Delacruz v. Cytosport, Inc., 2012 WL 1215243 (N.D. Cal.)
Delacruz filed a putative class action under the usual
California laws based on claims about Muscle Milk Ready-to-Drink and Bars. Though Cytosport allegedly represents the
products to be healthy and nutritious (e.g., “there's no question you're
getting a nutritious snack,” and the products “take[ ] the guess work out of
high performance nutrition”), almost 50% of their calories come from fat,
basically equivalent to a Krispy Kreme doughnut. The products claim to blend protein, “healthy”
fats, “good” carbohydrates along with vitamins and minerals to provide energy,
spur muscle growth, and help recover from workouts. However, the bars contain palm oil, which
plaintiff alleged may be just as unhealthy as trans fats, especially in the
processed versions Cytosport uses. The
website contains further alleged misrepresentations touting the products as
useful for athletes and non-exercise enthusiasts alike. The Ready-to-Drink product is advertised as “an
ideal nutritional choice [if] you are ... on a diet.” The FDA has sent a warning letter to Cytosport
based on its label for its chocolate shake and the webpage for its bars, among
other things stating that they violated the rules for the use of the term “healthy,”
though that information wasn’t in the complaint.
Cytosport allegedly recommended that consumers should use the
product multiple times a day, before and after workouts, and instead of or
along with meals. Plaintiff alleged that
she bought the products for 6 months prior to filing her initial complaint, and
that she was exposed to Cytosport’s long-term ad campaign for the products,
including the packaging, which induced her to buy them. She also alleged that she was denied the
benefit of her bargain when she decided to purchase the products over competing
products, which are less expensive or contain healthier ingredients; she would
not have paid as much as she did for the products, or she would not have bought
them at all, had she been aware of the misrepresentations.
The court concluded that “healthy fats” was the only really
specific claim on the label, since consumers are likely to think that
unsaturated fats are healthier than saturated fats and thus that the drink
contained unsaturated fat. The
additional claim to be a “nutritional shake,” while difficult to measure
concretely, “contributes to a sufficient claim of deceptive product labeling.” The presence of the nutrient label was not to
the contrary; the label doesn’t exist to correct misrepresentations made
elsewhere on the label and reasonable consumers expect it to contain details
confirming the representations. However,
“healthy” on its own was difficult to define and the plaintiff didn’t provide
objective criteria for evaluating healthiness; the analogy to Krispy Kremes was
unhelpful, so falsity/misleadingness wasn’t properly alleged as to “healthy”
alone or to various other statements that weren’t alleged to be false. Some statements, such as “Go from cover it up
to take it off,” “From invisible to OMG!” and “From frumpy to fabulous,” were
mere puffery, as was “ideal” in “ideal nutritional choice [if] you are ... on a
diet.”
Plaintiff properly alleged an economic injury from the
alleged misrepresentations. As to reliance, the court found her claim that she
was “exposed to” the labels “suspiciously vague,” but because she would have to
have had the labels in hand to consume the products, the court construed the
complaint to imply that she read them and relied on them. By contrast, she inadequately pled reliance
on Cytosport’s long-term ad campaign, which didn’t approach the longevity and
pervasiveness of that involved in Tobacco
II. She also didn’t plead that she
read or relied on any website statements.
Plaintiff successfully alleged actionable misrepresentation,
and her UCL unfairness claim also survived.
The court determined that the best test to use for a consumer class
action under the UCL was the FTC’s definition of unfair business practices:
“(1) the consumer injury must be substantial; (2) the injury must not be
outweighed by any countervailing benefits to consumers or competition; and (3)
it must be an injury that consumers themselves could not reasonably have
avoided.” If the product labeling is
false and misleading, the injury to the class as a whole could be substantial
even if individual injuries are minimal, and there’s no benefit to false and
misleading advertising. “While consumers
could arguably avoid the injury by reading the product label in full,
misleading labels would appear to qualify as an unfair business practice.”
Finally, the court addressed Cytosport’s standing
challenge. Misrepresentation, economic
injury and reliance together provide UCL/FAL standing. The CLRA standing requirement is more
relaxed, in that the allegedly unlawful practice must only have caused damage
to the plaintiff, not economic damage; plaintiff’s allegations also sufficed
there. Article III standing was also
present; any plaintiff with UCL standing will have Article III standing, since
the UCL is narrower.
Cytosport also tried preemption or at least a stay based on
the primary jurisdiction doctrine, which allows courts to stay or dismiss
without prejudice pending the resolution of a controversy by an administrative
agency with special competence. But
Cytosport failed to show that plaintiff’s claims required FDA expertise. She wasn’t alleging a violation of FDA
regulations, but rather that Cytosport’s misrepresentations were likely to
mislead a reasonable consumer.
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