"All Natural" and other claims survive preemption as to named Frito-Lay products

Wilson v. Frito-Lay North America, Inc., 2013 WL 1320468 (N.D. Cal.)

Plaintiffs bought a variety of Frito-Lay’s food products, specifically Lay's Classic Potato Chips, Lay's Honey Barbeque Potato Chips, Lay's Kettle Cooked Mesquite BBQ Potato Chips, Cheetos Puffs, and Fritos Original Corn Chips.  They alleged that they bought others from Frito-Lay during the class period, but didn’t specify what the products were.  Focusing on the only labels before the court—two versions of a Lay’s Classic Potato Chips bag—the allegations were of false/misleading labeling, specifically (1) as being “All Natural” despite containing artificial or unnatural ingredients, flavoring, coloring, or preservatives; (2) as having “0 Grams Trans Fat” content despite having more than thirteen grams of fat per fifty grams of food product; (3) as having “No MSG” despite containing MSG; (4) as being “low sodium” despite having more than 140 milligrams of sodium per serving size and per fifty grams of food product; (5) as being “healthy despite containing disqualifying nutrient levels”; and (6) as including assertions about other unauthorized health claims.

Plaintiffs alleged that they care about the nutritional content of their food, that they relied on the labeling and other statements in making purchases, and that they wouldn’t have bought Frito-Lay’s products had they known the truth. They brought the usual California claims, including warranty claims.

The court first dismissed the claims against PepsiCo for failure to allege exactly how Frito-Lay’s parent company was liable for Frito-Lay’s activity. Then it declined to resolve Frito-Lay’s standing argument based on the products not specified in the complaint, including “other varieties of potato chips, corn-based snacks like Cheetos and Fritos, and other types of salty snacks.”  The claims as to the unidentified products failed for lack of specificity under Rule 9(b) regardless.  Even though the California consumer protection laws cover likely deception of reasonable consumers, not just fraud, Rule 9(b) applied because the claims “sounded” in fraud. Most of the claims simply failed to provide underlying factual details about the targeted products, ads and websites.  This caused them to flunk Rule 8 too, as to claims about unpurchased or unnamed products.

The court then turned to whether websites mentioned on products constituted “labeling” under the FDCA.  In this case, no.  Labeling is “all labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) accompanying such article.”  Statements not actually printed on a label can be “labeling” if they serve the purpose of labeling, to supplement or explain the product.  Here, plaintiffs claimed that the statement “Visit our website @fritolay.com” in tiny print at the bottom of back product labels make the websites labeling (and thus mislabeling). The court disagreed; none of the website language explained or supplemented the individual named products sufficiently to satisfy the standard for labeling.  The labels told consumers to visit the website, but didn’t say that it would inform them of details of the nutritional information.

The court then rejected Frito-Lay’s preemption arguments as to “0 Grams Trans Fat” and “No MSG.”  As to zero grams trans fat, plaintiffs argued that, though the claim itself was accurate, the labels were unlawful under a regulation stating that whenever an express nutrient content claim is made on a food label, that label must bear further disclosures about ingredients that the FDA has found pose diet-related health risks. Thus, “[i]f a food ... contains more than 13.0 g of fat … then that food must bear a statement disclosing that the nutrient exceeding the specified level is present in the food as follows: … ‘See nutrition information for fat content.’”  Plaintiffs alleged that Frito-Lay unlawfully made “0 Grams Trans Fat” claims even though its products contained more than 13 grams of fat.  The label told consumers to “see nutrition facts for saturated fat info,” even though the total fat level is high, thus misdirecting consumers to a low number instead of to the total fat that Frito-Lay was required to disclose. Thus, plaintiffs’ theory was that the “0 Grams Trans Fat” label obligated Frito-Lay to use something like “See nutrition facts for saturated fat and total fat info,” thereby including all of the nutrients that would be required under the FDA’s regulation. The court agreed that this theory was in line with federal law and regulations.

Similarly, the “No MSG” allegations were based on the fact that some of the products—apparently Lay's Honey Barbecue Potato Chips and Lay's Mesquite BBQ Potato Chips—contain ingredients like torula yeast and yeast extract, which are sources of monosodium glutamate (“MSG”) despite not technically being MSG.  Frito-Lay argued that the FDA’s regulation on MSG labeling required that “[a]ny monosodium glutamate used as an ingredient in food shall be declared by its common or usual name ‘monosodium glutamate,’” while “sources of MSG,” like yeast extract, must be labeled according to their common names, like “yeast extract” or “hydrolyzed protein.” However, in November 2012, the FDA issued a clarifying statement: “While FDA requires that these [substances in which MSG naturally occurs] be listed on the ingredient panel, the agency does not require the label to also specify that they naturally contain MSG. However, foods with any ingredient that naturally contains MSG cannot claim ‘No MSG’ or ‘No added MSG’ on their packaging.”  Frito-Lay argued that the statement wasn’t entitled to any deference, but was merely a nonbinding, informal guidance that didn’t purport to interpret any regulation. The court disagreed: the FDA was interpreting its labeling requirements for MSG. When an agency interprets its own ambiguous regulation, even informally, that interpretation controls unless plainly erroneous or inconsistent with the regulation. The regulation was ambiguous. “No MSG” could be allowed in such circumstances if “MSG” only means an individually named ingredient, or it could be barred because the regulations clearly acknowledge that MSG is just one type of free glutamate that also appears under other names.  The court owed the FDA’s statement deference, though it didn’t resolve how, if at all, the statement should apply retroactively to Frito-Lay’s labeling during the class period, before the statement was issued.

The court also found the surviving UCL, FAL, and CLRA claims about the named products sufficient to satisfy Rule 9(b).  Frito-Lay’s arguments that none of the challenged statements were misleading as a matter of law were unconvincing; misleadingness is usually a question of fact.  The challenges to “Made with ALL NATURAL Ingredients” statements were based on the FDA’s interpretation of “natural” as being truthful and not misleading when “nothing artificial or synthetic ... has been included in, or has been added to, a food that would not normally be expected to be in the food.” Plaintiffs alleged that because some the products contained “artificial and unnatural maltodextrin, ascorbic acid[,] citric acid, and caramel color in the products,” “All Natural” was unlawful.

Frito-Lay argued that the full phrase was “Made with ALL NATURAL Ingredients,” and that no reasonable consumer could be misled into thinking that all the ingredients were natural, especially given the nutrition box.  A reasonable consumer, as a matter of law, should “read the statement in that context and sate any further curiosity by reading the nutrition box.”  The Ninth Circuit has already rejected this argument: reasonable consumers aren’t expected to look beyond misleading representations on the front of the box to discover the small-print truth elsewhere.  The “ALL NATURAL” label was ambiguous, because it could suggest either that the product was all natural or that some of its ingredients were.  A reasonable consumer could interpret “all natural” to mean “all natural.”

The “No MSG” claims also survived, since plaintiffs pled they were actionably misbranded; likewise with “0 Grams Trans Fat,” where plaintiffs alleged that they relied on these claims and were harmed because they would not have purchased the product had they known that the products also included levels of ingredients that should have been indicated on the front of the label. Though the court previously dismissed a different plaintiff’s claims about a similar statement on a nutrition bar that wasn’t accompained by any disclosure because “0 Grams Trans Fat” was true, and the distraction the statement posed relative to fat and saturated fat contents constituted neither a false statement nor a misrepresentation.  However, here the court couldn’t conclude as a matter of law that the “0 Grams Trans Fat” wouldn’t be misleading or deceptive, because, accompanied by a disclosure of at least one of the required ingredients, reasonable consumers could think that the statements made accurate claims about all the required ingredients, but they didn’t.

Other claims not based on the named products, which didn’t claim “low in sodium,” “healthy,” etc. were dismissed.  So were the warranty claims: product descriptions like “All Natural” weren’t warranties against defect under Magnuson-Moss, and Song-Beverly doesn’t apply to consumables like Frito-Lay’s products.