Wednesday, October 09, 2013

sugar by any other name unlawful, but not misleading

Morgan v. Wallaby Yogurt Company, Inc., No. 13–cv–00296, 2013 WL 5514563 (N.D. Cal. Oct. 4, 2013)

Another “evaporated cane juice” claim, here for yogurt that used that term in its ingredients list instead of “sugar” or “dried cane syrup.”  The FDA’s standard of identity for yogurt bans addition of any “nutritive carbohydrate sweetener[ ]” other than those explicitly allowed, of which “evaporated cane juice” is not one, though “sugar” is.  Noncompliance with the standard of identity means the product can’t be called yogurt.

The court found that the plaintiffs had standing, that the primary jurisdiction doctrine didn’t apply, that the yogurt claims weren’t preempted, and that plaintiffs weren’t trying to enforce the FDCA directly. 

Turning to the specific requirements of the UCL: plaintiffs failed to state a claim of “fraudulent” conduct because they didn’t explain how or why the term “evaporated cane juice” was likely to mislead consumers, or how they themselves were misled.  They claimed they wouldn’t have bought the products if they’d known the truth, but they bought despite the fact that the sugar content is listed right next to the ingredients list. While the Ninth Circuit said that “reasonable consumers should [ not] be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box,” Williams, “here, the ‘truth’ is literally next to the allegedly misleading representation in the same print size. If a reasonable consumer was concerned about sugar content, he or she can see how much sugar is in a Wallaby product next to the ingredient list.”  The plaintiffs didn’t explain what would be misleading about the term “evaporated cane juice.” 

If their objection was to “added” sugar, that was belied by their own allegations that they didn’t want to buy products with “sugar or dried cane syrup” in them.  They did buy Wallaby’s products despite the clear presence of sugar.  “The plaintiffs’ claims contradict themselves and, thus, do not meet the heightened standard for pleading fraud. If their claim is that they would purchase products containing naturally occurring sugar, but not those with added sugar, they need to allege that with particularity in their complaint.”

However, the plaintiffs did state a claim of “unlawful” conduct.  At this stage, the court agreed that it seemed that the term “evaporated cane juice” couldn’t be used pursuant to the federal common and usual name requirements adopted as California law by the Sherman Law.  Wallaby pointed out that the FDA’s draft guidance disapproving of “evaporated cane juice” was not yet finalized, but the FDA had still expressed its view of federal law.  Even an informal agency interpretation is controlling unless plainly erroneous or inconsistent with the relevant regulation.  Plus, Wallaby’d just finished arguing that the FDA had enormous expertise in support of its primary jurisdiction argument; the FDA’s tentative view should guide judicial interpretations.

They didn’t state a claim of unlawfulness on the theory that the yogurt standard of identity barred the use of “evaporated cane juice,” though, since the standard of identity allowed a number of sweeteners, including sugar, and only explicitly banned “table sirup,” which evaporated cane juice is not—it’s sugar.  “The Standard of Identity for yogurt only regulates what ingredients may be present in yogurt; it does not regulate what those ingredients may be called.”

Plaintiffs also failed to state a claim of unfair conduct. These results deprived plaintiffs of a claim under the CLRA and the FAL, which also use the reasonable consumer standard, so there was no actionable misrepresentation.

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