Italy's #1 Brand of Pasta plausibly communicates geographic origin despite Barilla's argument it's just a TM

Sinatro v. Barilla America, Inc., --- F.Supp.3d ----, 2022 WL 10128276, No. 22-cv-03460-DMR (N.D. Cal. Oct. 17, 2022)

Along with the headline-worthy nature of the claim (“ITALY’S #1 BRAND OF PASTA” plausibly falsely communicates Italian origin), the decision contains an extended discussion of judicial notice on a motion to dismiss v. incorporation of documents into the complaint by reference, both often significant in false advertising cases.

Barilla is now headquartered in Illinois, but originated as a bread and pasta shop in Parma, Italy in the nineteenth century. Plaintiffs alleged that “authentic Italian products, including pastas, hold a certain prestige and [are] generally viewed as a higher quality product,” and that “the general ‘Italianness’ of a product influences consumers[’] overall evaluation of a product” and willingness to pay a price premium. Indeed, “Italian pasta is one of the best and most sought after products in the global market,” and “Italian durum wheat is among some of the ‘best varieties[’]” of wheat. But, because, Italy’s production of durum wheat does not meet worldwide demand, Barilla allegedly “scrambled to manufacture, market, and sell purportedly authentic ‘Italian-made’ pastas, using durum wheat that is not sourced in Italy, in an effort to gain market share and increase sales.”

Barilla allegedly reinforces its representation about the origin of the products by replicating the green, white, and red colors of Italy’s flag surrounding the “Italy’s #1” representation, when the products are manufactured in Barilla’s plants in Iowa and New York using ingredients sourced from countries other than Italy. Barilla’s Italianate campaign allegedly included websites, a Barilla Historical Archive, a Barilla Pasta Museum, and Barilla Academy, which Plaintiffs allege were “all designed to promote the brand and company’s Italian identity” and “convince consumers that Barilla® brand pastas ... come from Italian ingredients, [are] processed and manufactured in Italian factories, and then exported.”

Plaintiffs alleged that there was no “clear, unambiguous, and conspicuously displayed statement, reasonably proximate to the Challenged Representation, that reasonable consumers are likely to notice, read, and understand to mean that ... the Challenged Representation is indeed false as the Products’ ingredients are not sourced in Italy and the Products themselves are not assembled or manufactured in Italy.” Plaintiffs brought the usual California claims.

Barilla asked the court to take judicial notice of front and side-nutrition labels for Barilla-brand pastas as well as documents related to Barilla’s trademark, “Italy’s #1 Brand of Pasta.” Judicial notice deals with essentially uncontrovertible facts, while incorporation by reference is “a judicially-created doctrine that treats certain documents as though they are part of the complaint itself.” This is to prevent “plaintiffs from selecting only portions of documents that support their claims, while omitting portions that weaken—or doom—their claims.” Incorporation by reference is appropriate “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff’s claim.” But if a document “merely creates a defense to the well-pled allegations in the complaint, then that document did not necessarily form the basis of the complaint.” Further, “the mere mention of the existence of a document is insufficient to incorporate the contents of a document.” So, “while a court “may assume [an incorporated document’s] contents are true for purposes of a motion to dismiss under Rule 12(b)(6) ... it is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint.”

The court declined to take judicial notice of the submitted image exhibits, which were presented as being taken from the same website from which plaintiffs got their screenshots, but which were blown up/annotated, and the text on the images of the packages was sometimes illegible. Nor would the court incorporate them by reference, given the parties’ dispute about whether these were good enough copies.

Barilla didn’t explain why excerpts of the file history for the “Italy’s #1 Brand of Pasta” registration were relevant to plaintiffs’ claims for false, misleading, and deceptive marketing practices, so the request for judicial notice of those excerpts was moot.

Barilla argued that plaintiffs lacked standing to seek damages/restitution because they didn’t plausibly allege they would’ve purchased a cheaper alternative or that Barilla would have charged less without the representations at issue. That flatly contradicted the allegations of the complaint, which expressly alleged that plaintiffs “would not have purchased the Product[s], or would not have overpaid a premium for the Product[s’] purported Italian origin, had [they] known that the Challenged Representation was false” and the products were actually made in the United States, using ingredients from countries other than Italy. A “quintessential injury-in-fact” can occur when a plaintiff alleges that they “spent money that, absent defendants’ actions, they would not have spent.”

Standing for injunctive relief: Plaintiffs alleged that they have “no way of determining whether the Challenged Representation on the Products is true,” and that Plaintiffs are “unable to rely on the truth of the Challenged Representation on the Products’ labels.” But they now know that the products are made in the US. The Ninth Circuit allows standing for injunctive relief where there’s a plausible threat of future harm from desire to purchase the product plus inability to rely on the advertising or labeling. But whether disposable wipes are actually “flushable”—the situation that prompted this ruling—is something that is hard for consumers to know, unlike national origin. And plaintiffs’ allegation that they’d be interested in buying the products if they were actually produced in Italy was insufficient “because it is implausible to expect such facts to come to pass.”

Barilla also challenged whether there was causation for Article III purposes, but the court rejected its argument that plaintiffs needed to do more than allege that they purchased the products and/or paid a premium for the products due to the challenged representation to establish causation. It was also premature to dismiss the nationwide class allegations (unjust enrichment/common law claims) at the pleading stage.

Standing for unpurchased products: The general rule is that “a plaintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar.” Here, plaintiffs challenged “the same basic mislabeling practice” across the Barilla products named in the complaint, including those that they purchased and those that they did not. They alleged that all of the products at issue used the same alleged misrepresentations on the primary display panel; are sold under the same brand name; and are dry pastas that are made from largely the same ingredients or types of ingredients, “milled in the same or similar manner, and manufactured into the finished Products in the same or similar manner.”

Could “ITALY’S #1 BRAND OF PASTA” mislead reasonable consumers? Barilla argued that this was its trademark and served to indicate producer source, not geographic source. Other courts have held that “[t]he mere use of a geographic reference, including a reference to the company’s historical origin, does not convey a representation about a product’s current origin.” Barilla argued that it wasn’t misleading to invoke the company’s “Italian roots.”

Nope. That was a factual issue. Plaintiffs plausibly alleged that the words, in combination with the use of Italian colors and a broader Italianate marketing campaign, deceived consumers about present origins. Prior cases involved labels that “did not explicitly connect their origin to the present day” or “exist against the backdrop of a long-standing marketing strategy expressly connected to a particular geographic location.”

Barilla argued that the products at issue “are conspicuously marked ‘Made in the USA’ with the location of Barilla’s headquarters in Illinois.” But reasonable consumers should not be “expected to look beyond misleading representations on the front of the box to discover the truth ... in small print on the side of the box.”

Lanham Act preemption: Barilla argued that its mark was incontestable under the Lanham Act and that the lawsuit here was “an end-run to attempt to cancel the Registered Trademark and must be dismissed under the doctrine of federal preemption.” “Barilla offers no authority for this argument and minimal analysis. The court cannot analyze an argument that counsel fails to develop.” Hard to imagine this working with more development, insofar as incontestability is no barrier to actual cancellation for use to deceive.

Ability to seek equitable relief under Sonner: The complaint alleged that “no adequate remedy at law exists” in light of varying statutes of limitation, since the limitations period for UCL claims is four years, which is one year longer than the statutes of limitation for the FAL and CLRA. Therefore, they argued, putative class members who purchased products more than three years prior to the filing of the complaint would be barred from recovery if they were not permitted to obtain equitable relief under the UCL.

 The court here agreed with the reasoning of courts holding that Sonner does not impose strict requirements at the pleading stage, because plaintiffs “may allege claims in the alternative at the pleading stage,” and because plaintiffs pled that equitable relief would be the only available remedy for certain timespans.