November 2012: Class Action Litigation Update

by Quinn Emanuel Urquhart & Sullivan, LLP
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Defending False Advertising Claims: If you thought a false advertising lawsuit based on ads that cats “like” or “choose” one brand of kitty litter over another was going too far, you were not alone. Judge Samuel Conti of the Northern District of California recently dismissed that aspect of a class action against Clorox, pointing out what seems perfectly obvious: that no reasonable consumer could be deceived by depictions of cats appearing to “choose” one litter box over another and that such statements are “puffery.” See In re Clorox Consumer Litigation, 12-00280, 2012 WL 3642263 (N. D. Cal. Aug. 24, 2012). It is still safe to show our furry friends engaging in human-like behavior without fear of being sued by someone who thinks it should be taken literally.

The Clorox case, which moves forward on other claims, is one of the scores of new false advertising lawsuits that have become the suit du jour in the class action world. Every label, print, internet, and TV ad is being carefully scrutinized for any transgression from 100% accuracy, no matter how obvious it is that the license taken with a claim is poetic. Even where the plaintiffs concede product ingredient levels and nutritional information are accurately disclosed on the label, they have still launched class actions—and gotten past the pleading stage—by contending consumers should not be expected to read labels provided for their benefit. Indeed, because consumer protection claims are broad in their coverage and claims of violations are fact-intensive, it is difficult to dismiss even seemingly frivolous cases with an early motion. But there are defenses that have had some measure of success and merit considering in the proper case.

First, if the claim is pled generally in a Federal Court complaint, it may be possible to argue it should be considered a fraud claim, subject to Fed. R. Civ. P. 9(b), requiring plaintiff to plead the “who, what, when, where, and how” of the charged misconduct. Federal Courts have required state-law consumer claims to be pled with particularity, including the commonly-asserted trio in California of the Unfair Competition Law (UCL), the Consumer Legal Remedies Act (CLRA), and the False Advertising Law (FAL). See Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1117, 1122 (C.D. Cal. 2010). This rule will rarely lead to dismissal with prejudice, but it is always worthwhile to know from the start what specific facts plaintiffs believe support their claim.

Second, and potentially more powerful, is a preemption defense, particularly for claims involving federally-regulated labels. This could include FDA-regulated packaging for foods and nonalcoholic beverages, see, e.g., Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1116 (N.D. Cal. 2010), as well as USDA-regulated labeling of meat, poultry, and liquid egg products. For example, The 2012 Nutrition Labeling and Educational Act (“NLEA”), 104 Stat. 2353, 21 U.S.C. §§ 341, et. seq. (2012), requires certain nutritional and ingredient information to be disclosed on the labels of nearly all FDA-regulated food items. Peviani v. Hostess Brands, Inc., 750 F. Supp. 2d 1111, 1118 (C.D. Cal. 2010). The Act expressly prohibits States from imposing “any requirement respecting any claim of the type described in section 343(r)(l) of this title made in the label or labeling of food that is not identical to the requirement of Section 343(r) of this title.” 21 U.S.C. §§ 343-1(a); see also Yumul v. Smart Balance, Inc., No. 10-00927, 2011 WL 1045555 (C.D. Cal. Mar. 14, 2011) (finding more restrictive “no cholesterol” labels required by California law preempted by the NLEA); Chacanaca, 752 F. Supp. 2d at 1116-17 (finding consumers’ action to prohibit “0 grams trans fat” labeling preempted by NLEA).

In California, in particular, many UCL/FAL/CLRA claims against food and drink manufacturers have been held preempted by federal labeling requirements under the NLEA when plaintiffs seek to impose a burden on food manufacturers that is not identical to what the NLEA requires. See Charles Hairston v. South Beach Beverage Co., Inc., No. 12-1429, 2012 WL 1893818 (C.D. Cal. May 18, 2012) (finding preemption of claim that it was improper to refer to fruits in describing flavors when beverage did not contain actual fruit or fruit juice).

Identifying specific provisions of the NLEA or FDA rules will increase the odds of succeeding on a preemption defense. For instance, in Lam v. General Mills, Inc., No. 11-5056, 2012 WL 1656731 (N.D. Cal. May 10, 2012), plaintiffs argued that packaging of Fruit Roll-Ups misled consumers into thinking they were healthy. The packaging contained statements such as “fruit flavored snack” and “strawberry natural flavored,” although the side panel had an accurate list of ingredients. Defendants presented a specific rule that permitted a producer to label a product as “natural strawberry flavored” even if that product contained no strawberries. The District Court held the claim was preempted. See also Carrea v. Dreyer’s Grand Ice Cream, Inc.¸ 475 F. App’x 113 (9th Cir. Apr. 5, 2012) (claim “0g Trans Fat” statement on drumstick’s packaging misled consumers into believing Dreyer’s ice cream was healthy were preempted by NELA rules on nutritional labeling).

Despite these cases, there is little help for claims against an advertiser who contends that a product is “all natural.” The FDA has not defined what is “natural,” and as a result, such claims are not preempted. See e.g., Wright v. Gen. Mills, Inc., No. 08-cv-1532, 2009 WL 3247148 (S.D. Cal. Sept. 30, 2009) (rejecting preemption defense to an assertion that a granola bar containing high fructose corn syrup is misleadingly labeled “all natural”); Astiana v. Ben & Jerry’s Homemade, Inc., No. 10-4387, 2011 WL 2111796 (N.D. Cal. May 26, 2011) (claim that ice cream containing alkalized cocoa was improperly labeled “all natural” not preempted).

If pleading defenses fail and a class is certified, under most consumer protection statutes, the challenged advertising claim will be judged from the perspective of the “reasonable consumer.” Even where common sense compels success under this standard, the litigation costs required to obtain that result in a class action can be significant. Whether courts like the Clorox court will become more active in shutting down suits that defy common sense at the pleadings stage remains unclear.

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