Monday, March 23, 2020

"no soy protein" claim for dog food plausibly indicates no soy

Rice-Sherman v. Big Heart Pet Brands, Inc., No. 19-cv-03613-WHO, 2020 WL 1245130 (N.D. Cal. Mar. 16, 2020)

Plaintiffs alleged that Big Heart falsely markets its Grain Free Easy to Digest Salmon Sweet Potato & Pumpkin Recipe Dog Food as “Grain Free,” and as containing “No Corn” and “No Soy Protein.” Most of the claim survived, though claims for injunctive/equitable relief and punitive damages survived. Of note: “no soy protein” is plausibly understood as meaning “no soy.”

Purchasers of such products allegedly “pay a premium in order to alleviate their pets’ allergies and provide various health benefits associated with a grain-free diet.” Plaintiffs allegedly would not have purchased the Product if the actual ingredient list had been fully disclosed. According to plaintiffs, “independent testing of Nature’s Recipe Food confirms that these representations are false because “[it] does, in fact, contain significant amounts of both corn and soy protein.” This testing was allegedly consistent with numerous academic studies that have found companies in the pet-food industry have inaccurate product labels, non-conforming ingredients, and cross-contamination. Some of the named plaintiffs also alleged that their dogs began displaying allergy symptoms after eating the product, incurring hundreds of dollars in veterinarian costs.

Big Heart argued that plaintiffs lack Article III standing because they didn’t specifically allege how, where, and why the “independent testing” was performed, and whether each specific Nature’s Recipe product purchased by each named plaintiff was tested. Those weren’t necessary for Article III standing, which was satisfied by allegations that they “spent money that, absent defendants’ actions, they would not have spent.” While Big Heart cited Wallace v. ConAgra Foods, Inc., 747 F.3d 1025 (8th Cir. 2014), for the proposition that plaintiffs are required to specifically allege that the particular product they bought contained the undisclosed ingredients, that’s not the law in the Ninth Circuit. As another court said, “if a customer has paid a premium for an assurance that a product meets certain standards, and the assurance turns out to be meaningless, the premium that the customer has paid is an actual, personal, particularized injury that is cognizable under Article III.”

Nor were plaintiffs required to allege that independent testing was done on their bags. In other cases finding insufficient allegations, the alleged contamination was sporadic and plaintiffs failed to allege that “all or even most” of the accused products were falsely advertised; therefore they were required to allege that the particular products they purchased were part of a subset of accused products that were falsely advertised. In the absence of such allegations, their claims were too speculative.  Here, however, plaintiffs focused on a particular product and argued that it was falsely advertised because it did, in fact, contain “significant amounts of both corn and soy protein.” Plaintiffs didn’t have to use the magic word “all,” given a fair reading of the complaint. In assessing standing on a motion to dismiss, the court must “presume that [ ] general allegations,” like the ones alleged here, “embrace those specific facts that are necessary to support the claim.”

Failure to state a claim: The complaint satisfied Rule 9(b). It alleged when and where each plaintiff bought the products; described the “Grain Free,” “No Corn,” and “No Soy Protein” representations on the Product packages which they relied on; described and included photographs of the false or misleading information on the packages and on Big Heart’s website; and alleged that the claims are false because independent testing revealed that the Products in fact contain corn and soy. They were not required to “provide definitions of grain, corn, soy, and soy protein or explain the parameters of the alleged independent testing.”  As for definitions, “[t]he relevant question is not what those terms mean, but rather what they mean to reasonable consumers, which cannot be resolved on a motion to dismiss.” Plaintiffs plausibly alleged that reasonable consumers would consider the representations “No Corn” and “No Soy Protein” to mean that the Product is free of corn and soy.  Big Heart alleged that there was a gap between “soy” and “soy protein,” but the court found that “hardly a logical gap.” Big Heart also argued over whether corn is a grain, but even if it isn’t, plaintiffs also alleged an explicit “No Corn” claim.

Independent testing: “Big Heart does not need more background information about the independent testing at the pleading stage in order to defend against plaintiffs’ claims.” Its results are accepted as true at the pleading stage.

As for the specific California claims, the arguments were largely repetitive of those rejected on 9(b). “These labels are not as ambiguous as such labels as ‘all natural’ or ‘healthy’; even if they were, the question of whether a reasonable consumer would likely be deceived is a factual dispute that cannot be resolved at the motion to dismiss stage.” Plaintiffs weren’t required to allege “that the corn or soy at the level detected would cause a health issue or nutritional deficiency.” They specifically alleged materiality, and also that Big Heart knew or had reason to know that consumers are likely to regard the matter as important given that they allege that Big Heart touts the “Benefits of Grain Free” on its website.

Warranty claims also survived. For implied warranty, plaintiffs used two theories: (1) there is a general warranty in all sales contracts that the product is fit for the ordinary purpose for which such good is used; and (2) the product does not conform to the promises or affirmations of fact made on the container or label.  Plaintiffs plausibly alleged (1) by alleging that Nature’s Recipe Food was specifically marketed for dogs with grain allergies, and that because it contains corn and soy it causes dogs to suffer allergic reactions and therefore is not fit for its ordinary purpose. And the court didn’t require privity for either theory.

Injunctive relief: In the Ninth Circuit, “a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase, because the consumer may suffer an ‘actual and imminent, not conjectural or hypothetical’ threat of future harm.” This includes cases where “the threat of future harm may be the consumer’s plausible allegations that she will be unable to rely on the product’s advertising or labeling in the future, and so will not purchase the product although she would like to,” and where “the threat of future harm may be the consumer’s plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved.” But plaintiffs didn’t make those allegations here.

Equitable relief under the UCL, FAL, and CLRA: only available where there were no damages; the complaint didn’t make clear whether the claims for equitable relief and damages are based on the same theory (false advertising) or on separate distinct theories. Motion to dismiss granted (with leave to amend, as above).

Punitive damages: Not recoverable under the UCL or FAL, or for breach of express warranty under the California Commercial Code. A consumer seeking damages under the CLRA may recover punitive damages, but plaintiffs failed to allege the necessary elements: “both ‘oppression, fraud, or malice’ and that the conduct at issue was performed or ratified by an ‘officer, director, or managing agent.”

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