Monday, January 16, 2023

survey + D's own website plausibly show materiality of presence of even small amounts of phthalates

Stuve v. Kraft Heinz Co., 2023 WL 184235, No. 21-CV-1845 (N.D. Ill. Jan. 12, 2023)

Plaintiffs alleged that Kraft Mac & Cheese deceptively omitted information, misleading purchasers into believing that Kraft Mac & Cheese is free from phthalates—“plasticizing chemicals that, at certain levels, can be dangerous to consume.” Plaintiffs filed this complaint in federal court pursuant to the Class Action Fairness Act of 2005, They alleged violations of multiple state consumer fraud and deceptive business practice laws; unjust enrichment; and breach of warranty. The court dismissed claims for false or misleading statements, breach of implied warranty for all non-Massachusetts plaintiffs, and breach of express warranty, but declined to dismiss claims based on material omissions and unjust enrichment.

“Each day, Kraft sells more than a million boxes of Kraft Mac & Cheese.” The front of the box tells consumers that inside is “The Taste You Love” with “NO Artificial Flavors,” “NO Artificial Preservatives,” and “NO Artificial Dyes.”

However, plaintiffs allege that phthalates “enter food during processing and packaging” and “escape from food contact materials such as processing equipment and food packaging material into the cheese powder.” Phthalates make plastics flexible, but also disrupt endocrines, and plaintiffs alleged that scientific studies have linked excessive consumption of phthalates to adverse health effects including decreased semen quality in men; endometriosis in women; asthma, allergies, and bronchial obstruction in children; and harms to developing fetuses.

In 2017, the Coalition for Safer Food Processing and Packaging, a group of nonprofit health and food safety advocacy organizations, allegedly detected phthalates in nine of the ten tested cheese powder products and found that the phthalate levels in those cheese powders were on average four times higher than in the 15 natural cheeses tested.

Kraft is aware that some consumers are concerned about phthalates. On its website, the first of its published “Frequently Asked Questions” queries, “Should I be concerned about food and phthalates?” Kraft’s response acknowledges that customers have inquired about phthalates in its Mac & Cheese and states, “We take your questions about phthalates and food safety and quality very seriously because we know moms and dads trust Kraft Mac & Cheese as a quality, tasty, and safe food for the family.” The website also seeks to dispel concerns about phthalates in its Mac & Cheese by stating that

[t]he safety of phthalates has been assessed by the US Food and Drug Administration and other authorities, such as the Centers for Disease Control. The trace levels found in the one limited test of mac & cheese are well below any level of concern. Hundreds of servings of mac & cheese would need to be consumed daily over an entire lifetime in order to exceed levels determined as safe.

Plaintiffs, however, alleged that “a Kraft Mac & Cheese packet could indeed constitute a large enough slice of a person’s daily-intake pie chart to warrant a warning label.” Alleging that the effect of phthalates is cumulative, plaintiffs alleged that, even if an amount of phthalates in the product is small in absolute terms, the amount is significant relative to other sources of phthalate exposure, which may move a consumer away from choosing the product in favor of a potentially healthier option.

The FDA has not set a specific threshold for the level of phthalates it allows in food, but permits the use of phthalates in food contact applications, such as processing tools and packaging materials.  The court rejected the argument that FDA’s regulations/lack of regulatios preempted the claims.  “[E]ven if Kraft is correct that FDA regulations must be interpreted as allowance for the presence of some amount of phthalates in consumable food, the FDA regulation would not make it impossible for Kraft to comply with state labeling laws.” Kraft might well be able to win summary judgment on whether the level of phthalates allegedly in a box of Kraft Mac & Cheese even comes close to approaching the amount that the FDA has deemed a “tolerable intake” via oral exposure, but that was a fact issue.

Neither did the NLEA preempt the claims, even though the FDA has issued a regulation exempting manufacturers from the obligation to disclose “[i]ncidental additives that are present in a food at insignificant levels and do not have any technical or functional effect in that food.” “Incidental additives” include “[s]ubstances migrating to food from equipment or packaging or otherwise affecting food” so long as they are “not food additives,” or, if they are food additives, “are used in conformity with regulations established pursuant to section 409 of the act.” The court couldn’t determine whether this exemption applied, because whether phthalates are present only at an “insignificant level” was a question of fact. Plaintiffs expressly contested the meaning of “insignificant level” and alleged that consumers care about the amount of phthalates in Kraft Mac & Cheese even in very small amounts.

Turning to materiality, which is what I find most interesting, the court rejected (at this stage) Kraft’s argument that the amount of phthalates allegedly present in its Mac & Cheese was too miniscule to be material to reasonable consumers. Plaintiffs plausibly alleged

that reasonable consumers do care about the presence of phthalates in their food, even in small amounts. As a matter of common sense, it is plausible that a reasonable consumer would choose to avoid foods at risk of containing phthalates in light of the list of health problems allegedly caused by phthalate consumption—including endocrine disruption, cancer, and neurodevelopmental problems. It is not obvious from the pleadings that safety risks associated with even small amounts of phthalates are “non-existent and hypothetical” such that Kraft had no duty to disclose the presence of phthalates in its macaroni and cheese to consumers.

The court pointed to Kraft’s own website as “arguably” confirming this point. “That content reflects Kraft’s understanding that its customers consider the presence of phthalates in food to be important information.” Even if Kraft was ultimately right in its reassurances, “the website confirms that Kraft is conscious of its consumers’ concerns about phthalates and has expended resources in responding publicly to those concerns. Absent evidence to the contrary, Kraft’s acknowledgement of consumer concerns supports a finding that it is plausible that phthalate content in food, even in small amounts, is material to reasonable consumers.”

Further, plaintiffs alleged that survey data shows consumers do care about the presence of phthalates in food. “Plaintiffs’ counsel asked 400 adult consumers who bought boxed macaroni and cheese within the preceding six months if the presence or risk of even a small amount of phthalates in products would be important to their purchasing decision, and approximately 89.5% answered that it would be either important or very important.” At this stage, the court wouldn’t discard the survey as biased or flawed.

True, Becerra v. Dr. Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019), held that a survey purportedly showing that consumers understood the term “diet soda” to mean that the drink would “either help them lose weight, or help maintain or not affect their weight” was irrelevant to what a reasonable consumer would understand “diet” to mean. “But there is a significant difference between a survey asking about a person’s understanding of the meaning of a word in context and one asking about a person’s own concerns…. The reasonableness of those concerns depends on whether those phthalates are present in an ‘insignificant amount,’ which is an open question of fact at this stage of the litigation.”

However, the affirmative “NO Dyes,” “NO Artificial Flavors,” “NO Artificial Preservatives,” and the phrase “gooey, cheesy goodness” were not plausibly misleading on the facts alleged:

Plaintiffs didn’t allege that Kraft Mac & Cheese does contain artificial preservatives, flavors, or dyes. Instead, they alleged that the statements “lead reasonable consumers to believe that the Products are wholesome, safe, and healthy, and do not contain dangerous chemicals or artificial substances, like phthalates.” But “[t]he alleged presence of a negative substance does not prohibit a manufacturer from advertising a product’s positive qualities.” And “The Taste You Love” and “Gooey, Cheesy Goodness” were “textbook puffery.”

 

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