Wednesday, December 12, 2018

Cheezit, the food cops! 2d Circuit reinstates claim over "made with whole grain" where most grain content is white

Mantikas v. Kellogg Co., No. 17-2011 (2d Cir. Dec. 11, 2018)

Plaintiffs bought Cheez-It crackers that were labeled “whole grain” or “made with whole grain.” They alleged violation of New York and California consumer protection laws because such labeling would cause a reasonable consumer to believe that the grain in whole grain Cheez-Its was predominantly whole grain, when, in fact, it was primarily enriched white flour. The district court held that the whole grain labels would not mislead a reasonable consumer, and the court of appeals (in some tension with its recentholding on Trader Joe’s truffle-flavored oil) reversed.

The challenged packages used “WHOLE GRAIN” in large print in the center of the front panel of the box, and “MADE WITH 5G OF WHOLE GRAIN PER SERVING” in small print on the bottom or “MADE WITH WHOLE GRAIN” in large print in the center of the box, with “MADE WITH 8G OF WHOLE GRAIN PER SERVING” in small print on the bottom. Both packages also contained a “Nutrition Facts” panel on the side of the box, which stated in much smaller print that a serving size of the snack was 29 grams and that the first ingredient on the ingredients list (in order of predominance, as required by federal law) was “enriched white flour.” “Whole wheat flour” was either the second or third ingredient.

The district court held that both the “MADE WITH WHOLE GRAIN” and “WHOLE GRAIN” labels would not mislead a reasonable consumer, because both statements were true and were “qualified by further accurate language detailing the number of grams of whole grain per serving.”

False advertising or deceptive business practices under New York or California law requires that the deceptive conduct was “likely to mislead a reasonable consumer acting reasonably under the circumstances.” Context is crucial, including disclaimers and qualifying language. The district court reasoned that “a reasonable consumer would not be misled by a product’s packaging that states the exact amount of the ingredient in question.” But the packaging here allegedly implied that the product was “predominantly, if not entirely, whole grain,” and it wasn’t. This was plausibly misleading because they falsely imply that the grain content was entirely or at least predominantly whole grain.

The ingredient list didn’t help, even though it indicated that a serving size of Cheez-Its was 29 grams and the list of ingredients names “enriched white flour” as the first (and thus predominant) ingredient. The serving size didn’t “adequately dispel the inference communicated by the front of the package that the grain in ‘whole grain’ crackers is predominantly whole grain because it does not tell what part of the 29-gram total weight is grain of any kind.” Plus, adopting the Ninth Circuit’s Williams rule, the court of appeals agreed 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.” The Nutrition Facts panel and ingredients list plausibly contradicted, rather than confirmed, the “whole grain” representations on the front of the box.

Other cases dismissed on the pleadings involved plaintiffs who alleged deception because a product label misled consumers to believe, falsely, that the product contained a significant quantity of a particular ingredient. Here, however, the deceptiveness was the implication that, of the grain content in the product, most or all of it is whole grain, as opposed to less nutritious white flour. In addition, in most of the other cases, “plaintiffs alleged they were misled about the quantity of an ingredient that obviously was not the products’ primary ingredient.” No reasonable consumer would think that crackers “made with real vegetables” were made primarily with fresh vegetables.  Here, “reasonable consumers are likely to understand that crackers are typically made predominantly of grain. They look to the bold assertions on the packaging to discern what type of grain.” Thus, the front of the package could have misled them. The court declined to adopt a rule that would allow any “made with X” advertising when the ingredient X was in fact present, no matter how deceptive (e.g., if the crackers here were 99.999% white flour).

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