Plaintiffs alleged that ConAgra deceptively marketed Wesson
cooking oils as “100% Natural,” when they’re actually made from unnatural
genetically modified organisms. They
were consumers from Nebraska, ConAgra’s HQ, and 14 other states and they sought
to represent a nationwide class alleging claims under the Magnusson–Moss
Warranty Act and the Nebraska Consumer Protection Act and Uniform Deceptive
Trade Practices Act. They also sought various state subclasses for consumer
protection, breach of warranty, and unjust enrichment claims.
ConAgra argued that the complaint failed to meet Rule 9(b)’s
particularity requirements, since only 2 of 21 plaintiffs alleged a purchase
location and only a handful provided dates of purchase. Plaintiffs responded that they provided
enough information to put ConAgra on notice of their claims, and that demanding
these additional details would do nothing to enhance ConAgra’s ability to answer
the allegations, which was the purpose of Rule 9(b). The court agreed that the necessary “where”
for Rule 9(b) purposes was where ConAgra made its misrepresentations—here, the
label. Plaintiffs were not required to
identify specific stores; they showed where the claim at issue appeared on the
bottles and alleged that this was true throughout the class period. Likewise, they adequately pled the “when” by
pleading when the allegedly misleading statement was made or when they saw it,
not when it resulted in a purchase.
Alleging that the statement was made throughout the class period was
sufficient, and they also pled at least some information about the frequency
with which they saw the allegedly misleading statements. Requiring specific dates was neither
necessary nor realistic.
ConAgra next argued that the complaint wasn’t specific
enough because plaintiffs didn’t allege how they were misled—it didn’t describe
what meaning any plaintiff ascribed to “100% Natural” or state that they
understood it to exclude bioengineered ingredients. But the complaint did detail plaintiffs’
plausible position on why GM products couldn’t be considered “natural,” and
that was enough at this stage. Further
allegations that, had they not been deceived by the labels, they wouldn’t have
purchased the products, were sufficient under Rule 9(b).
The claims under the Magnuson-Moss Warranty Act were
dismissed because the “100% Natural” statement wasn’t an assertion that the
product was defect free, that it would meet a specific level of performance, or
that the seller would take any remedial action, as required to fall within the
scope of the law for a written warranty.
The scope of “implied warranty” was broader, however, and covered
implied warranties arising under state law—thus creating a federal cause of
action for state law implied warranty claims.
“While plaintiffs have not alleged that implied warranties that attached
to Wesson Oils violated the act, the court cannot conclude that such a claim
would be futile, particularly given plaintiffs' allegations concerning implied
warranties elsewhere in the complaint.” Thus, the claim was dismissed with
leave to amend, though the court noted that there was no claim if the amount in
controversy of any individual claim was less than $25.
Nebraska Consumer Protection Act: ConAgra argued that the
act didn’t apply to regulated industries, citing a provision that states that
“the Consumer Protection Act shall not apply to actions or transactions
otherwise permitted, prohibited, or regulated under laws administered by the
Director of Insurance, the Public Service Commission, the Federal Energy
Regulatory Commission, or any other regulatory body or officer acting under
statutory authority of this state or the United States.” The question isn’t whether the defendant is
generally regulated (everyone is), but whether the challenged practice is
regulated. Here, the labeling and ads
were already regulated by the FDA, which bars labeling that’s “false or
misleading in any particular.” In fact,
the FDA has regulated the use of “natural” by sending a warning letter to a
company that branded its bagel product as “All Natural.” (As the recent ABA PAL teleconference I wrote briefly about explained, this is ridiculous: the FDA has done everything it can not to regulate "natural.") The exception to the Nebraska statute was
broader than federal preemption, so though the claim was not preempted it was
still excepted from the Nebraska CPA.
Nebraska UDTPA: the law only protects individuals “likely to
be damaged by a deceptive trade practice of another,” so it doesn’t cover past
damage. These plaintiffs won’t suffer
future damage because they’re now aware of the alleged misrepresentation, so
the claim was dismissed with prejudice.
(Jam tomorrow, and jam yesterday, but never jam today.)
As for the remaining state claims, ConAgra raised various
individual deficiencies. It argued that
the New Jersey and Oregon consumer protection claims failed to allege the
requisite “ascertainable loss.” The
allegation that plaintiffs wouldn’t have bought Wesson Oils at all, or wouldn’t
have paid as much for them, was insufficient under New Jersey law because it
didn’t set out the difference in value between what was promised and what was
received. Absent any specific
information concerning the price of the products or the price of any comparable
products, allegations of ascertainable loss were conclusory statements that were
insufficient to withstand a motion to dismiss.
Lee v. Carter–Reed Co., L.L.C., 203 N.J. 496 (2010), was not to the
contrary; it found ascertainable loss when the allegation was that defendant’s
product was worthless, making the ascertainable loss the total value of the
product.
Oregon has tended to require less rigorous pleading of
ascertainable loss; the state Supreme Court sustained a claim based on the fact
that a plaintiff paid a stated price for a tent advertised with specific
features that it didn’t have; the ascertainable loss was the difference between
the price paid and the value received, and the court was willing to infer it
though the price of a tent with the actual features wasn’t in evidence. So, under Oregon law, allegations that
plaintiffs wouldn’t have bought the product or would have paid less had they
known the truth were sufficient to survive a motion to dismiss.
ConAgra then argued that reliance was required in at least
California, Oregon, South Dakota, Texas, and Wyoming, and that plaintiffs had
insufficiently alleged how they were deceived, what they believed the
challenged statement meant or why it mattered to them. The court disagreed: the complaint alleged
what plaintiffs believed “100% Natural” meant and detailed why GMOs aren’t
natural. Coupled with the explicit allegation that they wouldn’t have bought
the oils for the price paid or at all if they’d known the truth, plaintiffs
adequately alleged reliance.
ConAgra argued that California, Massachusetts, Texas and
Wyoming require that plaintiffs give a defendant notice of their intent to sue
before they commence an action.
Plaintiffs alleged that they gave notice “to the extent required,” which
would ordinarily count as an insufficient bare assertion, but Rule 9(c)
provides that, “[i]n pleading conditions precedent, it suffices to allege
generally that all conditions precedent have occurred or been performed.” So the motion to dismiss was denied. The court noted, however, that ConAgra
attached the notices it claimed to have received, and they were just under
California and Massachusetts law.
Plaintiffs argued that ConAgra had been on notice for nearly a year
because of their “plain English request for nationwide relief,” but the court
wasn’t convinced that these notices were sufficient to put ConAgra on notice of
potential claims under other state statutes.
As for ConAgra’s argument that notice to the AGs of New Jersey, Oregon,
and Washington was required, nothing in those laws required presuit notice, so
plaintiffs were simply directed to provide such notice if they hadn’t already
done so.
ConAgra then argued that plaintiffs’ claims over a four-year
period contradicted with shorter limitations periods on some states, such as
Ohio (2) and New York (3). But the
allegations from those states’ plaintiffs indicated that they bought Wesson
oils within those periods, and if there were ultimately certified classes their
definitions could be modified.
Similar conclusions followed on various other claims; claims
for implied warranty were dismissed as to states that required privity.
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