Seventh Circuit Lets The Air Out Of Another “Slack Fill” Claim
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.
The District Court Decision
In Benson, plaintiffs Clarisha Benson and Lorenzo Smith alleged that they purchased Mint Meltaways and Pixies candies from stores owned by Defendant Fannie May. See Am. Compl., No. 17-cv-3519, ECF No. 36. Allegedly, the packages of the two products were about two-thirds filled:
The plaintiffs asserted that just a “fraction” of the packages’ empty space “serves the functional purpose of protecting the contents of the box,” and that the “total slack-fill” therefore “unreasonably exceeds the amount necessary to achieve such an objective.” Id. The plaintiffs claimed that they “reasonably relied … on the Product packaging’s implicit representations of quantity and volume” in choosing to purchase, and that as a result, they were “financially injured” and “depriv[ed] of the benefit of [their] bargain.” Id. The plaintiffs brought putative class claims under Illinois’ Consumer Fraud and Deceptive Business Practices Act (ICFA), for unjust enrichment, and for breach of implied contract. Id.
The district court granted Fannie May’s motion to dismiss due to the complaint’s failure to allege with sufficient plausibility that any slack-fill was “nonfunctional”—one of the well-recognized pleading defects we summarized previously. 2018 U.S. Dist. LEXIS 207658 (N.D. Ill. Dec. 10, 2018). Again, FDA regulations provide that slack-fill may cause a food container to be “misleading” only if its presence is not attributable to one of six functional reasons (e.g., protecting the package’s contents). 21 C.F.R. § 100.100(a). Because the federal Food, Drug, and Cosmetic Act (FDCA) expressly preempts state-law packaging requirements that differ from federal ones, a state-law slack-fill suit cannot succeed unless this nonfunctionality requirement is met. Benson, 2018 U.S. Dist. LEXIS 207658, at *4-5.
The district court observed that, in their initial complaint, the plaintiffs’ only attempt to plead nonfunctionality was a “barebones statement that the slack-fill was in excess of the amount necessary to achieve” any of the six permissible functions. Id. at *7-8. In their amended complaint, the plaintiffs attempted to bolster this allegation by comparing the amount of empty space in 7-ounce and 14-ounce packages. Id. Specifically, the plaintiffs pointed out that the 14-ounce package contains less airspace, as a percentage of its total volume, than the 7-ounce package. In the plaintiffs’ view, this was enough to raise a plausible inference that the empty space in the 7-ounce packages had to be “nonfunctional.” Id.
The district court determined that these allegations were insufficient to plausibly plead nonfunctionality. It observed that FDA guidance “cautions against concluding slack-fill is nonfunctional based on comparisons to other identical products, let alone similar products packaged differently.” Id. at *8-9. And “even if the FDA did not clearly disfavor such comparisons for determining whether slack-fill is functional,” the district court noted, “the comparison itself is of little value,” as there is no inherent reason to assume “that a larger box should have proportionately the same amount of slack-fill as a smaller box.” Id. For example, “Fannie May could be using different machines that have differing levels of precision to fill the [different sized] boxes,” or its filling equipment may “not [be] able to fill smaller boxes as accurately as large boxes.” Thus, the bare fact that the larger box has less slack-fill in proportion to its total volume does not support the inference that “the [smaller] boxes must contain nonfunctional slack-fill.” Id. at *9-10.
Because the plaintiffs had not sufficiently alleged nonfunctionality, the district court held that the plaintiffs “cannot state a non-preempted claim under Illinois law.” Id. at *12. Accordingly, the court dismissed the complaint with prejudice.
The Decision On Appeal
The Seventh Circuit affirmed, but on different grounds. 944 F.3d 639 (7th Cir. Dec. 9, 2019). The panel faulted the district court for finding the complaint preempted on a Rule 12(b)(6) motion to dismiss. The panel reasoned that preemption “is an affirmative defense upon which the defendants bear the burden of proof,” and that “[a]ffirmative defenses do not justify dismissal under Rule 12(b)(6).” Id. at 645. It found that “[m]oving for judgment on the pleadings under Rule 12(c) is the more appropriate way to address an affirmative defense.” Id. In its view, a dismissal on preemption grounds was therefore premature.
Setting aside the FDCA and its requirement of nonfunctionality, the Seventh Circuit proceeded to analyze whether the plaintiffs had adequately alleged ICFA and Illinois common-law claims. Under the ICFA, plaintiffs must plead a “deceptive or unfair act” that “caused actual damages.” Id. at 646. Breaking with a number of other courts, the panel held that the plaintiffs had adequately pleaded a “deceptive or unfair act” by making the naked allegation that “reasonable consumers rely on the size of packaging to infer the quantity of product that they are purchasing, so any extra slack-fill misleads consumers.” Id. In the court’s view, the plaintiffs’ “assertion that [they] and others attach importance to the size of a package [was] enough for now to indicate that a ‘reasonable consumer’ does so too.” Id. at 647 (emphasis added).
Ultimately, however, the Seventh Circuit agreed that dismissal was required. Again, an ICFA plaintiff “must show that she ‘suffered actual damage’ as a result of the defendant’s violation of the act.” Id. at 647-48. As noted above, the plaintiffs’ complaint asserted that the excess empty space “financially injured” them and “depriv[ed] of the benefit of [their] bargain” by causing them to pay an inflated price. But here, the Seventh Circuit was unwilling to accept that conclusory allegation as true. The plaintiffs had not pleaded facts plausibly establishing “that the seven ounces of chocolate in the box were worth less than the $9.99 that they paid.” Id. They had not pleaded, for example, “that the Mint Meltaways or Pixies were defective” or that “they could have obtained a better price elsewhere.” Id. This was “fatal to their effort to show pecuniary loss,” and thus, to their ability to “raise a plausible theory of actual damage.” Id. It was insufficient for the plaintiffs to plead that they “would not have purchased the candy if they had known the amount of slack-fill.” Id.
Finally, the Seventh Circuit held, the plaintiffs’ unjust enrichment claim failed because Illinois doesn’t recognize that cause of action, and their implied contract claim failed because there was an express contract between the parties “memorialized in the sales receipt[s] that [Plaintiffs] received at the cash register.” Id. at 648-49.
Certain aspects of Benson are unfortunate—even puzzling. Start with the Seventh Circuit’s conclusion that it was premature to reach the issue of preemption at the Rule 12(b)(6) stage. In fact, courts routinely address preemption on Rule 12(b)(6) motions without requiring the defendant to first file an answer and move for judgment on the pleadings under Rule 12(c). See Int’l Longshoremen’s Ass’n v. Davis, 476 U.S. 380, 406 (1986) (Blackmun, J., concurring in part and dissenting in part) (“In the ordinary case, … a defendant claiming pre-emption will do so at the threshold, usually in a motion to dismiss.”). The Seventh Circuit itself has often found state-law claims preempted on Rule 12(b)(6) motions, including in FDCA cases. See, e.g., Guilbeau v. Pfizer Inc., 880 F.3d 304, 310, 319 (7th Cir. 2018) (“The district court granted a Rule 12(b)(6) motion to dismiss on [FDCA] preemption grounds…. We AFFIRM….”); Turek v. Gen. Mills, Inc., 662 F.3d 423, 427 (7th Cir. 2011) (finding plaintiffs’ claims preempted as inconsistent with the FDCA’s requirements, and affirming dismissal “under Fed. R. Civ. P. 12(b)(6)”); Vill. of DePue v. Exxon Mobil Corp., 537 F.3d 775, 789 (7th Cir. 2008) (“[W]e affirm the district court’s Rule 12(b)(6) dismissal on the ground that [Plaintiff’s] claims are preempted….”); Lister v. Stark, 890 F.2d 941, 946 (7th Cir. 1989) (affirming “a finding of federal preemption … [on] a Rule 12(b)(6) motion to dismiss”). We hope that other courts, and future Seventh Circuit panels, will treat this procedural holding as the aberration that it is.
We are also less than enthused with Benson’s credulous approach to allegations that slack-fill is deceptive to “reasonable consumers.” Under the TwIqbal pleading standard, it is not enough for a plaintiff to make a naked assertion that a necessary element of the claim—such as deceptiveness to a “reasonable consumer”—is met. Instead, courts must use their “judicial experience and common sense” to determine whether such allegations are actually plausible. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). We’ve pointed to a number of Rule 12(b)(6) decisions in slack-fill cases where courts have applied common sense to conclude, as a matter of law, that reasonable consumers would not be deceived. We think those decisions have it right: as one judge put it, consumer protection laws “simply do not provide the level of coddling [slack-fill] plaintiffs seek.” Daniel v. Tootsie Roll Indus., 2018 U.S. Dist. LEXIS 129143, at *35 (S.D.N.Y. Aug. 1, 2018).
Nevertheless, we are heartened to see another court—especially an influential federal appellate court—reject slack-fill claims. And we are intrigued by the Seventh Circuit’s no-damages ground for dismissal, which appears to be a novel one in the slack-fill canon. Illinois is far from the only state whose consumer-protection statute requires concrete and objective harm, rather than mere subjective disappointment or regret over purchasing a product. See, e.g., Shaulis v. Nordstrom, Inc., 865 F.3d 1, 10-14 (1st Cir. 2017) (same under Mass. Gen. Laws ch. 93A); Small v. Lorillard Tobacco Co., 720 N.E.2d 892, 898 (N.Y. 1999) (same under N.Y. Gen. Bus. Law § 349(a)). In those states, too, Benson’s no-damages theory should provide another arrow in the quiver of defendants opposing vacuous slack-fill claims.