"smoked Gouda" plausibly communicates production method, not just flavor

Castle v. Kroger Co., --- F.Supp.3d ----, 2022 WL 4776319 (E.D. Wis. Oct. 3, 2022)

The court declined to dismiss some of Castle’s claims based on alleged false advertising of “smoked Gouda” as having actually been smoked, instead of having “smoke flavor” added. Plaintiff alleged reliance on the representations “Smoked Gouda” and “Distinctive, Smoky Flavor” on the front label as a reference to the cheese having been smoked “over hardwoods” and having its taste as a result of “being smoked on hardwoods.” She alleged that “smoke flavor”—“which is smoke condensed into a liquid form”—does not “supply the rich, layered combination of phenols and other odor-active compounds compared to where a food’s taste is derived entirely from being smoked over wood.” Consumer demand for smoked foods has allegedly increased over the past two decades, a trend recognized by the cheese industry. Also, the European Food Safety Authority allegedly found that smoke flavorings in foods “contain compounds at levels which may pose a toxic risk when consumed.”

In enacting regulations for flavoring, the FDA allegedly considered the term “smoked” to be misleading when “true smoke is absorbed in a liquid or other medium, and that medium is added to food to provide a smoke flavor.” In such cases, the front label of the product allegedly should contain the description “with added smoke flavor,” “[with] natural smoke flavor,” “flavor added,” or “smoke flavored.” The FDA allegedly recently warned companies regarding product labeling and smoked ingredients. Under Wisconsin precedent, Wisconsin law adopts FDA definitions and provides a private right of action for a violation of that law (like California does).

Kroger sort of argued preemption, but really that the FDCA doesn’t provide a private right of action. This is true but irrelevant, since plaintiff was using state consumer protection law, which incorporates FDCA standards but is its own separate source of a right of action.

Under Wisconsin law

[n]o person may sell or distribute a consumer commodity in package form unless each package clearly and conspicuously identifies the commodity contained in that package. The declaration shall identify the commodity by its common or usual name, by its legally required name, if any, or by a generic name or other appropriate description that is readily understood by consumers.

How did that apply to “Smoked Gouda”? The court concluded that the common or usual name of the product was “Gouda,” and so there was no violation.

However, Wisconsin law also provides that “[t]he declaration of identity under sub. (1) may not be false, deceptive, or misleading. Ingredients or components that are not present in the commodity in substantial or significantly effective amounts may not be featured in the declaration of identity.” Claims should survive a motion to dismiss “if they have plausibly alleged that the defendants’ front labels likely lead a significant portion of reasonable consumers to falsely believe something that the back labels belie.”

Other courts have found that “smoked” could deceive consumers. Kroger responded that its package was different because it said that the cheese inside has a “distinctive, smoky flavor” and that it has “smoke flavor” added. The front label contain the words “distinctive, smoky flavor,” but that wording didn’t alert the consumer that this distinctive flavor came from an added flavoring, rather than smoking. “A consumer could read the label and conclude that the package contains Gouda that has been smoked and thus has a ‘distinctive, smoky flavor.’” The small-print ingredient list on the back of the package was insufficient. Although another court rejected claims about Strawberry Pop-Tarts related to overstatement of strawberry content, the court here noted that the Pop-Tart package didn’t claim to contain “crushed” strawberries or “fresh-picked” strawberries, or otherwise “give consumers the impression that the filling’s flavor was the result of a process.” By contrast, “smoked” “could refer either to the flavor of the cheese or to a process (one that the plaintiff alleges alters the chemical composition of the cheese itself).” This was a question of fact.

Although the plaintiff adequately pled negligent misrepresentation and fraud, the economic loss doctrine barred her claims, and warranty claims also failed; unjust enrichment was dismissed as duplicative and she lacked standing to seek injunctive relief.