It's not butter, it's Parkay ... but maybe the butter labeling rules apply

Allen v. ConAgra Foods, Inc., No. 13–cv–01279, 2013 WL 4737421 (N.D. Cal. Sept. 2, 2013)

“Is Parkay Spray more like Pam® or liquid butter? That is the question posed by this consumer fraud action.”  Allen alleged that ConAgra falsely marketed Parkay Spray as “fat free” and “calorie free” even though a 226 gram bottle of the butter-flavored spray contains 93 grams of fat and 832 calories. ConAgra moved to dismiss, arguing that federal regulations entitle food manufacturers to round down the fat and calorie content of their products when a single serving contains less than 0.5 grams of fat and 5 calories. Allen rejoined that ConAgra used artificially—and unlawfully—small serving sizes intended for non-stick cooking sprays such as Pam (one spray or .2 grams for cooking and five sprays or 1 gram for topping) in order to round its sprayable butter down to zero.  The complaint also alleged that the Parkay Spray bottle listed soybean oil and buttermilk as ingredients, without including an asterisk and disclosing the presence of fat in those ingredients, in violation of FDA regulations.

Allen alleged that ConAgra knew or should have known that its labeling was misleading, citing internet complaints that the label was deceptive, e.g.: “‘[t]his is exactly what the marketing of this product was supposed to do—make you believe ... that we are consuming less calories than we actually are.’”  Allen alleged that she bought Parkay Spray in reliance on the statements on the label and in ConAgra’s marketing, and paid a premium she wouldn’t have paid if she’d known the truth.

Allen conceded that FDA regulations controlled, but argued that ConAgra was in violation of them. The core of the parties’ dispute was the serving size.  ConAgra argued that its serving sizes were consistent with the FDA serving size table for adults, which sets forth the “reference amounts customarily consumed per eating occasion” from which the other labeling and content claim regulations flow.  Under the heading “Fats and Oils,” the reference amount for “spray types” is 0.25 grams.  That serving size renders the amount of fat in one and five sprays below .5 grams and therefore requires ConAgra to round the fat content down to zero and allows it to claim the spray is “fat free.”  The serving size had similar effects on the calorie content and rules.

Allen argued that the proper reference amount was instead provided by the “butter, margarine, oil, shortening” category, for which the reference amount is one tablespoon.  If that were the case, ConAgra wouldn’t be labeling Parkay Spray properly.

The court found that Allen adequately alleged that Parkay Spray was a liquid butter substitute.  ConAgra circularly argued that Parkay Spray belonged under “spray type fats and oils” because it was a spray, and because the FDCA defines butter as containing milk, cream, or both.  But the reference table category for butter also included margarine, oil, and shortening along with it, and also provided that the reference amount for imitation and substitute products “shall be the same as for the food for which it is offered as a substitute.” Imitation butter therefore belonged in the same reference amount category as butter. 

ConAgra argued that the reference amount for spray type fats and oils was more specific, thus trumped the more general reference amounts. But that only applies when regulations are in conflict, which wasn’t the case here.  Even if there were a conflict, nothing indicated that the “spray type” category was more specific than any other.  The court noted that an 8-ounce Parkay Spray bottle claimed to contain 1130 single-spray servings, which the court found difficult to imagine.  Allen also alleged that Parkay Spray wasn’t typically dispensed in a single spray.  “Relying on ConAgra’s own serving size definitions would defeat the purpose of the regulations’ insistence on objective and uniform food labeling.”  Also, the nonbinding label statement guidance for spray type fats and oils is expressed as servings per second of spraying; ConAgra argued that this was inapplicable because Parkay Spray is a manual pump, not an aerosol spray—but Allen plausibly alleged that the reason the guidance didn’t apply was not because Parkay uses a pump, but because Parkay is labeled and used as a topping and butter substitute and not as a cooking spray.

Allen alleged substantial support for the contention that Parkay Spray should be categorized with other imitation butter products.  The product label and website advertised it as a substitute for butter that shares butter’s “Fresh and Creamy Taste” without the negative health consequences. “The front of the Parkay Spray bottle is an image of corn on the cob. The serving sizes on the bottle are for cooking and for topping.”  The website advertised Parkay “Spreads” together, including the spray: “Get the buttery taste of Parkay on all your favorite foods with zero calories per serving! It’s the guilt-free way to top vegetables, potatoes, poultry, and so much more. Plus, Parkay Spray has 0g of trans fat per serving.”

These claims were directly related to the FDA’s statement that “the serving size [ ] is an amount customarily consumed and which is expressed in a common household measure that is appropriate to the food.” Allen alleged that Parkay Spray is intended to be used as butter, and that customers use it that way; if this was true, then the correct reference amount is the reference amount for butter. 

In addition, FDA’s reading of its own rule, entitled to substantial deference, indicated that the spray type category wasn’t meant for products like Parkay Spray.  The FDA’s guide to the NLEA lists  each product category found in the reference amount table followed by each product to which the category applies. The products listed for the “butter, margarine, oil, shortening” category are “All types of butter and margarine (regular, diet, liquid, and whipped); spreads; oils; and shortenings.” The product listing for the “spray types” category reads “Nonstick cooking sprays (e.g., Pam).” A note indicated that each listing covered any form in which the product was found.  This, the court found, supported the conclusion that “[l]iquid butter, and substitute liquid butter, as well as spreads, belong in the butter product category.”

There was no implied preemption because Allen was suing to enforce California law, which is identical to federal law.  “Plaintiff’s allegation that Defendant’s statements violate FDA regulations as written is necessary for her claims to avoid preemption, but not necessary for her to establish the underlying state law causes of action.”  ConAgra’s primary jurisdiction argument also failed.  “Though the question of which reference amount requirement applies to Parkay Spray might narrowly be described as one of first impression, the same could be said of challenges to any food product that is not already explicitly listed in the regulations.”  The issues here could be resolved by applying the regulations straightforwardly.  A stay would do little to enhance uniformity, and would “needlessly frustrate” the states’ historic primacy in regulating health and safety.

The complaint also satisfied Rule 9(b).  ConAgra argued that Allen should have alleged what serving size she claimed as proper or the quantities in which she used the product, but the claim was that, no matter the serving size, or in what quantities she used Parkay Spray, she believed that the product didn’t have fat or calories based on ConAgra’s labeling and marketing.

ConAgra argued that Allen didn’t plead that a reasonable consumer would be fooled.  But the bottle contains 832 calories and claims to have none; the complaint included consumer complaints other than Allen’s own, each evidencing deception. This was enough to plead deceptive conduct, if not to prove it.  The court also declined to dismiss multiple state classes on the pleadings.

Allen’s express warranty claim also survived; cases dismissing Magnuson-Moss Warranty Act and Song-Beverly Consumer Warranty Act claims were inapposite because those laws define express warranties more narrowly than common law breach of warranty.  The allegation that the description of Parkay Spray as “fat free” and “calorie free” was part of the basis of the bargain was sufficient to state a claim for common law breach of warranty.