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Class Actions & Derivative Suits

Trends in Food Labeling and Nutrition Class Actions

By David T. Biderman and Joren S. Bass – April 30, 2012


In recent years, the number of consumer class actions challenging health and nutrition marketing claims made in relation to food and drinks has expanded dramatically. The courts are still developing a consistent approach to handling these cases. However, trends are emerging.


At the essence of these health-related claims is the plaintiffs’ contention that the defendants promised them something that they did not receive. For example, there has been a series of suits challenging the use of the term “natural” or “all natural” to describe food products. Many of these cases challenge a defendant’s use of some processed or synthetic ingredient. An early focus of suits challenging the term “all natural” focused on products that contained high-fructose corn syrup marketed as “all natural.” Other “all natural” challenges have focused on foods containing trans fats, genetically modified ingredients, and processed ingredients that do not occur in “nature.”


In other “all natural” cases, plaintiffs have challenged the purity of ingredients. For example, in a recent lawsuit filed against Kellogg, the plaintiff claimed that Kashi “all natural” cereal is “composed almost entirely of synthetic and unnaturally processed ingredients.” Bates v. Kashi Co., No. 11-cv-1967 (S.D. Cal filed Aug. 24, 2011). The plaintiff alleges that the product cannot be natural because some of the ingredients are listed by the Food and Drug Administration (FDA) as prescription drugs and others have been declared hazardous substances.


Outside of “all natural” cases, suits have been brought alleging a failure to provide a host of dietary or health benefits. These include suits challenging the health benefits of probiotic yogurts, the health benefits of breakfast cereals marketed as supporting increased immunity and improved cognitive function, and the heart benefits available from various food products. These are just a few examples—many other companies that market food-related products have faced similar lawsuits related to product marketing and labeling. For example, Campbell’s was sued for a label that advertised “low sodium” tomato soup when the soup contained as much salt as its normal tomato soup. Companies selling bottled water have faced lawsuits challenging the source and origin of their products.


Why Have Food-Related Claims Expanded So Dramatically?
A number of trends contribute to the rise in food-related consumer class actions. In recent years, companies have increased advertising focused on health and benefit claims. This increase is in response to consumer interest; consumers have demonstrated a desire for products that they perceive as healthy or improve their quality of life.


Additionally, a likely contributing factor of the growth in health and benefit claims is the current environment of traditional class-action cases. Traditional claims have become more difficult to pursue. For example, the pleadings standards in securities class actions have been heightened, and, after AT&T Mobility v. Concepcion, the ability to bring class actions over sales of products involving a consumer contract has been limited. This may have curtailed claims against sellers of financial products, consumer credit, or cellular services.


What’s more, certain organizations that claim they work in the public interest have also pursued or identified health and nutrition claims. Both the Federal Trade Commission (FTC) and the Federal Department of Agriculture have increased scrutiny of food-related marketing in recent years. For example, in March 2010, the commissioner of the FDA issued an “Open Letter to Industry” announcing “I have made improving the scientific accuracy of food labeling one of my priorities.”


Moreover, the FTC is imposing increasingly stringent standards for health and benefit claims. For example, in a settlement agreement with Reebok in a recent case involving athletic footwear, the FTC required any benefit claim to be supported by a “clinical study that is randomized, controlled, blinded to the maximum extent practicable, of at least six weeks duration,” and further indicated that one study might not be enough if another study contradicts the favorable study’s results. Moreover, in other contexts, the FTC has required two well-controlled human clinical studies to support some health-benefit claims.


Plaintiff’s attorneys are quick to follow any FTC or FDA action with a civil complaint. Just as a few examples, Kellogg, Dannon, Coca-Cola, and Nestlé have all seen class actions filed after the FTC made complaints about their marketing of food or beverages. In one recent case, moreover, the FTC appears to have linked closely with the plaintiffs’ bar. After the FTC filed a civil complaint alleging that Reebok had falsely represented the health benefits provided by its EasyTone sneakers, the plaintiffs filed a number of class actions alleging false advertising. In a motion seeking preliminary approval of a settlement, the plaintiffs’ attorneys represented that the FTC had provided them with significant assistance in preparing the class action.


Private groups and the plaintiffs’ bar have also collaborated, as in a recent lawsuit filed against Target. Cardona v. Target Corp., 12-CV-01148 (C.D. Cal. filed Feb. 9, 2012). On November 7, 2011, an organization named Food Safety News announced that it had conducted tests of the honey sold by Target and a number of other large retailers in the United States that revealed that pollen had been filtered out of much of the honey. On February 6, 2012, a putative class action was filed against Target, alleging that the store violated California’s consumer-protection statutes because the product it marketed as “pure honey” was stripped of all pollen during the refining process, rendering it inconsistent with the definition of “honey” used by state and federal regulations.


Resolution of Food-Related Class Actions
Challenges to the Pleadings
Courts are increasingly tightening the requirement that a class plaintiff allegedly injured by a company’s marketing claims demonstrate actual injury before certifying a class. Many of these challenges take place on the pleadings, where defendants frequently argue that the health claims in question are true. In Chavez v. Nestlé USA, Inc., for example, the court concluded that the plaintiff’s legal theory did not give rise to a cause of action. There, the plaintiffs alleged that Nestléengaged in false and deceptive advertising of its Juicy Juice drinks based on claims that the juice boosted “brain development” and “immunity.” The plaintiffs argued that the claims were “unsubstantiated” and therefore violated California consumer-protection statutes. The court dismissed all of the plaintiffs’ claims with prejudice, noting that the plaintiffs did not allege how Nestlé’s advertisements were false. Further, the court held that the “unsubstantiated by fact” theory was incompatible with California law, which placed the onus on the plaintiffs to prove or disprove false-advertising claims.


Similarly, in Mason v. Coca-Cola Co., the court dismissed a complaint after concluding that allegedly false claims were literally true and therefore could not give rise to liability. The plaintiff challenged Coca-Cola’s labeling of “Diet Coke Plus” after the FDA issued a warning letter stating that it considered a company’s use of the word “Plus” on a product—where there was no specification to which product the “Plus” product was being compared—to violate FDA regulations. The plaintiffs alleged that the labels violated New Jersey’s consumer-fraud statute because they falsely implied that the product was healthful, pointing specifically to the statement “Diet Coke with Vitamins and Minerals.” The court granted Coca-Cola’s move to dismiss. The court noted that Coke’s labels were literally true since vitamins and minerals had been added to the Diet Coke. The plaintiffs did not allege how the product fell short of reasonable consumer expectations. Furthermore, the court noted that the FDA warning letter on its own did not substantiate a claim of fraud against the defendant.


Another frequent challenge to food-related class complaints is that the plaintiffs failed to allege fraud with the particularity required by Federal Rule of Civil Procedure 9(b). While courts are allowing cases to proceed where plaintiffs can allege that they saw and relied on allegedly false marketing claims, many other cases have been dismissed by courts that have held that a plaintiff cannot describe with sufficient detail what marketing claims they claim to have relied on, how the claims mislead them, or when they purchased the product at issue.


In In re Hydroxycut Marketing and Sales Practices Litigation, the court ruled that the plaintiffs had failed to plead fraud with the specificity required by Rule 9(b). There, consumers filed suit alleging that a weight-loss supplement caused serious health problems and was never clinically proven to cause weight loss. However, the complaint did not identify which of the defendant’s marketing claims each named plaintiff saw, alleging only that the plaintiff “was exposed to and read Defendants’ advertising claims, including the Products’ labeling.” Indeed, the complaint did not allege that each plaintiff saw or read the defendants’ advertisements before purchasing the supplement or that they relied on the advertisements. As in most cases where a court finds the pleadings insufficiently specific, the court allowed the plaintiffs leave to amend. In contrast, courts have found the particularity requirement satisfied where the plaintiffs identify the advertisements they contend they saw and relied on and otherwise demonstrate that the defendants’ representations caused them alleged harm.


Federal Preemption
Many recent food-related class actions seek to hold defendants liable for claims made on product labels, and most of those cases are dismissed as preempted by the Nutrition Labeling and Education Act (NLEA). The Federal Food, Drug, and Cosmetic Act (FDCA) was enacted to “prohibit the misbranding of food.” In 1990, Congress amended the FDCA, enacting the NLEA to regulate the information required and permitted on nutrition labels. Congress passed the NLEA to establish “uniform national standards for the nutritional claims and the required nutrient information displayed on food labels.” H.R. Rep. No. 101538, at *13 (1990), reprinted in 1990 U.S.C.C.A.N. 3336, 3342. Consistent with this goal of national uniformity, the NLEA contains an express preemption provision that bars any state-law requirements “not identical” to the NLEA’s labeling requirements. A state-law claim is expressly preempted by the NLEA if it seeks to impose a “requirement” that addresses labeling and is “not identical” to those required by the NLEA.


In Turek v. General Mills, Inc., the plaintiff alleged that General Mills and Kellogg violated Illinois consumer-protection statutes because the labels of FiberOne and other chewy bars did not disclose that the products contained inulin, a fiber derived from chicory root rather than “natural” fiber. The plaintiff alleged that non-natural fiber had not been shown to have the health benefits of natural fiber. The district court ruled that the plaintiff’s demand that the defendants alter the labels of their chewy bars were expressly preempted by the NLEA. As the Seventh Circuit noted when affirming the dismissal, the plaintiff’s claim was preempted because “[t]he information required by federal law does not include disclosing that the fiber in the product includes inulin or that a product containing inulin produces fewer health benefits than a product that contains only ‘natural’ fiber.” 662 F.3d 423, 427 (7th Cir. 2011). Other cases in which the plaintiff challenged the adequacy or content of product labels have similarly been dismissed as preempted by the NLEA.


In cases where courts have found no preemption, the marketing terms are usually not regulated by the FDA—particularly the term “natural.” In Holk v. Snapple Beverage Corp., for example, the Third Circuit held that a consumer’s lawsuit challenging Snapple’s use of “all natural” on beverage labels containing high-fructose corn syrup were not preempted by the NLEA. According to the court, the FDA had imposed no requirements regarding the use of “natural” and, indeed, was still “carefully considering” the “many facets” of how to define the term. Other courts have likewise rejected preemption arguments over food labeled “natural.”


Class Certification
To date, there have been a relatively small number of motions for class certification decided in the food context. Courts appear skeptical of these cases, with the main battlegrounds being the predominance and superiority requirements imposed by Rule 23(b)(3) of the Federal Rules of Civil Procedure and the typicality requirement of Rule 23(a), although other provisions have come into play as well.


In Fine v. Conagra Foods, Inc., the plaintiffs sued Conagra, the maker of Orville Redenbacher popcorn, for allegedly misleading consumers by labeling popcorn as “no diacetyl added.” The plaintiffs asserted causes of action under California’s consumer-protection statutes. The district court denied class certification for several reasons: the class of plaintiffs was too broad because it included all California residents who had purchased microwave popcorn, the plaintiffs had not asserted that all the class members relied on the defendants’ alleged misrepresentation in buying the popcorn products, and the plaintiff could not establish typicality for the same reason. The court concluded that class certification was inappropriate because the class “would likely include people with varying rationales behind their purchases.”


In Weiner v. Snapple Beverage Co., the court denied the motion for class certification and found that the plaintiffs had failed to demonstrate predominance. In particular, the plaintiffs had failed to demonstrate that class-wide proof could be used to establish that purchasers of Snapple beverages had suffered injury caused by “All Natural” labeling. The court found the plaintiffs’ expert witness unreliable, and, absent his testimony, the plaintiffs’ claims were too individualized for common issues to predominate. Moreover, the resulting class was unmanageable due to its size and geographical dispersion and unascertainable because of how difficult it would be to identify the members of the putative class. The court eventually granted Snapple summary judgment to end the case.


Courts’ typicality analysis focuses on issues raised by the named plaintiffs. For example, in Wiener v. Dannon Co., consumers brought a putative class action against the defendant for violations of state unfair-competition and consumer-protection laws, alleging that Dannon’s claims about the health benefits of its probiotic-enriched yogurt products were unsubstantiated and deceptive. The court ruled that the named plaintiff could not meet the typicality requirement of Rule 23(a) and thus denied certification. Specifically, the named plaintiff had only purchased one of the three yogurt products and could not therefore establish that her claims would prove the claims of the proposed class members who bought the other two products.


Similarly, in Aaronson v. Vital Pharmaceuticals, the plaintiff alleged that he bought Redline “Ultimate Energy Rush”—a beverage that advertised providing a rush of energy to those who drink it—but instead of feeling energized when he drank it, he felt shaky and his heart rate increased. The plaintiff sued, claiming that the product’s warning labels failed to adequately disclose risks or to inform consumers about the product. However, during discovery, the plaintiff admitted he had not read the warning labels. The court denied the plaintiff’s motion for class certification, finding that the plaintiff had failed to establish typicality.


Courts also remain extremely skeptical of certification of nationwide classes. In Gianino v. Alacer Corp., the court denied the plaintiff’s motion for class certification in a case brought by purchasers of the product “Emergen-C.” The plaintiffs alleged that the manufacturer of the product had falsely advertised that it would boost people’s immune systems and sought certification of a nationwide class of consumers from all 50 states. The plaintiffs argued that, because the defendant is based in California and many consumers are Californians, California’s consumer-protection laws could be applied to all consumers’ claims nationwide. The court rejected that argument, detailing the many differences in consumer-protection statutes, including false-advertising, fraud, and unfair-competition laws across the nation. As a result, the court held that common legal questions did not predominate for purposes of Rule 23(b)(3). The court also found that a nationwide class was not superior under Rule 23(b)(3) because trial under 50 states’ laws would create an “unmanageable morass of divergent legal issues.”


In cases involving claims of a health or nutrition benefit, the inevitable question arises: If the focus of the claim is a health and nutrition benefit, does this not implicate the individual characteristics of the class members such that the commonality necessary for achieving class certification is lacking? To date, few cases have addressed these issues at the class-certification level.


Class-action cases relating to health and nutrition appear to be on the rise. A variety of factors seem to account for this increase. At the same time, courts have been willing to dismiss many such claims on a variety of bases. And achieving class certification—particularly a national class—remains problematic.


Keywords: litigation, class actions, derivative suits, health, nutrition, food labeling, pleading, class certification


David T. Biderman is a partner at Perkins Coie LLP in both the firm’s Los Angeles and San Francisco offices. Joren S. Bass is of counsel at Perkins Coie LLP’s San Francisco office.


 
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