Ambiguity in consumer protection cases means something different than ambiguity in Lanham Act cases

Would you believe I substantially shortened the analysis?

La Barbera v. Olé Mexican Foods Inc., 2023 WL 4162348, No. EDCV 20-2324 JGB (SPx) (C.D. Cal. May 18, 2023)

Granting reconsideration, the court reverses its previous ruling and dismisses the claims with prejudice. Notable for an extensive discussion of why it would be unreasonable for a consumer of defendant’s products to think they originated in Mexico, dooming the usual California claims, and for surfacing a key problem with the idea of an "ambiguous" claim.

All the accused products allegedly use: (a) the phrase “El Sabor de Mexico!” or “A Taste of Mexico!”; (b) a Mexican flag on the front and center of the packaging; and (c) the brand name “La Banderita” (or “the flag”), a reference to the Mexican flag displayed prominently on the Products. Some also contain a circular logo with the Mexican flag and the word “Authentic.” Sone also contain Spanish words or phrases, such as “Sabrosísimas” or “Tortillas de Maiz.” However, all the accused products “clearly and prominently” say “MADE IN U.S.A.” on the back and state they were “Manufactured by: Olé Mexican Foods, Inc., Norcross, GA 30071.”

The court agreed with defendant that recent Ninth Circuit precedents required more of reasonable consumers than earlier cases. When the front of the package is not misleading but ambiguous (whatever that means), consumers can be required to look at the back of the package for clarification.

Note: What ambiguity versus misleadingness usually means in practice, as far as I can tell, is whether the court thinks the front is misleading. The court here tries to create a distinction that could work, but—as it notes—the standard of care it imposes is pretty high, requiring more lawyerly precision than most consumers (even lawyers) engage in for most purchases. The court thinks this result is dictated by a single panel of the Ninth Circuit; I’m not so sure.

Anyway, plaintiffs must plausibly allege “a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Applying the Manuka honey precedent, the court found that standard not satisfied. The court gave a detailed exegesis of that case, Moore v. Trader Joe’s Co., 4 F.4th 874 (9th Cir. 2021), noting that the panel reasoned that reasonable consumers would use contextual information to conclude that “100% New Zealand Manuka Honey” did not have to be made with honey solely sourced from manuka flowers. “Perhaps the panel’s most surprising holding was the following: ‘given the foraging nature of bees, a reasonable honey consumer would know that it is impossible to produce honey that is derived exclusively from a single floral source.’” In addition, “the products’ inexpensive price would put a reasonable consumer on notice that the concentration of Manuka flower nectar was relatively low,” as would a “10+” rating on the label.

So, “if the Ninth Circuit thought the plaintiffs’ reading of the Trader Joe’s product so implausible that it could be dismissed as a matter of law, it would surely hold the same here.” Moore

imagines a “reasonable consumer” who is intelligent, someone capable of analyzing different pieces of information, engaging in logical reasoning, and drawing “contextual inferences” from a product and its packaging. She is diligent, for she does not just view one phrase or image in isolation, but looks at the entirety of the packaging together—she “take[s] into account all the information available” to her and the “context in which that information is provided and used.” And she appears to exhibit some skepticism about the representations made to her by a product’s advertising, aware that corporations attempting to sell items are conveying information to a given end and in a certain light. She does not expect advertisers to lie to her, nor should any consumer be expected to endure affirmative misrepresentations or strongly misleading claims. But she understands nuance and context, and that when making her purchasing decisions, all representations made by a seller are designed to sell.

Being a reasonable consumer of all the low-cost products we buy sounds exhausting! But, the court reasoned, Moore also has additional premises:

(1) that reasonable consumers in the market for a given product generally know a little bit about that product, at least more than a random person on the street, who may have no interest in that product or given it any thought; and (2) if a consumer cares about any particular quality in a product, she is willing to spend at least a few seconds reading a product’s packaging to see if it answers her question.

It follows that the “reasonable tortilla consumer” “knows a thing or two about tortillas, including a cursory understanding of their history and cross-border appeal, and has a basic grasp of broader social phenomena, such as the significant presence of Mexican American or Latino immigrants in the United States and the foods they have introduced into the mainstream American market.”

Moreover, if something is material to consumers, Moore indicates that they will be more careful and “invest at least a few seconds into reading the front and back labels of a product to see if it answers their question.” Although a reasonable consumer starts with the front of a package, “unless the front label is unmistakably clear about the issue for which she seeks an answer, she knows that she would ‘necessarily require more information before [she] could reasonably conclude’ what the answer is.” Then she would look at the product itself, including its context, for answers. This distinction between misleadingness and ambiguity is workable, but courts will have to keep in mind that, when a substantial number of reasonable consumers would think they could answer the question (and would be wrong about a reasonable answer) from the package front, misleadingness is possible.

As a matter of judicial experience and common sense, “any reasonable tortilla consumer who cares even a little bit about whether the tortillas she is buying in a grocery store are made in a Mexican factory rather than an American one, is willing to spend five seconds reading a product’s packaging to find out.” The court took pains to distinguish this from requiring the consumer to use the company’s website or compare reviews online. It was not suggesting that consumers must do anything more than “spend five seconds looking at the front and back labels.”

While I think Moore was wrong—it made up a class of sophisticated Manuka honey purchasers and the back labels did nothing to clarify—the analysis here is much more solid given the specific context of geographic origin information. A reasonable consumer “does not approach purchasing decisions with a professorial genius or inclination toward exhaustive research,” but if she cared about Mexican origin, she’d notice that the front package doesn’t say “one way or the other” and check the back, because “geographic origin information is often on the back of packaging.”

Another way to see it is that consumer protection claims arise along a spectrum:

On one end, plainly fanciful or unreasonable interpretations of a product’s labeling are subject to dismissal. On the other end, false or ambiguous front-label claims cannot be cured by contradicting back-label statements as a matter of law. Between these poles, ambiguous front-label claims that are consistent with back-label claims permit courts greater latitude to consider the surrounding context of the product and packaging to determine if the claims are misleading.

I don’t like this framing as much because it double-counts ambiguity while conflating two different meanings. Some ambiguity is what Lanham Act cases mean when they say a claim is ambiguous: “some consumers may receive a true message, while others may receive a false one,” and that should be included in the class of potentially misleading claims. But the ambiguity the court here seems focused on, which seems right, is whether a reasonable consumer could even answer the relevant question from the front of package information.

Her, “there are certainly no falsehoods on the front of the labels, while the back labels have nothing to contradict or correct.”

So let’s look at the packages:

La Banderita Sabrosísimas Corn

Other than “La Banderita” and “Sabrosísimas,” every single other word (apart from “tortillas” itself) on the front and the back of the packaging was in English, not Spanish. It wasn’t true that there was a “Mexican flag on the front and center of the packaging”: the tricolor was there, but “Defendant has erased the national coat of arms (an eagle perched on a cactus with a rattlesnake in its mouth) from the center white stripe and replaced it with an image of corn.”

La Banderita Sabrosísimas Flour

Though there was more Spanish, e.g., Sabrosísimas Tortillas Caseras and El Sabor de Mexico, English words and phrases still predominated, and the back was even clearer than the other packages that it was made in the US.

La Banderita Burrito Grande

Hardly any Spanish-language representations on the front label, apart from the brand name and “Burrito Grande,” “the latter of which hardly counts as Spanish because it would be recognizable to even monolingual English-speaking Americans.”

La Banderita Whole Wheat Fajita

Similar.

A reasonable consumer  

would know that the United States of America is a nation of immigrants. She has a basic understanding that there is such a thing as global capitalism, in which markets for goods and services operate across borders. She would know that foods associated with other cultures, from Chinese to Italian to Mexican, have become enormously popular in the United States, with Americans of all kinds enjoying these cuisines, or Americanized versions of them, at restaurants and at home. Because these foods are commonplace in the United States, not just in their countries of origin, she understands that there are American businesses, or multinational businesses, that sell these kinds of foods—i.e., it is an inherently unreasonable assumption that just because a food clearly originates from a foreign country, whether it is pasta or tortillas, that ipso facto it must be made in that country. This is obviously true of ethnic restaurants, which by definition serve food originating from foreign nations but made in the United States. But it is also true of manufactured products, including the kind of products produced by the kinds of businesses like Defendant’s: an American company manufacturing and selling goods in the United States, founded and led by a family with an immigrant background who make foods originating from their family’s nation of origin.

Some Spanish on the package wouldn’t be misleading. “Virtually all of the words on the Products’ labels are in English, not Spanish, and even most of the Spanish words or phrases are translated into English.” Even assuming that a package entirely written in Spanish might convey to a consumer that its primary market is Spanish speaking, and that a reasonable consumer could infer that products targeting the Mexican market are more likely to be made in Mexico, no reasonable consumer would think these products targeted a monolingual Spanish-speaking market.

Further, nothing in statements like “The Taste of Mexico!” were inherently false or misleading; rather, they were meaningless/trivially true in that tortillas are Mexican; “one could eat a hamburger or any quintessentially ‘American’ food outside the United States and say that it ‘tastes of America.’”

The court was also careful to note that images, logos and graphics “can convey a strong message to consumers, and often they can be more powerful than words alone.” But not all flag-like uses are the same.

If the Products contained an actual Mexican flag, especially one paired with any kind of statement of a seemingly “official” nature, perhaps a consumer could think the Products display some kind of governmental imprimatur of Mexican origin. A product that bears the Mexican flag and says “Made in Mexico” or “Hecho en Mexico” beneath it is obviously misleading if, in fact, the product is made in the United States. So, too, may be a product bearing a Mexican flag with the words “Official Product” or “100% Mexican” or another phrase that suggests a representation regarding the product’s supply chain, rather than just a cultural affiliation. But no reasonable consumer would think the Mexican flag imagery on the Products suggests that they must be made in Mexico, for these are highly stylized “flags,” decidedly unofficial in nature: they adopt the Mexican tricolor, with images of wheat or corn in lieu of the national coat of arms. Such imagery evokes Mexican heritage, which is truthful, rather than misleading: tortillas originate from Mexico.

Then there was some more speculative stuff, like that reasonable consumers will know that fajitas are Tex-Mex, not Mexican (really?), that whole wheat is an American thing, and that burritos have only limited popularity in northern Mexico but they’re central to Mexican-American cuisine.

The court was also not persuaded by the complaint’s allegations that a substantial number of reasonable consumers would pay more for tortillas of Mexican origin. Although a price premium for authenticity could be plausible, “it is not reasonable to assume that potential consumers for Defendant’s products are seeking out the most traditional of tortillas, for they are buying them at ‘grocery retailers in California.’” The plaintiff alleged that Olé targeted Hispanic consumers, “[b]ut anyone with a basic familiarity with Mexican culture, including many or most Mexican Americans living in the United States, knows that the vast majority of Mexicans acquire their tortillas at tortillerias, and no tortilleria would package their products in a manner remotely similar to the Products. The Products also do not look like mass-produced tortillas sold in Mexican grocery or convenience stores, not least because they are mostly written in English, not Spanish.”

Anyway, authenticity was nothing more than subjective; it was a social construct. “Reasonable tortilla consumers care about whether their tortillas are good—and that is not the same thing as caring solely about whether their tortillas are made in Mexico.” [I was pretty sympathetic up to this point, but consumers are generally entitled to want what they want for whatever reasons they want, even if the reasons are dumb ones. And while “authentic” is probably puffery in this context, that’s not the challenged representation—it’s Mexican origin, which people can plausibly value because of their varied conceptions of authenticity.]

But the court used this point to challenge the idea that defendant was acting in bad faith: It was ok to offer “Mexicanness” with made-in-the-US food. Have some culture war:

An individual can be proud to be an American while simultaneously acknowledging, and celebrating, her Mexican heritage; a company can be based in the United States with a corporate culture that acknowledges, and celebrates, Mexican culture and cuisine. By implicitly rejecting these ideas, lawsuits like this one perpetuate an unfortunate, and unreasonable, undercurrent of essentialism: that foreign-sounding people, words and foods are less American than the people, language and cuisine associated with the “real” America. If a consumer begins with the presumption (seemingly an unrebuttable one if she is also unwilling to look at the back of a package to see if it is made in the United States) that all ethnic food products she finds in an American grocery store are manufactured in a foreign country because they are inherently “foreign,” she fundamentally misunderstands the American experience. For purposes of a FAL, CLRA or UCL claim, she is also not a reasonable consumer ….

The dismissal (which is now on appeal) was without leave to amend, despite the existence of a survey. The survey couldn’t change the results. Among other things, the survey deliberately showed only portions of the packaging to participants and to exclude the parts where they say they are made in the United States. “A participant would have to click on a tiny and difficult-to-find link to view any additional images, and nowhere do the survey results show whether or how many participants did so.”

Comment: Here’s where an understanding of the dual meanings of “ambiguous” would be helpful. If there is a good enough “I don’t know/not enough information to answer” option, even a survey showing only the front can provide relevant evidence about whether the front of the package is ambiguous in the way that means “a reasonable consumer would understand that she can’t answer X question with this information” or ambiguous in the way that means “30% are fooled and 70% aren’t.”

The survey also fatally failed “to provide adequate factual detail as to why a consumer might believe the Products were made in Mexico.” They needed to be asked why they believed that.