Thursday, October 28, 2010
Fruity Oaty Bars and false advertising
(I couldn't do just one Joss Whedon reference, now, could I?)
Chacanaca v. Quaker Oats Co., 2010 WL 4055954 (N.D. Cal.)
Plaintiffs filed a putative California class action under the UCL, FAL, and CLRA, arguing that Quaker’s Chewy Bars contain “dangerous amounts of trans fat,” but are labeled and marketed to suggest that they are in fact wholesome and healthful. They sought an injunction against the "0 grams trans fat" statement on the Chewy Bar label and other relief. The court granted Quaker’s motion for judgment on the pleadings based on preemption for all claims directed at the "0 grams trans fat" statement, the "good source" of calcium and fiber statements, and the statement indicating that the product contains whole grain oats but lacks high fructose corn syrup. In addition, plaintiffs, as noncompetitors, lacked standing to bring a Lanham Act claim. However, claims relating to the term "wholesome," to the phrase "smart choices made easy,” and to depictions of oats, nuts, and children survived.
Plaintiffs argued that trans fat is highly toxic to human health. Quaker’s label states that a single bar contains “0 grams trans fats,” and yet the bars include hydrogenated vegetable oil (trans fat) in the ingredient list. This is because federal regulations expressly instruct that any level of trans fat that falls below 0.5 gram per serving must be rounded down to zero. Plaintiffs conceded that the “0 grams” in the nutrition box complied with FDA regulations and that Quaker wasn’t allowed to state a decimal amount smaller than 0.5, but argued that the repeated “0 grams” statement, removed from the nutrition facts statement but plainly visible to consumers, was false and misleading.
Plaintiffs also alleged that the box’s use of the phrases "wholesome," "a good source of calcium and fiber," "made with whole grain oats," "no high fructose corn syrup," and "smart choices made easy," along with images of oats, nuts and children in soccer uniforms that also appear on the box, create the misleading impression that Chewy Bars are healthful or part of a healthful lifestyle.
Though it took a while to explain the statutory scheme, preemption was relatively easy: state law claims can survive only if they’re identical to those imposed by the FDCA and NLEA or don’t involve claims/labeling information as described in the relevant statutory sections, including “nutrient content” claims. “0 grams trans fat” was a nutrient content claim. Thus, plaintiffs’ attack on it would only survive if the claim could it be “misleading” outside the nutrient box and thus constitute misbranding in violation of the FDCA/NLEA. The side panel statement was voluntary, unlike the nutrient box. Nor were plaintiffs asking for Quaker Oats to make a different affirmative statement; they pointed out that at least the rounded-down number in the box is in close proximity to the ingredient list, which discloses the partially hydrogenated vegetable oil and provides serving information, allowing consumers to figure out that consumption of several bars could entail non-trivial amounts of trans fat. (Technically, pursuant to regulation, Quaker Oats was required to declare the "0 grams" trans fat in the nutrition box only because it made the content claim elsewhere, but the court didn’t consider that important.)
The court rejected Quaker’s argument that an express claim can’t be misleading if it simply restates the information in the nutrition box. But, noting that the FDA’s Final Rule on the matter states that even express claims can be misleading, the court refused to adopt such a categorical rule. No regulation specifically requires that express content claims have to use the rounded figures required in the nutrition label. Instead, it must "not in any way implicitly characterize the level of the nutrient in the food" and must not be "false or misleading in any respect." However, the FDA has also held that reference claims (claims that compare the nutrient level of a product to that in a prior version) can choose to use either rounded or actual values so long as the label is internally consistent. It has also reasoned that the difference between actual and rounded values is “nutritionally insignificant” and functionally provides identical information. “Accordingly, if ‘nutritionally insignificant amounts’ of less than 0.5 gram trans fats means the same thing, according to Agency regulations, as ‘0 grams,’ then the use of the latter language in an express nutrient content claim would not be misleading” within the meaning of the law. Thus, the state law claims sought to impose a non-identical burden on Quaker and were preempted.
Plaintiffs also challenged “contains whole grain oats” and “no high fructose corn syrup.” A statement of an ingredient is not necessarily a nutrient content claim, but may function as such depending on the circumstances. The FDA says that an absence claim can only be made if the food is specially processed or formulated to remove the nutrient; if a food in its natural state lacks the nutrient, the seller must indicate that. Plaintiffs argued that the presence of hydrogenated vegetable oil makes these claims, though true, misleading. But the FDCA has provided for this precise scenario: even true nutrient content claims are misleading if another “disqualifying” nutrient exceeds an amount established by regulation. The FDA has only imposed disqualifying levels for total fat, saturated fat, cholesterol, and sodium. In 2003, it declined to set disqualifying levels for trans fats. Because of this express decision, plaintiffs’ state law claim was inconsistent with the FDCA and regulations to the extent it depended on the presence of trans fats to render the content claims misleading. Similar reasoning defeated the claims against Quaker’s representations that Chewy Bars are a “good source” of calcium and fiber.
However, the pictures, “wholesome,” and “smart choices made easy” decal (part of an industry program) could not be categorized as nutrient content claims, and thus were not preempted. Though the FDA has expressed interest in such front of the box claims, until it acts there’s no preemption. “Wholesome” doesn’t describe any particular nutrient and the FDA has no formal or informal policy on the term.
Nor did the court apply the primary jurisdiction doctrine, which allows courts to kick initial decisions to the relevant agency. There are four relevant factors: “(1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration."
No dice. “Without question, the FDA has extensively regulated food labeling in the context of a labyrinthine regulatory scheme. Nonetheless, plaintiffs advance a relatively straightforward claim: they assert that defendant has violated FDA regulations and marketed a product that could mislead a reasonable consumer. As courts faced with state-law challenges in the food labeling arena have reasoned, this is a question ‘courts are well-equipped to handle.’" The remaining representations don’t entail technical questions or require agency expertise to interpret.
Quaker then argued that plaintiffs hadn’t suffered an injury in fact and lacked standing, because they failed to plead any health-related harm. But the harm for which plaintiffs sought redress was not health harm, but deception. Had they known about the trans fat content, they alleged, they wouldn’t have bought the product, which is adequate to allege an injury.
Quaker contended that the remaining statements are truthful or nonactionable puffery. Quaker relied on Tylka v. Gerber Products Company, 1999 WL 495126 (N.D. Ill. July 1, 1999), which found that "[the] most wholesome nutritious safe foods you can buy anywhere in the world" was puffery. But “wholesome” was only part of that phrase, whose superlative claim was what rose to the level of unbelievable exaggeration. By contrast, a representation that a product is “wholesome” could arguably mislead a reasonable consumer. The same analysis applied to “smart choices made easy.” Likewise, if plaintiffs are correct that trans fats are not safe in any amount as true, and if the images on the box imply that active, healthy children are fueled with Chewy Bars, the court couldn’t find puffery as a matter of law at this point.
Plaintiffs also pled with sufficient particularity under Rule 9(b).
However, as consumers and not competitors, plaintiffs lacked Lanham Act standing.