Friday, May 02, 2014

Color and price aren't actionable representations about product

Boris v. Wal-Mart Stores, Inc., No. CV 13–7090 2014 WL 1477404 (C.D. Cal. Apr. 9, 2014)

Plaintiffs sued Wal-Mart for deceptively marketing Equate Migraine and Equate Extra Strength Headache Relief (Equate ES).  Both allegedly have the exact same active ingredients in the same amounts, but Wal-Mart charges 2-3x more for Equate Migraine than for Equate ES, and Equate Migraine has a red background while Equate ES has a green background.  Plaintiffs alleged that the different prices and backgrounds deceived consumers into thinking that Equate Migraine was better—stronger and more effective—than Equate ES.  WalMart’s website also lists all three active ingredients for Equate Migraine, but lists only one active ingredient for Equate ES.

Plaintiffs sued, alleging California, New Jersey, and New York consumer protection claims.  The court refused to treat price and color as conveyors of meaning, contrary to what marketers know to be true (there are many examples of research on consumers using price as a quality signal, regardless of whether it is a good or true signal—not for nothing is there a cliché “you get what you pay for”).

Plaintiffs failed to identify affirmative misrepresentations, omissions, or failure to comply with FDA rules. Instead, the argument was that the increased price and the use of red on the Equate Migraine package deceived consumers into thinking it was more effective than Equate ES.  To plaintiffs, “no reasonable consumer would pay more than $9 for Equate Migraine when he or she could pay less than $3 for Equate ES unless he or she believed Equate Migraine was more effective than Equate ES.”  The court noted the res ipsa loquitur appeal of the claims.  But “a consumer’s assumptions about a product are not the benchmark for establishing liability under any of the consumer protection statutes Plaintiffs rely on; rather, all of these statutes require some act, statement, or omission by the defendant.” 

Comment: The assumptions don’t come out of nowhere!  There’s nothing inherent in them—they’re created by Wal-Mart’s choices of contrasts—which is to say Wal-Mart’s “acts,” or you could even reasonably call them “statements” insofar as they are communicative. Compare Amestoy, 92 F.3d 67 (2nd Cir. 1996), the blue dot case where the state decreed what a blue dot would mean. The meaning isn’t inherent, but the Second Circuit had no trouble understanding that consumers would put the blue dot together with the sign displayed in the store. That a contrast is made nonverbally makes it no less of a contrast; color is a standard way of distinguishing varieties/strengths of products (take a look at the tampon aisle sometime), even setting the confirming price signal aside.

But the court disagreed.  Color and price aren’t statements or representations. “[T]he price is simply the amount at which the merchant offers to sell the product, and the color of the packaging is a color, not a statement about the product.”  (I’ll believe that when consumers don’t expect pink-packaged foods to contain fruity flavors and green-packaged ones to be citrus or mint.)  Plaintiffs argued that Wal-Mart v. Samara supported them, because color can acquire secondary meaning (actually that’s Qualitex, but no matter)—which means that it can communicate something other than “the product is this color.”  The court said “Wal–Mart has no bearing on the consumer false advertising claims in issue here.” Nor did Miller v. Ghirardelli Chocolate Co., 2013 WL 1402682 (N.D. Cal. Apr.5, 2013), which involved allegedly false claims of white chocolate content, since the word “chocolate” was involved there.

Rather, the court concluded, “[i]nsofar as the color red on a product’s package communicates anything, its message is necessarily subjective and speculative. A merchant’s liability cannot be premised solely on a consumer’s assumptions about a product based on a product’s price and the color of its packaging.”  You know, like you can’t look for extrinsic evidence to figure out what a word means in context, either.  The packages had the active ingredients and dosages on them, and plaintiffs could’ve figured out the truth by simply comparing them.

The UCL unfairness claim then failed because it wasn’t tethered to any specific constitutional, statutory, or regulatory provision, and thus was too inchoate.  A test based on the test used for UCL unfairness claims between competitors was the appropriate guide because “‘[a]n undefined standard of what is ‘unfair’ fails to give businesses adequate guidelines as to what conduct may be challenged and thus enjoined and may sanction arbitrary or unpredictable decisions about what is fair or unfair,’ regardless of whether the unfairness claim is asserted by a competitor or by a consumer.” 

Price setting is up to merchants, absent legislative regulation. “Taken to its logical conclusion, Plaintiffs’ claim requires the judiciary to make pricing decisions, such as ruling that pharmacologically identical drugs must be the same price or may have only a limited price differential, or imposing liability for differential pricing on a necessarily unpredictable case-by-case basis.” (Wal-Mart offered an explanation for the price difference based on different FDA approval processes applicable to each medication, which was beyond the scope of the pleadings and unnecessary.)  Even stating that result shows it’s untenable; price regulation “is a political question beyond the judiciary’s authority.”  So is the fairness of a product’s color.  (Deceptive pricing isn’t!)

For the same reasons, the NY and NJ claims also failed.

While the dismissal of the price/color claims were with prejudice, dismissal of claims based on the website description differential was with leave to amend.  The website allegedly falsely listed Equate ES as having only one active ingredient, acetaminophen 250 mg, while listing three active ingredients for Equate Migraine (acetaminophen 250 mg, plus aspirin 250mg, and caffeine 65 mg).” Nothing in the current complaint was enough to allege that this independently violated the law; the only plaintiff who claimed to represent an online purchaser class didn’t specify when he viewed or relied on the Wal-Mart website to buy Equate Migraine.  Because Wal-Mart’s website changes over time, Wal-Mart was entitled to know when he saw the website and whether he viewed the pages listing the active ingredients.

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