Monday, July 30, 2012

Does a purchaser of one flavor of ice cream have standing as to other flavors?

Astiana v. Dreyer’s Grand Ice Cream, Inc., 2012 WL 2990766 (N.D. Cal.)
DGIC makes Dreyer’s and Edy’s ice cream, which are basically the same but Dreyer’s is used in the West and Edy’s in the East, along with Haagen-Dazs, a premium brand.  Some of the Dreyer’s/Edy’s products say “All Natural Flavors,” while some Haagen-Dazs packages say “All Natural Ice Cream.”  Plaintiffs alleged that these were false and misleading because Dreyer’s/Edy’s actually has between one and five artificial/synthetic ingredients, and because Haagen-Dazs doesn’t disclose that cocoa, an ingredient, was processed using a synthetic and/or artificial alkalizing agent, i.e., potassium carbonate, as opposed to a nonsynthetic one.  (Plaintiffs cited various regulations to support their claims that particular ingredients were synthetic or artificial.)  Each plaintiff alleged that, had he or she known the truth, he or she would not have purchased DGIC’s ice cream and would have purchased instead ice cream that was truly all natural or bought a non-natural ice cream that was cheaper than DGIC’s.
Plaintiffs sued under the Magnuson-Moss Warranty Act, the usual California claims, and common-law fraud.  The Magnuson-Moss claims were dismissed because that law defines a covered written warranty as an affirmation or fact that “relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time.”  A claim that a food is natural is not a claim to be defect-free, and deliberately including synthetic ingredients isn’t the kind of omission/aberration that “defect” suggests.
The court dealt with the Dreyer’s/Edy’s “All Natural Flavors” statement first.  DGIC mainly argued that the claims were preempted.  The FDCA provides that a food shall be deemed misbranded if it contains any artificial flavoring unless its label states the same.  Regulations define artificial and natural flavor/flavoring.  Artificial flavor/flavoring means “any substance, the function of which is to impart flavor, which is not derived from a spice, fruit or fruit juice, vegetable or vegetable juice, [etc.],” while natural flavor/flavoring means “the essential oil, oleoresin, essence or extractive, [etc.] which contains the flavoring constituents derived from a spice, fruit or fruit juice, vegetable or vegetable juice, [etc.], whose significant function in food is flavoring rather than nutritional.”  Further regulations say that labels of foods to which flavor is added shall declare them as “spice,” “natural flavor,” “artificial flavor,” “or any combination thereof, as the case may be.”  Another regulation addresses labeling of “characterizing flavors.”
“If the food contains no artificial flavor which simulates, resembles or reinforces the characterizing flavor, the name of the food on the principal display panel or panels of the label shall be accompanied by the common or usual name of the characterizing flavor [with certain exceptions] ....”  In the alternative, if there is an artificial flavor, “artificial” or “artificially flavored,” has to be adjacent to the flavor name in letters not less than one-half the height of the letters in the name of the characterizing flavor.
But wait!  There are also regulations about ice cream specifically, including regulations governing the labeling of characterizing flavors, which allows the manufacturer to use the term “flavored,” as in “vanilla flavor,” on the main package panel, as long as the natural characterizing flavor predominates over an artificial flavor simulating it.  The FDA has recognized that these two provisions conflict.
Plaintiffs alleged that “All Natural Flavors” was misleading because it suggested that all ingredients, not just the flavoring ingredients, are natural when they aren’t.  In addition, they alleged that DGIC violated the regulations because the ice cream simply used the common/usual name of the characterizing flavor when in fact it had two artificial flavors: propylene glycol monostearate and/or alcalized cocoa processed with potassium carbonate.  (Plaintiffs specifically alleged that propylene glycol monostearate and alcalized cocoa were “flavors” in that they imparted flavor; whether the potassium carbonate counted as part of the flavor was not a fact that could be resolved on a motion to dismiss.)  E.g., Dreyer’s/Edy’s Triple Chocolate Peanut Butter Sundae didn’t use “flavored” or “artificial” as it allegedly should.
DGIC argued that the first theory was preempted because it’s allowed by regulation to use “natural flavors” on the ingredient list and should be allowed to use the same term elsewhere on the label without penalty.  The fact that DGIC added “all” to “natural flavors” didn’t take it outside the scope of preemption, since the preemption provision bars a state from imposing any requirement for food labeling “of the type” required by the federal scheme, and the statute “does not require exact precision.” 
Still, DGIC didn’t succeed.  It mainly relied on on 21 U.S.C. § 343(r), which provides that a claim on a label about a food product’s nutritional levels can be made “if the characterization of the level ... uses terms which are defined in regulations of the Secretary.”  However, plaintiffs weren’t challenging any claim about nutritional levels.  Congress could have, but didn’t, include a similar provision for flavoring.  The court also suggested that claims about nutritional levels were less likely to be subject to consumer interpretation:
For example, where a claim is made that a food product has 0 grams of trans fat, there is no real room for debate as to what is meant by “trans fat.” In contrast, a claim that a food product has “All Natural Flavors” is plausibly subject to some interpretation—i.e ., what is the meaning of “flavors”? Here, Plaintiffs take the position that a reasonable consumer could interpret “All Natural Flavors” to mean “all natural ingredients,” a claim purportedly applicable to all of Dreyer’s/Edy’s ice cream flavors. While DGIC disagrees, and while the Court is skeptical of Plaintiffs’ “spin” on “All Natural Flavors,” it cannot say at this juncture that it is implausible under Twombly and Iqbal that a reasonable consumer might so understand the term.
Plaintiffs were arguing that DGIC violated the federal regulations, and it’s okay for states to make that, and only that, actionable.  However, to the extent that plaintiffs were arguing independent violations of California law, their claims were either preempted or duplicative.  Thus, only their “unlawful” claims survived, not the “unfair” or “fraudulent” claims.
DGIC also argued that it was implausible that a reasonable consumer would view the “All Natural Flavors” label and that plaintiffs failed to adequately allege materiality and reliance.  As for the first, though the label wasn’t prominently displayed, “clearly it was intended to be seen by consumers or there would be no reason to include it.” Plaintiffs alleged that they were concerned about and tried to avoid consuming foods that are not natural; that they relied on the label in purchasing the ice cream; and that, had they known about the synthetic and/or artificial ingredients, they would not have purchased the ice cream. That was enough; the court rejected DGIC’s argument that, under Iqbal/Twombly, plaintiffs needed to explain why consuming natural foods is important to them.
DGIC also argued that it wasn’t required to identify whether a natural or synthetic process was used so long as it identified the ingredient, but the court disagreed at this point.  DGIC argued that the FDA had recognized that disclosing the presence of high fructose corn syrup was enough, without indicating which type (synthetic or nonsynthetic) was present.  But DGIC didn’t provide the relevant authority, and in any event it wasn’t clear that conclusions about high fructose corn syrup would automatically apply to other ingredients.
The court then turned to the Haagen-Dazs “All Natural Ice Cream” statement.  DGIC argued that the claims should be dismissed for want of materiality, and that plaintiffs’ claims were implausible because “(1) ice cream is not a wholesome or healthy food, (2) ice cream is not a natural food (i.e., one found in nature), (3) the label on its face indicates that only the ice cream itself is natural (i.e., the ice cream base) and not mix-ins to the ice cream, and (4) even if the mix-ins were considered part of the ice cream, a reasonable consumer would not likely expect that the cocoa was alkalized with a ‘natural’ alkalizing agent, as opposed to the commonly used potassium carbonate.”  The court rejected all these arguments for purposes of the motion to dismiss.  (1)-(2) were, in fact, “clearly without merit and hardly worth addressing,” since that wasn’t what plaintiffs were arguing.  They simply claimed that they believed that natural ingredients are healthier and that “All Natural Ice Cream” suggests that the entire ice cream product is made of natural ingredients. 
The argument about mix-ins wasn’t meritless, but it was still wrong.  DGIC argued that the ingredient list separates out the mix-ins.  But, under federal regulations, ice cream is arguably defined to include flavoring ingredients, and the 9th Circuit’s Williams decision says that a manufacturer can’t rely on the ingredient list to correct a false or misleading front-of-package statement.
Finally, DGIC’s argument (4) relied on an FDA advisory policy which states that natural means “nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.”  Because potassium carbonate is commonly used as an alkalizing agent, as plaintiffs admitted in the complaint, nothing artificial or synthetic had been used.  The court recognized the potential gap between industry practice and consumer expectations: “This position is problematic because, even if potassium carbonate is commonly used, that does not necessarily mean that a reasonable consumer would expect it to be used—i.e., normally used does not necessarily imply normally expected; a reasonable consumer may not have the same knowledge as, e.g., a commercial manufacturer.”  In any event, plaintiffs alleged that sodium carbonate, a non-artificial/synthetic substance, was also commonly used as an alkalizing agent.
Finally, DGIC raised the usual standing objections, arguing that plaintiffs could only represent people who bought exactly the same products.  Plaintiffs responded that there was enough similarity between the products they bought and those they didn’t to survive a motion to dismiss, and that any remaining concerns would be better addressed at the class certification/adequacy of representation stage.  Because of a concerted effort by defendants to push this theory, and some mishandling of the issue, there is caselaw going both ways.  The court here noted that some of the cases were quite conclusory.  For the cases that did provide reasoning, “the critical inquiry seems to be whether there is sufficient similarity between the products purchased and not purchased.”
For example, Dysthe v. Basic Research LLC, No. CV 09–8013 AG (SSx), 2011 WL 5868307 (C.D. Cal. June 13, 2011), involved claims based on Relacore and Relacore Extra Maximum Strength, even though the plaintiff had only purchased the latter.  The court held that the plaintiff lacked standing as to Relacore, and rejected plaintiff’s argument that the products were nearly identical: Relacore had nineteen ingredients, and Relacore Extra only ten (?), and the products had different packaging with different claims.  Having a few common ingredients wasn’t enough; the court commented, “just because an Old Fashioned and a Manhattan both have bourbon doesn't mean they’re the same drink. Relacore and Relacore Extra are different products, marketed and sold separately by Defendants.”  (As the court’s later analysis implies, one would think that this conclusion would depend on the purpose for which one was asking the question.  If you’re stopped for DUI, there is no relevant difference between an Old Fashioned and a Manhattan.)
The court contrasted Carideo v. Dell, Inc., 706 F. Supp. 2d 1122 (W.D. Wash. 2010), which allowed class action claims to continue including computer models plaintiffs didn’t buy.  The plaintiffs pleaded the same core factual allegations and causes of action; further inquiry could take place later, at the class action certification inquiry.  Similarly, Koh v. S.C. Johnson & Son, Inc., No. C–09–0927 RMW, 2010 WL 94265 (N.D. Cal. Jan. 6, 2010), the court found that the plaintiff had standing to pursue class action claims based on a product (Shout) that he did not purchase as opposed to a product (Windex) that he did purchase. There’s no bright-line rule that different product lines can’t be covered by a single class.  In Koh, the plaintiff challenged the defendant’s use of specific labels (i.e., “Greenlist Ingredients” and other supposedly environmentally friendly claims) that could be found on both products.
Here, the court concluded, plaintiffs alleged sufficient similarity between the products they purchased and those they didn’t.  They were challenging the same kind of food products—ice cream—and the same labels for all the products.  Variation in non-challenged ingredients wasn’t dispositive because plaintiffs’ claims were based on the same mislabeling practice across different product flavors.  In fact, many of the ingredients were the same: “21 out of 59 ice creams contain propylene glycol monostearate; 43 out of 59 contain potassium carbonate; and all 59 appear to contain glycerin, mono and diglycerides, tetrasodium pyrophosphate, and xanthan gum.”  This distinguished a recent case against Trader Joe’s where the plaintiffs lacked standing as to Trader Joe’s crescent rolls; the products at issue there (cookies, apple juice, cinnamon rolls, biscuits, ricotta cheese, and crescent rolls) bore little similarity to each other.  This case, by contrast, involved “the same kind of product (ice cream), based on largely the same ingredients, and asserting the same wrongful conduct applicable to a wide range within the product line.”  


  1. Why is the court entertaining a private civil action over FDA regulations at all? The FDCA preempts, and only the FDA itself can act under the FDCA. See Pom Wonderful v. CocaCola.

  2. Mark, that's not entirely true. The FDCA preempts non-identical state regulations, but to the extent the state merely provides a cause of action for violating the FDCA/governing regulations, that's ok. See, e.g., Delacruz v. Cytosport, Inc., 2012 WL 2563857 (N.D. Cal.). The Lanham Act caselaw gets a bit more complicated--there's a line of cases not allowing Lanham Act claims that would require interpretation of the FDCA/regs while allowing claims that merely require straightforward application--but even there, private causes of action survive. Pom Wonderful is a bit of an outlier in the circuits, but I don't think it cuts off Lanham Act claims entirely; it's perfectly possible for a food- or drug-related claim to be false and to violate the FDCA.

  3. I do not doubt that the caselaw is all over the map. Seems like false advertising ought to be actionable no matter whether it coincidentally violates the FDCA, FDA regs, religious taboos, dietary customs or restrictions, social mores, whatever. But can you make an interpretation of the religious taboos part of the claim? Part of the defense? Part of the proof? How can any claim of violating any FDA regulation not involve some kind of interpretation of the FDCA, starting with how to characterize the goods and which of the many FDA regulations-- and exceptions-- and special rules for bulk products and raw ingredients-- to apply? Isn't that what the FDA-- the federal agency exclusively responsible-- is for?

  4. It depends--there are cases about the meaning of "kosher," not to mention the class action against McDonald's for misleadingly touting that they didn't use beef to fry their french fries while in fact they added beef extract at another phase--which, among other things, caused Hindus to inadvertently violate an important taboo.

    Sometimes there isn't any need to interpret a regulation, even when it applies. There's another Pom case providing an easy example: a fraudster makes juice with mostly apple and grape and a hint of pomegranate and advertises it as pomegranate juice. The FDA regulates juice pretty closely, but there is no reason to leave enforcement against that fraudster to the highly overworked FDA, especially when legitimate competitors have an incentive to police the market. Plus, to say the FDA is "exclusively responsible" is to assume the answer to the question; it's not, where there are (1) violations of an independent law (and no conflict preemption) or (2) state laws "identical to" the FDCA/regs, which is what the key preemption provision says isn't preempted.

    Another hypo: a contract dispute in which the defendant promised to deliver product X, whose composition is regulated by the FDA. Plaintiff says that defendant didn't deliver X but a variant that doesn't have the same composition. Why would the FDCA preclude such a private action? True, the court might have to look at the regs to figure out if defendant delivered X, but so what?

  5. So the Lanham Act functions as a sort of Clayton Act for the FDCA, and creates a "private attorney general" right of action? Everything you say about what the courts are allowing is true. (That's why I read your blog every day.) And what the courts are allowing is probably even necessary. But why are they allowing it in the absence of a statutory grant, and in the face of what certainly appears to be an exclusive grant to the FDA? Does the Lanham Act create a private right of action under the FDCA the same way it does under the FTCA? Has any court ever stepped up and said so directly? Or are attractive easy claims actionable and ugly complex claims preempted depending on the wh--, uh, sense of the court?

  6. A couple of doctrinal points, which I've neglected but which are probably of most relevance to your questions: the FDCA preempts contrary state law. Technically, interaction with other federal statutes is a matter of preclusion, not preemption, and the analysis differs (in part because of the absence of federalism concerns).

    The Lanham Act does not make any violation of the FDCA actionable (whereas California has chosen to do so by adopting "identical" laws, as allowed by the FDCA's key preemption provision). Instead, the Lanham Act bars false advertising. It may be the case that a claim is false because it conflicts with FDA rules (e.g., if the FDA has defined an "active ingredient," maybe if you call an inactive ingredient active you're speaking falsely), or it may even be that FDA regulation has shaped consumers' expectations so they expect advertisers to adhere to FDA definitions (this has recently been litigated with respect to what pharmacists think about terms like "equivalent"). But you can't use mere violation of the FDCA/regs to establish a Lanham Act violation; you need the whole falsity/materiality package. In addition, some courts have refused to find falsity based on a mere failure to follow the FDA's definitions--though even then, if a plaintiff can show that consumers believe the advertiser is using a term the same way the FDA does, the possibility of false advertising should logically remain, and the pharmacist cases have generally come out that way.

  7. Thanks. Sorry about my loose use of preclusion/preemption. Now I'm worked up about the balkanization of the supposedly national economy, where the exact same behavior is or is not unlawful and actionable depending on which state, which circuit, and which court you are in. Maybe we should be like the European Union and try to harmonize our laws. Would a coherent national body of law be such a bad thing? It IS interstate commerce, after all. No Constitutional reason to let 1000 flowers-- or 50 weeds-- grow.