Kellogg's un-FDAMA-approved health claim was "unlawful" under UCL

Hadley v. Kellogg Sales Co., 2019 WL 3804661, No. 16-CV-04955-LHK (N.D. Cal. Aug. 13, 2019)

An important reminder that California’s UCL makes “unlawful” conduct a violation even without separate consumer deception (although consumer belief may be important for damages causation).  Hadley won partial summary judgment on UCL claims against certain Kellogg advertising that its cereal products supported heart health.  First, the court had previously ruled that preemption hadn’t been shown to apply to the labeling statements “Heart Healthy” or “+ Heart Health +” and declined to revisit the matter now.  (Among other things, Kellogg filed an answer to the operative amended complaint 149 days late without seeking leave to do so. Discovery had closed and the plaintiff had made a number of strategic decisions about what claims to pursue, and “Kellogg effectively asks the Court to reward Kellogg for not citing this regulation in three years of litigation in six versions of Kellogg’s preemption defense. In this Court’s []view, rewarding Kellogg for effectively sandbagging Plaintiff would be clearly erroneous and a manifest injustice.” FWIW, the court didn’t like the “unwieldy” number of products/claims challenged by the plaintiff either.)

Kellogg did succeed in avoiding punitive damages under the CLRA, which allows them upon “clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” Hadley’s theory was that “Kellogg knew long before consumers of the dangers of added sugar consumption, knew consumers were ignorant of those dangers, and intentionally obscured those dangers, misleading consumers through both affirmative misrepresentations and deceptive omissions, encouraging Class Members to consume its products, putting their health at risk in pursuit of profit.” But the FDA has taken the position that “inadequate evidence exists to support the direct contribution of added sugars to obesity or heart disease.” Hadley’s own expert admitted that he couldn’t find one study that finds that cereal consumption increases the risk of coronary heart disease, diabetes, or obesity. There wasn’t a triable issue of whether Kellogg met the high standard for punitive damages here.

Hadley sought summary judgment on the argument that two statements: (1) “+ Heart Health + / Kellogg’s Raisin Bran / With crispy bran flakes made from whole grain wheat, all three varieties of Kellogg’s Raisin Bran are good sources of fiber” and (2) “Heart Healthy / Whole grains can help support a healthy lifestyle” were unlawful under the UCL. The UCL borrows other statutes and regulations for unlawfulness. Federal regulations (which have been adopted as California law) govern health claims on food, defining a health claim as “any claim made on the label or in the labeling of a food...that expressly or by implication,...characterizes the relationship of any substance to a disease or health-related condition.” The regulations specify that “[n]o expressed or implied health claim may be made on the label or in the labeling for a food,” unless “[t]he claim is specifically provided for …”; the linking of “[d]ietary fiber and cardiovascular disease” is specifically listed as an unauthorized claim.

Statement 1 (+ Heart Health +/good source of fiber): Kellogg argued that this was two separate claims, each “expressly authorized by the FDA regulations” and that they weren’t required to be separated by any given distance.  Hadley responded that there is a separation requirement because the regulations bar making a direct link between cardiovascular health and fiber. The regs expressly prohibit health claims associating dietary fiber with heart disease and don’t contain an exception for “when the reference to dietary fiber, considered alone, is an otherwise authorized nutrient content claim.”  The court agreed.

Statement 2: “Heart Healthy / Whole grains can help support a healthy lifestyle.”  This statement links whole grains and cardiovascular disease and was not specifically authorized by any regulation, in violation of the statutory/regulatory scheme. Kellogg conceded that “the FDA has not promulgated a formal regulation authorizing food manufacturers to associate consumption of whole grains with cardiovascular disease” but argued that Statement 2 should be considered authorized because it was similar to two claims that the FDA approved via the streamlined process outlined in the Food & Drug Administration Modernization Act of 1997 (FDAMA).

The court disagreed. The FDAMA “provides an alternative avenue for obtaining approval of health claims that are not specifically authorized by FDA regulations,” where (i) “a scientific body” must have published an “authoritative statement” “about the relationship between a nutrient and a disease or health-related condition;” (ii) a manufacturer, “at least 120 days” before using a health claim, submits to the FDA “the exact words used in the claim,” as well as support for its validity; (iii) “the claim and the food must be in compliance” with other requirements; and (iv) the claim must be “stated in a manner so that the claim is an accurate representation of the authoritative statement,” and “so that the claim enables the public to comprehend the information provided in the claim and to understand the relative significance of such information in the context of a total daily diet.”

Under FDAMA, General Mills in 1999 submitted the statement: “[d]iets rich in whole grain foods and other plant foods and low in total fat, saturated fat, and cholesterol, may help reduce the risk of heart disease and certain cancers.” Kraft in 2003 submitted: “[d]iets rich in whole grain foods and other plant foods, and low in saturated fat and cholesterol, may help reduce the risk of heart disease.” By explicit statutory language, FDAMA requires submission of the “exact words” to be used; Statement 2 didn’t contain these exact words.  (And this case is why: preauthorization would be almost meaningless if the manufacturer could just get in the general target area and claim that it got close enough to be deemed authorized.)  It was not enough to argue that, when “read alongside the FDA-compliant disclaimer language,” the “message is substantively identical to an approved FDAMA claim.” (An asterisk referred to fine print: “[w]hile many factors affect heart disease, diets low in saturated fats and cholesterol may reduce the risk of heart disease.”)  Even assuming that it was ok to look to the fine print, that still wasn’t the exact words. Indeed, the asterisked statement “may reduce the risk of heart disease” was different from “may help reduce the risk of heart disease”; the former was simply not an approved statement, implicating the requirement that the manufacturer must submit “a balanced representation of the scientific literature relating to the relationship between a nutrient and a disease or health-related condition to which the claim refers.” Relatedly, Kellogg failed to cite any authority that it could rely on a FDAMA claim submitted by different manufacturers regarding different products and different product claims.

Kellogg argued that, regardless, there was no evidence that its statements were “likely to deceive reasonable consumers or that Kellogg acted with deceptive intent.” That’s not the law. The Ninth Circuit has explicitly held that the “FDA regulations include no requirement that the public be likely to experience deception,” and thus, the “reasonable consumer test” is not an element of a violation of FDA regulations. (Of course, reliance will also be an issue in assessing damages, so the reasonable consumer is not gone from the case.)

The court also denied Kellogg’s motion to strike the testimony of Bruce Silverman about consumer behavior and the challenged claims because he didn’t conduct a consumer survey. But his opinion could be based on his “many years of marketing experience and his review of Kellogg’s own internal consumer research and other documents.” In California state law cases, “surveys and expert testimony regarding consumer expectations are not required.”  Kellogg’s competing expert did do a survey, and that would also come in because the surveys were relevant to assessing materiality. Surveys are “typically ‘adequate evidence’ of whether consumers were deceived or injured by an advertisement.”