theory of liability and damages may no longer be tolerated at the class-certification stage.

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.

Consumer class actions involving goods regulated by the Food and Drug Administration (“FDA”) coexist in parallel with FDA enforcement efforts.  Consumers have no private right of action to enforce the Food, Drug, and Cosmetics Act—the statute the FDA is charged with implementing—and attempts to use state consumer protection laws that interfere with the FDA’s regulatory regime are preempted.  Even so, private litigants often invoke FDA guidance, rules, and statements regarding labeling practices as evidence that a manufacturer’s marketing claims are—or are not—susceptible to challenge as deceptive advertising under state law.

It’s hard to argue that New York’s consumer-protection laws (Gen. Bus. Law §§ 349–350) are being underutilized by private plaintiffs.  But, on that claimed basis, the state’s Legislature is considering a multifaceted amendment that would make those laws vastly more plaintiff-friendly—and business-unfriendly—than they already are.  It’s hard to understate the impact these changes would have on the business community.  We’re not sure what the bill’s odds of passage are, but given the extremity of the amendments, we’re a bit surprised they haven’t attracted more public attention.

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.

To prove damages in a consumer class action, the named plaintiff must show—among other things—how many units of the defendant’s product were purchased by consumers in the relevant state (or states).  This is easier said than done.  Manufacturers generally keep records of their own wholesale transactions—i.e., how much product they shipped to distributors or large retail chains.  But they generally don’t have direct visibility into sales at the retail level, since they aren’t a party to those transactions.  If not all of the product sold at wholesale ends up being purchased by consumers, manufacturers’ records may not reflect this.  Likewise, if the product that a manufacturer ships to an address in State A (e.g., a regional distribution center) ends up being moved to State B before reaching store shelves, manufacturers’ records will not reflect this either.  What, then, is a class-action plaintiff to do?

As astronomer Carl Sagan famously said, “absence of evidence is not evidence of absence.”  Plaintiffs have not gotten the message.  They often allege that a defendant’s marketing or labeling statements are false and misleading on the sole basis that there is purportedly no evidence (or insufficient evidence) proving their truth.  These so-called “lack of substantiation” claims are easy to plead because a plaintiff does not need to conduct an investigation to identify evidence that the challenged statement is false.  Rather, she alleges only an absence of supporting evidence for the statement—and generally, in a conclusory manner.

Last Friday, the Third Circuit held that a J. Crew customer lacked standing to sue the company for printing ten digits of his credit card on a receipt, in violation of the Fair and Accurate Credit Transaction Act (which provides that companies should print only the last four digits).  Relying on the Supreme Court’s decision in Spokeo v. Robins, the court held that the plaintiff’s alleged injuries—a violation of the statute and the “risk of identity theft”—were merely “procedural,” and thus insufficiently “concrete” to confer standing under Article III.  The Third Circuit’s rigorous application of Article III standing requirements is good news for defendants in mislabeling cases, some of which are “gotcha”-type suits arising from highly technical labeling violations. 

The rise of social media has redefined advertising, giving businesses exciting new ways to reach consumers and deliver their messages.  To no one’s surprise, it has also provided new fodder for advertising class actions.  However, as one plaintiff recently learned the hard way, these social-media class actions can founder on the same shoals as their traditional-media counterparts.

Over the last few years, “conjoint analysis” has become the methodology du jour for false advertising plaintiffs seeking to demonstrate they can calculate class-wide damages.  Conjoint analysis is so named because it is used to study the joint effects of multiple product attributes on consumers’ choices.  At bottom, conjoint analysis uses survey data to measure the strength of consumers’ preferences for particular product features.  Or, put differently, it tries to isolate how much people care about an individual product attribute in a multi-feature product (in a more scientific manner than just asking them directly).

This is an exciting time for manufacturers on guard against compelled disclosures in their product labeling or advertising.  Late last June, the Supreme Court decided  National Institute of Family & Life Advocates v. Becerra, 138 S. Ct. 2361 (2018) (“NIFLA”), an abortion case with potentially far-reaching effects on the law of compelled commercial speech more generally.  However, as lower courts begin to interpret and apply NIFLA in the context of product disclosures, major uncertainties remain.

By law, packaged foods and beverages must bear an accurate list of their ingredients “in descending order of predominance by weight.”  21 C.F.R. § 101.4.  Consumers routinely sue food and beverage companies alleging that they were misled about the presence or absence of particular ingredients—even though a mere glance at the ingredient list would have averted any confusion.  Do such plaintiffs have a plausible claim for relief under false advertising laws, or should these claims be dismissed at the threshold?