Judges in the Northern District of California can’t agree on what is required to state a claim under the “unlawful prong” of California’s Unfair Competition Law (UCL). Judge Orrick’s recent decisions in a pair of food labeling cases challenging the use of terms such as “evaporated cane juice” create new uncertainty. In Morgan v. Wallaby Yogurt Co., No. 13-cv-00296-WHO, and Gitson v. Trader Joe’s Co., No. 13-cv-01333-WHO, Judge Orrick found that plaintiffs’ “unlawful” claims passed muster simply by alleging that the term “evaporated cane juice” violates California’s Sherman Law. While he didn’t address any of the cases that came out differently, he concluded that “plaintiffs allege facts that plausibly show that Wallaby is not complying with the law, and that is enough at the pleading stage.”
This conclusion directly contradicts Judge Koh’s recent holding in Kane v. Chobani, a nearly-identical case challenging the same “evaporated cane juice” statement and brought by the same plaintiffs’ counsel. In Kane, Judge Koh issued a strong affirmation that the “actual reliance” requirement applies to claims under the UCL’s unlawful prong “to the extent such claims are based on fraudulent conduct.” Kane, No. 5:12-cv-02425-LHK, 2013 U.S. Dist. LEXIS 134385, at *21 (N.D. Cal. Sep. 19, 2013). Because the gravamen of plaintiffs’ claims was that the labeling was deceptive, plaintiffs needed to plead reliance. See our prior post here discussing the ruling.
Judge Orrick did, however, agree with Judge Koh that plaintiffs’ allegations of being misled by “evaporated cane juice” were too far-fetched to survive. He noted that the products clearly list sugar content next to the ingredient lists, concluding that plaintiffs failed to state “how or why the term ‘evaporated cane juice’ is likely to mislead consumers, or how they themselves were misled.” Nonetheless, he didn’t allow this skepticism to derail plaintiffs’ “unlawful” claim.
As many different judges face identical food labeling claims (often brought by the same plaintiffs’ counsel), the law is quickly developing in different directions. See “Court Dismisses Labeling Claims Against Wholesoy, Deferring to the Authority and Expertise of the FDA” and “Second Time’s a Charm: “Evaporated Cane Juice” Claims Tossed in Chobani Yogurt Case on Motion for Reconsideration.” The repercussions of these rulings also extend far beyond the Food Court, as plaintiffs and defendants throughout the country have an interest in issues such as whether reliance is ever required under the UCL’s unlawful prong. Stay tuned for further developments.