Monday, February 28, 2022

consumer reliance negates puffery so "healthy" could be actionable

Johnson-Jack v. Health-Ade LLC, --- F.Supp.3d ----, 2022 WL 562827, No. 21-cv-07895-LB (N.D. Cal. Feb. 24, 2022)

Plaintiffs brought the usual California claims in this putative class action challenging use of the term “Health-Ade” to market kombucha-inspired beverages, including Health-Ade Kombucha, Health-Ade Plus, Health-Ade Booch Pop, Health-Ade pop, and Health-Ade Mixers. “Health-Ade” allegedly misleadingly implied that the defendant’s products are healthy when they are not because they contain sugar. “Most courts in this district have found that mislabeling claims based on this theory (i.e., that it is deceptive to market products with added sugar as healthy based on studies linking excess sugar consumption to disease) can survive a motion to dismiss and that the term ‘healthy’ is not puffery.” This opinion joined them.

The plaintiffs plausibly alleged that the products were, in fact, unhealthy by citing scientific studies that allegedly link the consumption of sugar-sweetened beverages to negative health outcomes.

As for deceptiveness, the prominent use of the word “health” and the homophonic connection between “ade” and “aid” made it plausible that reasonable consumers would construe “Health-Ade” to mean healthy. “[T]he use of a cross on some of the subject products …, which evokes the Red Cross symbol, also militates in favor of finding that it is plausible that consumers would construe ‘Health-Ade’ to mean healthy.” 

Version of Health-Ade Plus with large yellowish white cross on yellow

Health-Ade plus with red cross on white background

Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019), held — based on dictionary definitions — that the word “diet” when used “in a soft drink’s brand name is understood as a relative claim about the calorie content of that soft drink compared to the same brand’s ‘regular’ (full-caloric) option” and not a promise of weight management. The defendant here argued that dictionary definitions of “ade” and “kombucha” alert reasonable consumers to the presence of sugar. But the issue was not whether the name implied the absence of sugar; the issue was a putatively misleading message of healthfulness. The dictionary definitions did not dispel that. Likewise, as opposed to “100% Manuka Honey” where reasonable consumers know that bees forage, it wasn’t impossible to have a healthy drink, and there was also no basis to hold as a matter of law that reasonable consumers know that beverages with added sugar may be unhealthy.

Was the term “healthy” puffery? Not necessarily, “because consumers rely on it when purchasing food products.” Because the definition of puffery is vague/etc. statements on which reasonable consumers would not rely, “the principal issue when evaluating claimed puffery is whether a consumer would rely on the challenged term. Whether a term is easily defined or measured is secondary and merely informs the reliance analysis.” [In fact, courts go back and forth on this, usually without explaining themselves, which is why this is a plausible statement of the law. If consumers do rely on a claim, then the core justification for calling it puffery disappears—but that may create a falsifiability problem, if the term is in fact vague/has many meanings. But it would be reasonable and perhaps helpful to distinguish vagueness from consumer reliance and deal with vagueness at the falsifiability stage. The embarrassing part of that approach is that we’d have to admit that “reasonable” consumers may well rely on vague claims without thinking them through—the reasonable consumer does not often engage in an extensive exercise of reason for an average claim encountered in the marketplace, given how many such claims there are.]

Prior cases have found that the addition of adverbs and adjectives can turn an actionable objective term like “nutritious” into a non-actionable subjective term like “unbelievably nutritious” because the modifier “unbelievably” makes consumers less likely to rely on those terms. And  the Ninth Circuit has also stated that the term “ ‘nutritious’ ... standing on its own, could arguably constitute puffery, since nutritiousness can be difficult to measure concretely.” But district court cases have found the term non-puffery in specific contexts, especially given the existence of food-labeling regulations, which consumers might use to calibrate their willingness to rely on such statements. And, as in a previous case, “[t]he meaning of the word ‘healthy’ or ‘health’ in this case can be measured against whether or not Defendant’s products are found to be unhealthy based on the scientific studies and evidence provided by Plaintiff.” Thus, “if the plaintiff plausibly alleges the existence of scientific studies showing that the consumption of the subject product is ‘unhealthy,’ then the court cannot find that the term “healthy” is puffery when used to market purportedly unhealthy foods.” The studies “suggest that whether the defendant’s products are healthy or not can be determined according to scientific standards.”

And there was no preemption because the challenged term wasn’t a “health” claim or “nutrient content” claim, which are the relevant types of labeling statements governed by federal law.

Finally, the plaintiffs had standing to seek injunctive relief “because the difficult-to-ascertain nature of the alleged misrepresentation suggests that the plaintiffs will not be able to rely on the labeling statements in the future.” Inability to rely was an ongoing injury.

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