Friday, September 10, 2021

slack fill and "healthy" claims unite in one case

Stewart v. Kodiak Cakes, LLC, 2021 WL 1698695, No. 19-cv-2454-MMA (MSB) (S.D. Cal. Apr. 29, 2021)

Plaintiffs alleged that Kodiak was liable for “(1) non-functional slack fill and (2) deceptive marketing practices” for its pancake and waffle mixes.

Defendant misleadingly labels and advertises its products as having “no preservatives” as well as being “free of artificial additives,” “non-GMO,” “healthy,” and “protein-packed.”

After deciding that it would consider marketing material incorporated by reference into the complaint and dismissing nationwide/out-of-state class claims, the court turned to the request for injunctive relief. Here, plaintiffs mostly lacked standing because they could tell from the box whether the slack fill amount/quantity or box size had changed, so they wouldn’t be fooled again by the inability to rely on the package. As for the allegedly deceptive marketing, they could check the ingredients to see if the products still contain preservatives; artificial additives; unhealthy levels of fat, cholesterol, sugar, and vitamins; or insufficient protein. However, they did have a continuing injury of being unable to rely upon “non-GMO” marketing statements in deciding whether to buy the product in the future.

For representations not made on the product packaging, most plaintiffs didn’t sufficiently allege reliance, though one plaintiff did plausibly plead reliance on the “healthy” statement on the online store.

The parties argued over whether a reasonable consumer could rely on the size of a box instead of weight, price per ounce, serving sizes, and final product output listed on the box, especially if they were buying online. Plaintiffs pointed out that Kodiak didn’t argue that its slack fill was functional and argued that a baking mix that requires cooking is more susceptible to deception than other things. The complaint included a picture comparing the opaque exterior box next to a clear interior sealed bag containing the product mix—and using a ruler to show the difference. The exterior box was roughly nine inches tall, the interior bag was about eight-and-a-half inches tall, and the content of the bag was under four inches tall. They alleged that competitors sell products with “significantly more product” than Defendant, which “lead[s] consumers to the reasonable assumption that [Defendant’s products] contain the same amount of mix.” For example, one Kodiak package contains 12.7 ounces of product while a similarly sized competing product contains 32 ounces of products.

Courts have divided on similar slack fill claims. Though many have found that disclosure of number of servings defeats deception, others have reasoned that, e.g.,

a reasonable consumer is not necessarily aware of a product’s weight or volume and how that weight or volume correlates to the product’s size. In other words, the fact that the Products’ packaging accurately indicated that a consumer would receive 141 grams or 5 ounces of candy does not, on its own, indicate to a reasonable consumer that the Products’ box may not be full of candy and that, instead, 35.7% of the box is empty. Rather, a reasonable consumer may believe that 141 grams or five ounces of candy is equivalent to an amount approximately the size of the Products’ box.

The underlying question is something like: Do reasonable consumers know “how much” five ounces really is, in the abstract, if they don’t have something like “X Oreos” to compare it to?

The court here concluded: “Substantial, nonfunctional empty space may be a factor that could plausibly mislead a reasonable consumer.” Further:

The reasonable consumer does not don Sherlock Holmes garb to scrutinize an entire aisle filled with shelves of a various pancakes by comparing the exact weight of each box’s content with the price across a dozen brands or shaking and manipulating each box to detect the nature of the hidden culinary treasure. Although consumers take into consideration certain labels and information provided on the packaging, consumers plausibly do not perform intense word-by-word detective work for each product they toss in their shopping cart. To some degree, “consumers may reasonably rely on the size of the packaging and believe that it accurately reflects the amount she is purchasing.”

Still, reasonable consumers also consult serving size and product yield information.

So what to do? Baking mix wasn’t part of a high-end market where large and weighty packages are expected, and plaintiffs’ allegations suggested that empty space in pancake packaging is not the market norm. And while some of the labels stated the final product yield, “other labels only provide serving size in cylindrical cups and list an approximate number of those servings per container.” At this stage, it was plausible that “the reasonable consumer is unlikely to convert cylindrical cups plus other ingredients into the approximate product yield of the finished pancakes, waffles, or other baked goods.”

What about online purchases? This argument failed because the slack fill allegedly violated the California Fair Packaging and Labeling Act, and thus formed the basis for unlawfulness UCL violations, and because, even online, consumers could plausibly rely on the online product’s picture—without a measure of reference—to assume that the container’s size bears some relation to amount of its contents. As to online purchases, the CFPLA provides that there is no nonfunctional slack fill where “[t]he mode of commerce does not allow the consumer to view or handle the physical container or product.” But it also says that, if it doesn’t impose the same requirements as the relevant section of the FDCA/its regulations governing slack fill, then the federal requirements are incorporated instead. The federal rules don’t distinguish between modes of commerce, so the CFPLA doesn’t either.

The court also rejected Kodiak’s argument that the CLRA claim had to be dismissed as to the slack fill theory because the CLRA requires a representation and slack fill is not a representation. “Construing the CLRA liberally as required by statute, the Court finds that exaggerated box size and slack fill allegations can form the basis for a CLRA claim.”

Thus, the result was split: plaintiffs plausibly alleged deception where the packaging didn’t provide information about final output, but didn’t plausibly allege deception where it did.

Likewise, various ingredient claims survived, though the court was skeptical “how consumers of baking products would be misled by the presence of [allegedly artificial additive or preservative] leavening agents.” However, plaintiffs didn’t define “non-GMO” or provide further allegations to assess whether the challenged ingredients were plausibly genetically modified or how a reasonable consumer would be misled.

And, in context, “healthy” wasn’t necessarily puffery used to describe a muffin mix, but reasonable consumer wouldn’t be misled by the “Healthy Living on a Budget” blog post that stated, “[b]ut now that the kids are back in school, it’s even more important to have a healthy breakfast every morning.” “The paragraph merely provides generalizations of breakfast and does not mention Defendant’s products.” Likewise, a reasonable person would not find “protein-packed” to be misleading. The grams of protein were listed clearly on the front of the box, and if there were any remaining uncertainty, the nutrition facts label would dispel it (as opposed to correcting a falsehood, which the nutrition facts can’t do).

Did Sonner preclude all equitable claims? Not to the extent that plaintiffs showed future harm; having standing to seek injunctive relief also meant lacking an adequate remedy at law to at least some degree. And, unlike in Sonner, the plaintiffs weren’t “pursuing equitable remedies to the exclusion of a remedy at law,” so the court declined to dismiss the equitable claims at this time.



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