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Say Cheese! Seventh Circuit to Weigh In on Reasonable Consumer Standard in Grated Parmesan Case

On September 17, the Seventh Circuit heard argument in Ann Bell v. Albertson Companies Inc.  The case hinges on whether a reasonable consumer would understand the phrase “100% Grated Parmesan cheese” on a Parmesan cheese canister to mean that the canister contains literally nothing but cheese.[1]  The plaintiffs argued that they believed just that, when in fact the cheese product in question contained cellulose, which the defendants claimed was used as an anti-caking agent and the plaintiffs claimed was used as “filler".

The Seventh Circuit panel—consisting of U.S. Circuit Judges Amy Coney Barrett, David Hamilton and Michael Kanne—peppered both sides with questions, indicating that the Circuit may be preparing to weigh in on the “reasonable consumer” standard for consumer-protection claims,  as the Second Circuit and others have done recently.  See e.g., Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d 492 (2d Cir. 2020) (affirming the dismissal of false advertising claim involving the meaning of “steak”; finding that under New York law, a court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer); Dumont v. Reily Foods Co., 934 F.3d 35 (1st Cir. 2019) (reversing district court decision involving reasonable consumer understanding of “Hazelnut Crème”).

Background

Plaintiffs are consumers who, like many, prefer to top their pasta with grated parmesan.  They filed five consolidated class action complaints in the Northern District of Illinois against multiple defendants, described as “purveyors of grated parmesan cheese products with labels stating ‘100% Grated Parmesan Cheese’ or some variation thereof.”  In re 100% Grated Parmesan Cheese Mktg. and Sales Practices Litig., 348 F. Supp. 3d 797, 801 (N.D. Ill. 2018) (hereinafter “Parmesan I”). The plaintiffs challenged (i) that labeling the product as “100% Grated Parmesan Cheese” was misleading because the product contained cellulose (an organic polymer without nutritional value) and (ii) that the ingredient list on the back of the canister was misleading because it described cellulose an anti-caking agent when, in fact, the cellulose also acted as a simple fillerId. at 802. 

In 2018, the district court dismissed plaintiffs’ claims stemming from the phrase “100% Grated Parmesan Cheese.”   To support their position that a reasonable consumer could indeed believe that a “100% cheese” product could exist unrefrigerated on a supermarket shelf,  plaintiffs proffered consumer survey evidence, reports from linguistic professors regarding the meaning of  “100% Grated Parmesan Cheese,” and a Kraft patent stating that fully cured parmesan cheese “keeps almost indefinitely”.  Yet the district court found this “evidence” unpersuasive and sided with defendants.  According to the court, “given the context provided by the ingredient lists and the products’ placement on unrefrigerated shelves, no reasonable consumer could be misled by the ‘100% Grated Parmesan Cheese’ labels into thinking that the products were 100% cheese.”  Id. at 804.

Also in 2018, and then again in July 2019, the district court  narrowed the scope of plaintiffs’ “anti-caking” claims, i.e., claims that the parmesan ingredients list is misleading because it describes cellulose as an anti-caking agent as opposed to a filler.  See Parmesan I at 806-818; see also In re 100% Grated Parmesan Cheese Mktg. and Sales Practices Litig., 393 F. Supp. 3d 745, 756-66 (N.D. Ill. 2019) (hereinafter “Parmesan II”).  Following Parmesan II, the dispute headed to the Seventh Circuit Court of Appeals.

September 17, 2020 Ann Bell Oral Argument

The recent oral argument in Ann Bell highlights at least two issues that may drive the outcome of this parmesan-related dispute.  Notably, the appeal focuses only on the “100% Grated Parmesan Cheese” claims, as the surviving “anti-caking” claims are stayed pending the appeal.

When Do Ingredients and Context Come Into Play?

Unsurprisingly, the parties disagree on the role that an ingredients label should play at the pleading stage.  The district court found that the ingredient lists on the cannisters provided context that would not allow a reasonable consumer to come to the conclusion that the grated parmesan product contained “100% cheese.”  Describing this as the “fundamental error of the district court,” plaintiffs-appellants’ counsel told the Seventh Circuit panel that when a front label is deceptive or ambiguous, the court is not permitted to dismiss on the pleadings a consumer complaint simply because the ingredients listed on the back provide context to an otherwise deceptive label. See Oral Argument at 4:05-5:10.  Stated otherwise, when a claim on the front label is contradicted by the back label, according to plaintiffs, the case simply cannot be dismissed on the pleadings.  Counsel for defendants-appellees disagreed, arguing that the back label, as well as how the product is presented in the supermarket and the entire context, should all be taken into consideration.  See id. at 26:00.

During the argument, the questioning Seventh Circuit panel likened this case to the split-decision in Dumont v. Reily Foods Co., 934 F.3d 35 (1st Cir. 2019)See Oral Argument at 2:40, 31:00.  There, plaintiff brought an action on behalf of herself and a putative nationwide class after purchasing New England Coffee Company’s Hazelnut Crème Coffee.  The front label described the product as: “freshly ground,” “100% Arabica Coffee,” “Hazelnut Crème,” “Medium Bodied,” and as having a “Rich, Nutty Flavor.”  The back of the package went on to set forth the ingredients:  “100% Arabica Coffee Naturally and Artificially Flavored.”  Dumont alleged that she would not have bought the coffee—or at least would have paid less for it—had she known that the bag did not contain actual hazelnuts, as opposed to artificial flavoring.  Therein lies the debate: Should a reasonable consumer be expected to flip the package over and examine the contents?  In the Dumont majority’s view, this was a question of fact for a jury to decide.  “One might presume,” it recognized, “that a reasonable consumer who … cared whether the coffee she intended to purchase contained real hazelnut would check the list of ingredients.”  Dumont, 934 F.3d at 40.  “On the other hand,” it continued, “perhaps a reasonable consumer would find in the product name [‘Hazelnut Crème’] sufficient assurance so as to see no need to search the fine print on the back of the package.”  Id.  The Dumont majority “th[ought] it best that six jurors, rather than three judges, decide” what a reasonable consumer would do.  Id. at 41.

Back to cheese.  On the other side of the aisle, defendants-appellees’ counsel in Ann Bell was quick to liken this case to Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 501 (2d Cir. 2020), where the Second Circuit recently reaffirmed that a court can look at context and decide at the pleadings stage whether a reasonable consumer would be misled by a particular advertisement.  See Oral Argument at 24:50.  There, the Second Circuit endorsed the district court’s decision to examine the entire context, noting that plaintiff “bought her Angus Sandwich for less than $4 and her Angus Wrap for less than $2. … A reasonable consumer purchasing one of the Products from Dunkin Donuts in that context would not be misled into thinking she was purchasing an ‘unadulterated piece of meat.’”  Chen, 954 at 501.

The Seventh Circuit panel also put questions to the advocates that would indicate that at least certain members believe the price point and the placement of the product at supermarket may indeed matter at this juncture.  Judge Barrett queried: “What relevance does the price point have in terms of context… Fresh parmesan cheese is more expensive, which is why a lot of people buy the green cannister.  Do you think people who pay a low price for cheese would expect purity?”  See Oral Argument at 15:55.

One point that was lingering in the background of the oral argument—and strikes us as a point in the defendants’ favor—is the tension between the plaintiffs’ two theories of deception in the district court.  Even if we assume that a reasonable consumer should not be expected to turn the package around and review the ingredient list, the plaintiffs here have claimed that they were misled by the ingredient list’s description of cellulose as an “anti-caking agent.”  In order to be so misled, they must have read the ingredient list and learned that the product contained cellulose as well as cheese.  Once that happened, they could no longer claim to have been misled by the “100% Grated Parmesan Cheese” representation on the front label.  Should the plaintiff-appellants prevail on the “100%” claim, we will watch closely to see if the district court addresses this issue.

What About Preemption?

Preemption was also front and center, even though the district court did not have to reach the issue.  Defendants-appellees assert that the U.S. Food and Drug Administration (“FDA”) has defined grated Parmesan cheese in a standard of identity and, thus, the FDA has already indicated that grated parmesan cheese can indeed have anti-caking agents and still be referred to as “grated cheese.”  See Oral Argument at 20:10.  “So when defendants call their products 100% Grated Parmesan cheese, what they were saying was exactly right,” counsel proclaimed.  Id. at 20:27.  Accordingly, the defendants-appellees claimed, plaintiffs’ suit was an improper attempt to impose labeling guidelines that were “non-identical” to those imposed by the FDCA.

The panel queried the limits of such preemption.  Judge Hamilton asked whether a claim challenging a manufacture’s decision to falsely label the grated parmesan cheese as “made in Italy” would be preempted under this logic.  See Oral Argument at 38:05.   Counsel for defendants-appellees confirmed that it would not, because neither the standard of identity regulation nor any other FDA regulation at issue speaks to the circumstances under which that claim may be made.  See id. at 38:30.

Takeaways

As we’ve noted before, courts have disagreed over whether and when “reasonable consumers” are expected to read the ingredients list on a food product to protect themselves against potential deception or misunderstanding.  A consensus is emerging among most federal courts that a consumer who claims to care strongly about a product’s ingredients, but does not bother to read the ubiquitous ingredient list, is per se acting unreasonably.  Yet some courts have held out on joining this consensus, declaring that reasonable consumers should not be expected to consult “the ingredient list in small print on the side of the box” to find out which ingredients the product contains.  Ann Bell is just the latest invitation to a Circuit court to wade into these familiar issues.  Stay tuned for the decision.


[1] September 17, 2020 Oral Argument Audio, Ann Bell et al v. Albertson Companies Inc., et al, Case No. 19-2581, available at http://media.ca7.uscourts.gov/sound/external/mn.19-2581.19-2581_09_17_2020.mp3 (hereinafter “Oral Argument”).