Wednesday, November 02, 2022

Cocoa/cacao? More like tomay-to/tomah-to, court rules

Lee v. Mondelez Int’l, Inc., 2022 WL 16555586, No. 22-cv-1127 (LJL) (S.D.N.Y. Oct. 28, 2022)

Lee sued over Green & Black’s dark chocolate products, which advertise specific percentages of “cacao” on their front label, such as 60%, 70%, and 85% cacao. The front labels also announce that the products are “made with the finest Trinitario cacao beans” or “fine Trinitario cacao beans.” The ingredients list, however, refers to chocolate, chocolate liquor, cocoa butter, or cocoa. Lee argued that cacao, the unprocessed/unroasted form, is more nutritious than cocoa, and so the advertising of “cacao” on the front was false.

The court found that claims under NY’s GBL (and DC’s similar statute) and common-law fraud were not preempted by the FDCA, but that deceptiveness to a reasonable consumer was not plausibly pled.

The court noted that “the FDA often conflates cacao and cocoa,” which meant that it hadn’t specified a standard of identity/ruled on whether there was a difference (helpful to Lee for preemption purposes) but which also reinforced the idea that there was no particular reason to think that consumers would distinguish them either. The FDA’s conflation was “ ‘persuasive evidence of the meaning of the label’ in the cacao context—namely, that the two terms have been treated as interchangeable, and that use of the word ‘cacao’ in lieu of ‘cocoa’ is not misleading or necessarily based on the level of processing.”

More generally, Lee failed to allege that reasonable consumers would think that “cacao” meant unprocessed. In context, the language didn’t imply lack of processing; the use of “made with” rather suggested only that cacao was the source of an essential flavor ingredient. The percentages, in context, clearly conveyed how much of the bars were derived from cacao beans, not the nature of the processing the beans underwent or their nutritional value. “The placement of the percentage reference directly below the representation of ‘Trinitario cacao beans’ thus could only indicate to a reasonable consumer that the ‘x’ percentage of the Product is derived from the Trinitario cacao bean (as opposed to, for example, other ingredients, such as sugar or vanilla extract), not that the cacao remained in its raw unprocessed form.” Even if it was ambiguous, the ingredients list, containing “cocoa,” “chocolate liquor,” and “cocoa butter,” did not contradict but clarified the front label, dispelling any inference of deception, given that those things are all made from cacao products. Thus, there was nothing false about the claims.

Lee argued that reasonable consumers would understand references to percentages to refer to raw cacao, but his cited sources were mostly not about chocolate bars but products sold as powders, and they suggested that “when a manufacturer intends to refer to the cacao that has the health benefits Plaintiff claims he believed the Products to have, it refers to ‘raw cacao,’ or to ‘raw cacao powder’ or to ‘cacao nibs.’” Nor did he allege that his sources were widespread or otherwise connected to the understanding of the reasonable consumer. Two were product ads, one was a recipe directed at “those who cook” [apparently not the general consuming public these days], and only one was even apparently directed to the general public, and advocated the use of cacao powder and not the consumption of chocolate bars.

This conclusion also doomed both falsity and scienter for common law fraud; if the FDA didn’t distinguish, then it would be hard for Mondelez to have the necessary scienter.

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