Last week, a split-panel of the Tenth Circuit affirmed the district court’s dismissal of a false advertising case in which plaintiffs alleged that “Product of the U.S.A.” labels on various beef products were misleading because the products do not originate from cattle born and raised in the United States.  Plaintiffs alleged that defendants imported live cattle from other countries, slaughtered and processed the cattle in the United States, and labeled the resulting beef products as “Products of the USA.”  Plaintiffs claimed this practice violated the New Mexico Unfair Practices Act and sued on that basis.  Defendants filed a motion to dismiss, which the district court granted largely on preemption grounds.  The court reasoned that the United States Department of Agriculture pre-approved the “Products of USA” labels under the Federal Meat Inspection Act (FMIA), 21 U.S.C. § 601-695, which contains an express preemption provision, 21 U.S.C. § 678.  The district court concluded that, since Plaintiffs sought to impose standards on defendants not identical to federal law, the claims were preempted.

The Tenth Circuit majority agreed.  It held that the FMIA “plainly preempts plaintiffs’ labeling claims.”  The USDA “has already approved defendants’ labels, concluding that they are not deceptive or misleading under the FMIA.”  Plaintiffs seek to impose a “different standard, insisting that the labels are nevertheless deceptive and misleading under state law and must be changed.”  Allowing Plaintiffs to pursue a false advertising claim based on labels USDA approved as not misleading “is precisely what § 678 prohibits.”  So, the claim was preempted.

The decision is here.

Perkins Coie is pleased to announce the launch of our sixth annual Food Litigation Year in Review. In recognition of the firm’s practice expansion, this year-in-review report has been broadened to the Food & Consumer Packaged Goods Litigation Year in Review 2021. Accompanying the 2021 report are infographics that highlight key litigation outcomes, filing data, and industry trends. As always, the report offers a summary of the past year’s key litigation outcomes, regulatory developments, and filing data using metrics from our proprietary database, developed by our food and consumer packaged goods (CPG) litigation team. in order to track and understand trends in this growing area.

More new class action lawsuits were filed against the food and beverage industry—325 cases—than in any other year of the last decade. And, as plaintiffs’ lawyers have set their sights on other products in the CPG space, Perkins Coie has continued to systematically track these cases as well.

Perkins Coie has been a leader in defending food and CPG litigation cases, securing favorable, precedent-setting results for its clients. The nationally recognized Retail & Consumer Products industry group includes attorneys focused on food and beverage and consumer packaged goods. Our food litigation team is regularly called upon to comment on national trends driving the industry, including in trade publications and national media outlets.

To learn more, read the full reports here.

The U.S. Court of Appeals for the Tenth Circuit recently affirmed dismissal in Renfro v Champion Petfoods USA Inc., where the plaintiffs challenged label claims such as “Biologically Appropriate,” “Trusted Everywhere,” “Fresh and Regional Ingredients,” and “Ingredients We Love [From] People We Trust.” The district court had dismissed these claims as either puffery or not materially misleading to a reasonable consumer. The Tenth Circuit agreed, holding:

  • The claims “Trusted Everywhere” and “Ingredients We Love [From] People We Trust” were nonactionable puffery. These statements are not falsifiable and “Champion does not make claims about its testing regimens on the dog food packaging. Nor does Champion say on the packaging that the dog food is free from filler. Instead, the statements about being ‘Trusted Everywhere’ and using ‘Ingredients We Love [From] People We Trust’ are the sort of subjective and ‘vague generalities that no reasonable person would rely on as assertions of particular facts.’”
  • The phrase “Fresh and Regional” was either not empirically verifiable or was unactionable puffery. “Although Plaintiffs allege that the dog food contained a ‘material amount’ of non-fresh and non-regional ingredients, they do not explain what amount of fresh ingredients a reasonable consumer would expect or why Champion’s advertising claims suggested that the food was entirely fresh or regional. In fact, the ingredients listed on the Orijen and Acana packaging belie any understanding that the food is entirely fresh by listing non-fresh and non-regional ingredients.”
  • The plaintiffs’ challenge to the term “Biologically Appropriate” lacked standing. “The district court understood Plaintiffs’ claim was based on its allegation that some of the food sold in 2018 contained beef tallow contaminated with pentobarbital. In analyzing the claim, the court found that none of the plaintiffs actually purchased any dog food that contained beef tallow as an ingredient . . . . We agree Plaintiffs could not have suffered any consumer protection injury if they had not purchased dog food containing the objectionable ingredients.” Further, “no reasonable consumer would have concluded this general statement of quality was a material misstatement of fact. . . . The only conclusion that a reasonable consumer could draw from a package that claimed the dog food was ‘Biologically Appropriate’ is that it was fit for dogs to consume.”
  • The plaintiffs’ omission-based claims (that Champion failed to disclose the risk of pentobarbital and risk of non-regional/non-fresh ingredients) did not give rise to a fraudulent concealment claim, but Champion had no duty to disclose based on statements of puffery.

 

Accurate net weight and serving size disclosures on packaging can be a helpful defense to slack-fill claims, as one Southern District of New York court recently held.

On January 24, 2022, the court in Klausner v. Annie’s granted Annie’s motion to dismiss—with prejudice—in a case alleging the presence of non-functional slack-fill in the defendant’s fruit snacks. In coming to its conclusions, the court stated that it “does not write on a blank slate when it comes to so-called ‘slack-fill’ cases,” citing at least eight other in-district cases as “instructive.” Order at 6.

The court first granted Defendant’s Rule 12(b)(1) motion because Plaintiff failed to plausibly allege a threat of future injury. This is because Plaintiff alleged that she purchased the fruit snacks “multiple times a year for the past three years” and was presumably “aware by now of the amount of slack-fill contained in a box of Fruit Snacks.” Id. at 7. Further, the court rejected Plaintiff’s assertion that she will purchase in the future only with the “assurance” of less slack-fill. Id. This is a “conditional” statement that depends on the defendant’ changing the packaging: if Annie’s doesn’t, then Plaintiff won’t purchase; if Annie’s does, then Plaintiff is not deceived by future packaging. Id. “In either scenario, Plaintiff goes unharmed.” Id. at 8.

Turning to the Rule 12(b)(6) motion, the court held that a reasonable consumer would not be misled by the packaging because “the front label of the Fruit Snacks box ‘discloses, in large, color-differentiated font, the actual amount of’ Fruit Snacks in each box” and Plaintiff didn’t allege that any of this information was inaccurate. Id. at 9. The court dismissed Plaintiff’s GBL claims on this ground.

The court also dismissed Plaintiff’s remaining common law claims on the same grounds, for lack of a material misrepresentation, as well as for independent pleading failures. Id.

  • Plaintiff’s negligent misrepresentation claim failed for lack of a “special relationship” between the parties. “Indeed, the relationship between Plaintiff and Defendant ‘appears to be even more attenuated than a run-of-the-mill, arms-length commercial transaction because’ Plaintiff did not purchase the Fruit Snacks directly from Defendant—she purchased them from ‘stores including ShopRite.’” Id. at 12.
  • Plaintiff’s claim for breaches of express warranty, the implied warranty of merchantability, and the Magnuson Moss Warranty Act also failed for lack of privity. Id. at 13. Plaintiff did not allege that she purchased directly from Annie’s or that she incurred a personal injury—only an economic one. Id.
  • Plaintiff’s fraud claim failed because “Plaintiff has not alleged facts sufficient to support plausibly an inference that the [Fruit Snacks’] packaging was materially misleading as to the quantity of [Fruit Snacks] in the box she purchased and, given the content disclosures on the box, she cannot establish that she reasonably relied on any quantity impression derived solely from the size of the box.” Id. at 14–15.
  • Plaintiff’s unjust enrichment claim failed as duplicative. Id. at 15.

Lastly, the Court declined to grant leave to amend, noting that Plaintiff has already had an opportunity to amend and she failed to attach a proposed amended pleading or otherwise advise in her briefing how the defects could be cured by amendment. Id. at 16.

On December 13, 2021, California’s Office of Environmental Health Hazard Assessment (OEHHA) published a notice of modified text to its proposed short-form Proposition 65 warning regulations.

As Perkins Coie previously detailed, OEHHA proposed amendments to its Proposition 65 warning regulations earlier this year that sought to dramatically restrict businesses’ use of short-form warnings (the “Proposed Amendments”). Specifically, OEHHA’s Proposed Amendments sought to:

  • limit the use of short-form warnings to products with five square inches or less of label space;
  • eliminate the use of short-form warnings for internet and catalog warnings; and
  • significantly lengthen the short-form warning language.

The public comment period was open from January 8, 2021, through March 29, 2021, and garnered over 200 public comments, the majority of which urged OEHHA not to adopt the Proposed Amendments.

After consideration of the public comments, OEHHA released modified regulatory text on December 13, 2021 (the “Modified Text”). The key modifications are as follows:

  • Increased Label Size Limits. The maximum label size for short-form warnings was increased from 5 square inches to 12 square inches.
  • Short-Form Permissible on Websites/Catalogs. Short-form warnings are permissible on websites and catalogs if the product itself also uses a short-form warning.
  • New “Signal Words.” Warnings (both long-form and short-form) may use additional “signal words” such as “CA WARNING” or “CALIFORNIA WARNING.” For example:

 CALIFORNIA WARNING: This product can expose you to chemicals including [name of one or more chemicals], which is [are] known to the State of California to cause cancer. For more information go to www.P65Warnings.ca.gov.

  • Additional Warning Language Variations. The January 8, 2021, Proposed Amendments expanded the content of short-form warnings to include (1) the name of at least one chemical and (2) the terms “risk” and “exposure.” The Modified Text provides additional variations of warning language that would be permissible. For example:

 CA WARNING: Risk of reproductive harm from exposure to [name of chemical] – www.P65Warnings.ca.gov.

 CA WARNING: Exposes you to [name of chemical], a reproductive toxicant – www.P65Warnings.ca.gov.

The Modified Text preserves two important provisions introduced in the Proposed Amendments:

  • Explicit clarification that short-form warnings may be used on food products (which was previously ambiguous); and
  • A “sell-through” provision, whereby the new warning regulations would not apply to products manufactured prior to the effective date of the regulations. Warnings on previously manufactured products will be considered compliant if they follow the 2016 Proposition 65 regulations.

Written comments responding to the proposed regulations are due by January 21, 2022. After the close of the comment period, regulators will decide whether to issue final regulations. Based on the timeline in the proposed regulations, the limitations on short-form labeling would go into effect one year after these final regulations are promulgated.

Artfully worded disclaimers are an increasingly powerful tool for food companies looking to protect their label claims, as the following case illustrates.

On December 6, 2021, the Southern District of California tossed a case alleging that Defendant’s hand sanitizer falsely claimed it “kills 99.99% of germs,” followed by an asterisk that stated, “Effective at eliminating more than 99.99% of many common harmful germs and bacteria in as little as 15 seconds,” because the product was “substantially ineffective against approximately 54 pathogens.” The Court first held that Plaintiff failed to establish standing because he lacked a cognizable injury—”Plaintiff points to the Products alleged ineffectiveness….Yet nothing suggests that the Products did not accomplish their intended purpose to some degree.” Further, Plaintiff’s amended complaint “makes no representations that the alleged issues resulted in payment of a premium.” Continue Reading Plaintiff Could Not Clean Up Defendant’s Hand Sanitizer Labeling

Health-conscious consumers continue to challenge the sugar content in foods, including sugar appearing in other forms, such as “dehydrated cane juice solids.” But as one recent case shows, calling sugar by another name is not actionable alone if the product does not otherwise make representations about sugar content and accurately discloses sugar content on the nutrition facts panel. Continue Reading Sugar by Any Other Name: Plaintiff’s Recent Challenge to “Dehydrated Cane Juice Solids” Fails

On November 12, President Biden announced his intention to nominate Dr. Robert Califf as Commissioner of the U.S. Food and Drug Administration (“FDA”). Dr. Califf, a cardiologist, previously served as FDA Commissioner in the Obama Administration between February 2016 and January 2017. Califf is currently a professor of medicine at Duke.

The FDA has been without a permanent head since January 2021. For the past 10 months, the agency has been helmed by Acting Commissioner Janet Woodcock, who joined the FDA in 1986. In announcing Califf’s nomination, President Biden applauded Acting Commissioner Woodcock and her staff’s dedication during a “busy and challenging” time for the agency and noted that the agency would continue “its science and data driven decision-making” during this “critical moment” under Califf.

If confirmed, Califf would join the FDA as it prepares for further work in the face of the pandemic and supply-chain issues. Califf’s confirmation hearings could provide insights on his views on cannabidiol (“CBD”) and other issues facing the food and beverage industry.

A New Jersey federal court dismissed slack-fill claims against the manufacturer of Junior Mints and Sugar Babies products. Plaintiff Regan Iglesia purchased Junior Mints in 2017 and claimed that the boxes of the challenged products were about forty-five percent empty. He brought suit under a litany of alleged violations related to this area of empty packaging, called slack-fill. On October 18, the court dismissed each of Iglesia’s claims, holding that the complaint was not plead with adequate particularity, including the date or exact location of the alleged purchase.

The court went on to provide additional holdings, including:

  • No Standing for Products Plaintiff Did Not Purchase: The court held that Iglesia had standing to bring claims for products he purchased (Junior Mints) and lacked standing to pursue claims regarding products he did not purchase (Sugar Babies).
  • The Challenged Labeling Was Not Misleading Under the Reasonable Consumer Standard: The Court further held that the products were sold by weight, not volume, so the challenged net weight statement was not misleading, even if the claims were plead with particularity. Specifically, the labeling challenge failed under the reasonable consumer standard as the net weight of the products was displayed on the front of the packaging in easily discernable font. Relying on a 2018 slack-fill decision dismissing claims against Junior Mints products, the court found that “a consumer can easily calculate the number of candies contained in the Product boxes simply by multiplying the serving size by the number of servings in each box, information displayed in the nutritional facts section on the back of each box.”
  • The Size of the Product’s Packaging Did Not Create an Express Warranty: Applying New Jersey law, the court held that the size of the product’s boxes did not create an express warranty, writing “an express warranty based on the size of the box alone is, in essence, an implied express warranty, which the law does not permit.”

The court granted the motion to dismiss without prejudice on all counts apart from unjust enrichment, finding that any amendment would be futile on that claim. Iglesia has thirty days to amend the complaint. The case is Iglesia v. Tootsie Roll Industries LLC, No. 3:20-cv-18751 (D.N.J.), and the order is available here (link).

Food litigation filings have risen significantly in the recent past. According to data collected by Perkins Coie, even with the pandemic, filings targeting the food and beverage industry have seen record levels in 2020 and 2021. But these filings face a formidable obstacle: the reasonable consumer defense. Courts continue to apply the “reasonable consumer” standard to reach early dismissals in cases positing implausible theories as to how consumers actually read and understand the labels of consumer-packaged goods. The reasonable consumer defense remains an important check on the rising number of food litigation matters filed across the country. As the Ninth Circuit Court of Appeals recently noted, “a reasonable consumer does not check her common sense at the door of the store.”

Recent cases involving vanilla illustrate how courts across the country reason with the “reasonable consumer” standard. These cases generally allege that a “reasonable consumer” expects that a product labeled as flavored with vanilla (e.g., vanilla ice cream or vanilla soy milk) derives its flavor exclusively from pure vanilla or vanilla extract. The nation’s courts have seen over 120 new suits based on this theory since 2019.

But recent decisions in New York and California federal courts show federal courts are growing increasingly impatient toward the tide of vanilla litigation. Most courts have concluded that no “reasonable consumer” is misled by a claim indicating that a product is flavored with vanilla when that product, in fact, tastes like vanilla. Relying on common sense, these courts have repeatedly held that when consumers read vanilla on a product label, they understand it to mean the product has a certain taste, not that it is derived exclusively from vanilla beans. See, e.g., Steele v. Wegmans Food Mkts., Inc., 472 F. Supp. 3d 47, 50 (S.D.N.Y. 2020); Clark v. Westbrae Natural, Inc., 2020 WL 7043879 (N.D. Cal. Dec. 1, 2020); Pichardo v. Only What You Need, Inc., 2020 WL 6323775, at *5 (S.D.N.Y. Oct. 27, 2020); Parham v. Aldi, Inc., No. 19 CIV. 8975 (PGG), 2021 WL 4296432, at *4 (S.D.N.Y. Sept. 21, 2021).

In consumer class action matters generally, and food litigation matters specifically, the reasonable consumer defense is often dispositive. The outcome of vanilla-related lawsuits demonstrate that the reasonable consumer defense is here to stay, presenting an important check on rising food and beverage litigation.