Thursday, July 18, 2024

"plant-based" is plausibly misleading without qualification; can asterisks save the day?

Whiteside v. Kimberly Clark Corp., No. 23-55581, 2024 WL 3435308, -- F.4th --- (9th Cir. Jul. 17, 2024)

Whiteside alleged that KC’s “plant-based” baby wipes were misleadingly advertised; the court of appeals revived some claims that the district court had dismissed for failure to sufficiently plead misleadingness. The same stresses that have caused courts to occasionally modify the (nontextually-based) Lanham Act distinction between “explicitly false” and “misleading” here show up with competing interpretations of what an “unambiguous” front-of-package claim means. Just as the Lanham Act’s text does not make the distinctions courts have adopted, consumer protection laws don’t use “ambiguous” in their text either. In practice, “unambiguous” tends to mean “I think reasonable consumers could be fooled by this.” That might be as good a rule as we can practically get unless we want to restore caveat emptor, but it would be more useful for courts to write in terms of “reasonable consumers could think they had all the information they needed from the front of the package” than of “ambiguity.” The court here takes useful steps in that direction.

Whiteside alleged that the words “plant-based wipes” (or “plant-based ingredients”) and “natural care®” on the front label, together with the nature-themed imagery displayed on the packaging, suggest that Defendant’s baby wipes contain only “water, natural ingredients, and ingredients that come from plants and that are not subject to chemical modification or processing.” But they also contain synthetic ingredients that do not come from plants and are subject to chemical modification or processing.

Examples of the packaging:

 



The district court distinguished (1) labels where an asterisk was placed after “plant-based wipes*” and a corresponding qualifying statement (“*70%+ by weight”) was present elsewhere on the front label (the “Asterisked Products”); and (2) labels on which no asterisk or qualifying statement appeared on the front label. For both, directly preceding the ingredients list is a statement reading: “NATURAL AND SYNTHETIC INGREDIENTS.” Back label images:

 


closeup of ingredients list

After making the distinction, though, the court found that both sets of labels were ambiguous and therefore it was unreasonable to be fooled instead of consulting the back label.  The district court reasoned that when a product’s front label is not “unmistakably clear about the facet for which she seeks more information,” a reasonable consumer is expected to look to other features of the packaging, such as the fine print on the back label. Anyway, the term “plant-based” “plainly means mostly, not necessarily all, derived from plants,” making the Unasterisked Products not misleading as a matter of law, even without reference to the back label.

The court of appeals reversed as to the unasterisked products. The Ninth Circuit has long held that reasonable consumers aren’t “expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box.” Thus, the rule is that, “if a product’s front label is plausibly misleading to reasonable customers, then the court does not consider the back label at the pleadings stage. Whether the back label ultimately defeats the plaintiff’s claims is a question left to the fact-finder.”

On the other hand, if the front label is only plausibly ambiguous, the back can resolve the ambiguity. Indeed, the Ninth Circuit has held that “other contextual factors aside from the back label can defeat claims that a product’s label is misleading,” specifically in its manuka honey decision. In that case, the court said, the “foremost” reason for finding only ambiguity was that, “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,” and “[a] reasonable consumer would not understand Trader Joe’s label . . . as promising something that is impossible to find.” Its low price and use of a honey grading scheme also meant that “100% New Zealand Manuka Honey” was not misleading. Here, the court says, it was very important in that case that manuka honey is “a niche, specialty product,” and that buyers were “undoubtedly more likely to exhibit a higher standard of care than a parent walking down the dairy aisle in a grocery store, possibly with a child or two in tow, who is not likely to study with great diligence the contents of a complicated product package.”

KC argued that a front label was ambiguous if it can have more than one possible meaning. Whiteside argued that a front label can be unambiguous if it was plausible that a reasonable consumer would view the label as having one unambiguous (and deceptive) meaning. Whiteside was correct. The plaintiff doesn’t have to prove unambiguous deceptiveness to avoid dismissal at the pleading stage. Instead, “a plaintiff must plausibly allege that the front label would be unambiguously deceptive to an ordinary consumer, such that the consumer would feel no need to look at the back label.” Thus, a front label is ambiguous if “reasonable consumers would necessarily require more information before they could reasonably conclude” that the front label was making a specific representation. The California courts have followed this rule, for example in the One-a-Day case, which “acknowledged that some sophisticated consumers might not interpret ‘One A Day’ literally and would inquire into the back label. But other reasonable consumers might take the front label at face value and assume that they needed to take only one vitamin daily. … Put another way, reasonable consumers would not necessarily require more information before concluding that they needed to take only one vitamin daily.”

The unasterisked products were plausibly misleading.  “Plant-based” “plausibly conveys a concrete and unambiguous meaning to a reasonable customer: that the product is entirely plant- based and exclusively contains ‘natural’ materials.” It was not an “all-but-meaningless marketing term” like “Nature Fusion,” especially combined with allusions to “natural care” and nature imagery

Although consumers could consult the back label, “[f]ront-label ambiguity is determined not by whether a consumer ‘could’ look beyond the front label, but whether they necessarily would do so.” The district court’s standard would always require a consumer to consult the back label, which contradicts controlling precedent.  Plus, baby wipes aren’t a niche, specialty product. “[C]onsumers of everyday items are not expected to study labels with the same diligence as consumers of specialty products.”

The district court also reasoned that the products were in fact “plant-based” because they contained at least 70% plant-based ingredients by weight. But California prohibits both literally false and misleading ads. And the district court’s definition of “plant-based” as “mostly, not necessarily all, derived from plants” had little support.

Even if consumers understand “tomato-based sauce” to mean “mostly but not all tomatoes,” that’s not helpful here, where the issue was not a characterizing ingredient. “[T]here is no reason to assume that consumers interpret all terms ending in ‘-based’ in the same way,” any more than they interpret “100%” the same way in every label.

Reasonable consumers also understand that meat does not grow on trees, yet technology has advanced such that plant-based meat is now available. Consumers could reasonably suppose that manufacturers have similarly devised a way to make baby wipes using only plant-based compounds.… Unlike bees … , which are familiar to anyone who has encountered vegetation,  most people likely have  not contemplated how baby wipes are made. Similarly, most consumers likely have not considered whether synthetic ingredients are necessary to make wipes “shelf-stable,” a term that is not part of

The court further pointed to the FTC’s “Green Guides,” which warn that unqualified representations like “made with renewable materials” are likely to mislead a reasonable consumer to believe that a product “is made entirely with renewable materials.” Although the FTC has declined to provide guidance on the term “plant-based” specifically, it’s the lack of qualification that is significant here; the FTC recommends using percentages or other qualifiers.

On the other hand, the use of an asterisk and the qualifying statement “*70+% by weight” on the front label of the Asterisked Products “ameliorate[s] any tendency of [the] label to mislead.” Those tracked the Green Guides’ recommendation for qualifications and complied with California law adopting the Green Guides. Even assuming that “70%+ by weight” is ambiguous, a reasonable consumer would require more information from the back label, which clarifies that the Products contain both “natural and synthetic ingredients.” “Even before reading the back label, the presence of an asterisk alone puts a consumer on notice that there are qualifications or caveats, making it unreasonable to assume that the Products were 100% plant- based.” (I don’t think the court thinks that it has taken back everything it said in the first part of the case, but maybe it has. If you thought the message was clear, how would you know that the asterisk related to the message you thought was clear and not to some other or peripheral feature? That’s the FTC’s reasoning for why asterisks and “disclosure” aren’t good qualifiers.)

No comments:

Post a Comment