2018 was another eventful year for food-labeling litigation, and 2019 is
shaping up to be lively as well. The McGuireWoods food-labeling litigation team
monitors food-labeling litigation nationwide and has identified five trends for
those in the food and beverage industry to watch in 2019.
The number of food-labeling cases continues to rise. More food-labeling
cases were filed in 2018 than in 2017, and the industry can expect this trend
to continue in 2019. But the nature of the claims filed, how courts are
treating these claims, and where the lawsuits are being filed are rapidly
evolving. Food-labeling litigation is relatively mature, and both the hunters
and hunted have become more sophisticated over time. Those in the food and
beverage industry have become more risk-averse and largely have stopped using
the riskiest label claims. As a result, most of the “low-hanging fruit” is
gone. Plaintiffs had to look in new directions for prey, and they did just
that. Some of the newer claims are more technical and “in the weeds,” while
others are more macro — focusing on the overall impression that packaging and
labeling gives to consumers. Essentially, plaintiffs in 2018 experimented with
a new generation of food-labeling claims to see what would stick. Some stuck,
and others did not, as explained in more detail below.
These evolving claims had important implications for the state of
food-labeling litigation nationally. Because of this experimentation of new
claims, fewer cases are surviving defendants’ motions to dismiss. Courts are
not as likely to allow a borderline claim to survive as they once were. This is
good news for those in the food and beverage industry. But there is bad news
related to class certification. Courts are more willing to certify
food-labeling class actions than ever before. It is unclear exactly why, but it
may have to do with recent rulings in the 9th U.S. Circuit Court of Appeals
that expanded standing. It may also be due to the 9th Circuit’s approval of
proposed damages models by plaintiffs in these suits, which has long been a
difficult hurdle for plaintiffs.
The location where these suits are filed is also changing. For most of the
last decade, the Northern District of California has reigned supreme as the
jurisdiction where the overwhelming majority of food-labeling lawsuits were
filed. In 2018, New York, particularly the Eastern District of New York,
emerged as an important alternative jurisdiction. While there have been such
suits in New York for several years, they spiked in 2018 to where New York
threatened to surpass California for highest number of food-labeling lawsuits
filed. The Southern District of California also became more popular with
plaintiffs in 2018. Other venues — including Florida, Illinois, and Missouri —
also saw an increase in these suits in 2018. Expect to continue to see more
food-labeling cases filed in jurisdictions other than the Northern District of
California in 2019.
Finally, the past few months saw an increase in cases filed in state court,
as opposed to federal court. It is unclear whether plaintiffs believe they can
keep the cases in state court or if they are simply trying to force defendants
to clear the additional hurdle of removing the cases to federal court. Either
way, this could be an important new front in the food-labeling conflicts ahead.
2. Death of Slack-Fill Litigation
One significant development in 2018 was plaintiffs’ lack of success with
slack-fill lawsuits — suits alleging that the packaging of a product gives a
false impression of the volume of the product purchased. Approximately 18
months ago, the number of slack-fill lawsuits spiked to such an extent that it
became one of the most popular food-labeling lawsuits, even more so than
“natural.” But in 2018, these suits endured an epic losing streak.
It began with two suits alleging that the amount of coffee in a cup was
less than advertised. In Strumlauf v. Starbucks Corp., the U.S. District Court
for the Northern District of California on Jan. 5, 2018, dismissed a lawsuit
asserting that latte drinks contained milk foam, making the volume of the
drinks less than advertised. The court held that “[n]o reasonable consumer
would be deceived into believing that lattes which are made up of espresso,
steamed milk, and milk foam contained the promised beverage volume excluding
milk foam.” Then, the 9th Circuit in Forouzesh v. Starbucks Corp. affirmed the
dismissal of another suit, this one complaining about the amount of ice in
drinks: “no reasonable consumer would think ... that a 12-ounce ‘iced’ drink,
such as iced coffee or iced tea, contains 12 ounces of coffee or tea and no
ice.”
There is some evidence that courts have grown weary of certain plaintiffs’
inattention to common sense in these suits. In dismissing a suit challenging
the amount of Junior Mints in a box, the U.S. District Court for the Southern
District of New York explained on Aug. 1 in Daniel v. Tootsie Roll Industries
LLC that “[t]he law simply does not provide the level of coddling plaintiffs
seek” and “[t]he court declines to enshrine into the law an embarrassing level
of mathematical illiteracy.” Even in slack-fill suits that survived motions to
dismiss, the news was still bad — two courts recently denied class
certification in suits alleging slack-fill. See, for example, White v. Just
Born, Inc., decided Aug. 7 in the Western District of Missouri; and Spacone v.
Sanford LP, decided Aug. 9 in the Central District of California.
However, it bears mentioning that a few slack-fill cases resulted in
settlements with manufacturers in 2018. For instance, the parties in a suit over
“theater boxes” for popular candies like Jujyfruits and Now and Laters agreed
to a settlement of approximately $2.5 million. And last month, the parties
reached an undisclosed settlement in another candy slack-fill suit involving
the maker of Mike and Ike’s and Hot Tamales. That settlement followed the
denial of class certification in August.
Not surprisingly, given the courts’ recent reception of these claims, the
number of new slack-fill suits filed dropped dramatically in 2018. In 2019,
expect to see even fewer of these suits, and expect to see plaintiffs focus on
other labeling claims.
3. Evolution of Natural
Claims
Another significant development in 2018 was the evolution of “natural”
claims. For a number of years, “natural” was one of the most popular targets in
food-labeling litigation. These claims slowed once the Food and Drug
Administration indicated that it was working on a definition of “natural” in
2016. There was some sense that the days of lawsuits targeting natural claims
were coming to an end, but that has not come to pass.
In fact, these claims experienced a resurgence and represented one of the
biggest success stories for plaintiffs in 2018. This new generation of
“natural” claims has a different focus than past suits — they target the use of
particular ingredients that were once widely considered “natural,” even by the
plaintiffs’ bar. Synthetic malic acid is a popular target. A number of suits
filed in the Southern District of California alleged that claims such as
“all-natural” or “no artificial flavors” are misleading when the food product
contains synthetic malic acid, rather than naturally sourced malic acid. And
almost all of these lawsuits are surviving motions to dismiss by defendants.
See, for example, Allred v. Frito Lay, decided April 10 in the Southern
District of California; and Allred v. Kellogg Co., decided Feb. 23, also in the
Southern District of California. More importantly, the Southern District of
California granted class certification on Nov. 29 in one such case, Hilsley v.
Ocean Spray Cranberries, Inc.
Given plaintiffs’ successes with these suits in 2018, expect to see more of
them in 2019. Expect also to see other ingredients targeted, such as fumaric
acid, sodium diacetate, ascorbic acid, xanthan gum, caramel color, citric acid,
and others. Those in the food and beverage industry should take a close look at
the ingredients in the products labeled as “natural” or “no artificial
preservatives and/or flavors” and make sure they know each ingredient’s purpose
and whether it is synthetic.
4. Re-emergence of Reasonable-Consumer Standard
One welcome development in 2018 for those in the food and beverage industry
was the re-emergence of the reasonable-consumer standard at the
motion-to-dismiss stage. This standard governs whether a label claim is
misleading; if a reasonable consumer would be misled, then it is misleading as
a matter of law. Conversely, if a reasonable consumer would not be misled by a
label claim, then it is not misleading as a matter of law. Many less-than-credible
food-labeling lawsuits have survived motions to dismiss over the years because
courts have been reluctant to invoke the reasonable-consumer standard at the
motion-to-dismiss stage, instead viewing it as a jury question.
But in 2018, courts used the reasonable-consumer standard to dismiss a
number of food-labeling lawsuits. For instance, on April 8, the Northern
District of Illinois in Killeen v. McDonald’s Corp. dismissed a lawsuit against
McDonald’s that claimed its “value meals” were no cheaper than buying the food
separately. The court found that consumers had access to information that would
eliminate the confusion and that, “[u]nderstandably, plaintiff may not have
wished to take the time to compare prices, but there is no question that doing
so would have dispelled the deception on which her claims are based.”
Similarly, the 2nd U.S. Circuit Court of Appeals on Dec. 3 in Jessani v.
Monini, affirmed the dismissal of a class action alleging that truffle oil does
not contain actual truffles. It stated that “[i]t is simply not plausible that
a significant portion of the general consuming public acting reasonably would
conclude that [defendant]’s mass produced, modestly-priced olive oil was made
with the most expensive food in the world.” Other courts have reached similar
conclusions using the reasonable-consumer standard. See, for example, Campbell
v. Freshbev LLC, decided in July in the Eastern District of New York; Becerra
v. Dr. Pepper/Seven Up Inc., decided Aug. 21 in the Northern District of
California; and Maxwell v. Unilever U.S., decided in March, also in the
Northern District of California.
As described above, courts are dismissing more food-labeling lawsuits at
the motion-to-dismiss stage. A big reason why is the increased willingness of
courts to find as a matter of law that a reasonable consumer would not be
deceived by a label claim. Expect to see more of this in 2019. There is a
critical mass of recent food-labeling decisions using the reasonable-consumer
standard to dismiss claims in a variety of jurisdictions, and those in the
industry facing such lawsuits will be able to rely on these decisions going
forward. The chances of obtaining dismissal of a food-labeling lawsuit at the
motion-to-dismiss stage have never been better.
The final trend on the industry’s radar is the expansion of targets by the
plaintiffs’ bar. One of the most prominent examples is a focus on glyphosate
(an ingredient in the herbicide Roundup) and other toxic chemicals in food,
even at low levels. The $289 million jury verdict in a Roundup suit in August
2018 led to a number of new suits in this area. These include Doss v. General
Mills in the Southern District of Florida; Steckler v. PepsiCo, Inc., filed on
Oct. 26 in the Central District of California; and Daly v. Pret A Manger, Ltd.,
filed on Sept. 24 in the Eastern District of New York. Some suits focus on
other chemicals, like the insecticide Acetamiprid. See, for example, Yu v. Dr.
Pepper Snapple Group, Inc., filed on Nov. 1, in the Northern District of
California. Expect to see a lot more of these suits in 2019.
Another new target in food-labeling litigation is environmentally-friendly
label claims. Labels that claim the product is compostable or that the animals
that provide the product have “outdoor access” or are “happy” or that the
product is “environmentally-friendly” have all been the subject of lawsuits in
2018. See, for example, Organic Consumers Assoc. v. Ben & Jerry’s Homemade
Inc., filed in July in the Superior Court of the District of Columbia; Kelly v.
Cameron’s Coffee and Distribution Co., filed in January in the Circuit Court of
Jackson County, Missouri; Gibson v. Wal-Mart Stores, filed in January in the
Northern District of California; and Mattero v. Costco Wholesale Corp., filed on
Sept. 17 in the Northern District of California. This will undoubtedly continue
in 2019.
Another target is the label claim “Made with Real ____.” This is not a new
target, but a resurgence of this type of claim. See, for example, Reyes v.
Crystal Farms Refrigerated Distribution Co., filed in April in the Eastern
District of New York; and Childers v. Dr. Pepper Snapple Group Inc., filed in
July in the District Court of Dallas County, Texas. In fact, in June 2018, the
Northern District of California certified a class in Fitzhenry-Russell v.
Keurig Dr. Pepper targeting the label claim “Made with Real Ginger” on ginger
ale. In November, the Fitzhenry-Russell court relied heavily on consumer survey
data in partially denying the defendant’s summary judgment motion. Expect this
outcome to spur even more such suits in 2019.
The “Made with Real ____” focus is part of a larger trend where the
plaintiffs’ bar is targeting ingredients more generally. The focus on malic
acid was discussed above. Other suits focused on supposedly inferior
ingredients when label claims suggest otherwise. See, for example, Skinner v.
Ken’s Foods, Inc., filed in January in the Central District of California,
claiming that an olive oil dressing contains soybean and canola oils that are
less expensive than olive oil; Feldman v. Utz Quality, filed on July 3 in the
Southern District of New York, claiming that the defendants switched from a
blend of vegetables and replaced it with a cheaper synthetic blend. Still other
suits focus on whether front-label claims match the ingredient list. Richburg
v. Rebbl Inc., filed in March in the Eastern District of New York, alleged that
a label claim of “made with coconut milk” is misleading because the actual
ingredient is coconut cream and water. Pizzirusso v. Chicago Bar Co., filed on
June 15 in the Eastern District of New York, alleged that a label claim of
“made with egg whites” is misleading because the actual ingredient is egg white
protein powder. This focus on ingredients is one of the areas that saw the most
growth in terms of lawsuits in 2018, and the industry can expect this trend to
continue in 2019. Those in the food and beverage industry should pay very close
attention to their ingredients and whether those ingredients are consistent
with the various label claims on the product.
Still another significant trend is that of lawsuits targeting label claims
and packaging that suggest that a product is healthy. See, for example, Levin
v. Stremick’s Heritage Foods, filed on Sept. 26 in the Central District of
California, which alleged that the product contains too much sugar and is not
healthy despite visual depictions of fruit on packaging. In January 2018, in
Zemola v. Carrington Tea Co., the Southern District of California denied a
motion to dismiss a lawsuit alleging claims that coconut oil is healthy are
misleading given its high saturated-fat content. These suits do not necessarily
target a particular claim, but the general “aura” or “halo” of the packaging,
such as pictures of fruits on the front label. These suits are particularly hot
right now because the Northern District of California granted class
certification in Hadley v. Kellogg Sales Co., a suit targeting various cereals.
Because of this precedent, expect to see many more of these suits in 2019.
Finally, expect to see an increase in standard of identity and origin
claims in 2019. These suits were fairly popular in 2018. See, for example,
Cohen v. East West Tea Co., where the Southern District of California on Aug. 2
denied a motion to dismiss related to whether kombucha should contain live
organisms; and Peacock v. The 21st Amendment Brewery Café, LLC, where the
Northern District of California ruled in January on a case alleging that beer
was not brewed exclusively in California, when representations and packaging
suggest that it was. On March 27, a Massachusetts federal court partially
denied a motion to dismiss in O’Hara v. Diageo-Guinness, USA, Inc., a suit
alleging that a beer maker falsely claimed it brewed all the Extra Stout sold
in the United States in Ireland. The maker of Tabasco settled a “Made in the
U.S.A.” suit filed in California for approximately $650,000, as well as
agreeing to remove the “Made in the U.S.A.” from its product labeling and
advertising in California. Much like the targeting of “healthy” products above,
these suits focus to a greater extent on the “aura” or “halo” of the packaging
rather than specific claims. This seems to be a trend for the plaintiffs’ bar
in food-labeling suits, and 2019 will see more of these suits
