Antitrust Law Daily Wrap Up, ADVERTISING—D.N.J.: Consumers’ NJCFA claim over Gerber’s marketing of probiotic products fails, (Oct 15, 2014)

By Linda O’Brien, J.D., LL.M.

In a putative class action against Gerber for the alleged deceptive marketing of its infant formula and cereal products, a group of consumers failed to quantify ascertainable loss. Therefore their claim under the New Jersey Consumer Fraud Act (NJCFA) was dismissed by the federal district court in Newark, New Jersey (In re Gerber Probiotic Sales Practices Litigation, October 6, 2014, Linares, J.).

A group of consumers filed a putative class action arising from the alleged deceptive, false, and misleading marketing of infant formula and probiotic cereal manufactured by Gerber. The consumers asserted that the marketing and labeling was deceptive since the products did not provide immune system benefits in violation of the NJCFA. In July 2014, the plaintiffs’ NJCFA claim was dismissed. The plaintiffs filed an amended complaint, and Gerber again moved for dismissal.

NJCFA. The court held that the plaintiffs failed to allege the identity and cost of comparable products to Gerber’s formula and cereal products to show ascertainable loss under the benefit of the bargain theory. To establish ascertainable loss, a plaintiff must suffer a definite, certain, and measureable loss. While the plaintiffs sufficiently alleged that a reasonable belief about the products was induced by a misrepresentation, they failed to identify a comparable product and its cost to calculate the difference in value between the product as promised and the product as allegedly received.

Moreover, the plaintiffs failed to allege a price paid for the products as well as the price for any comparable products beyond conclusory statements. Since the court determined that the plaintiffs could plead ascertainable loss with specificity, the complaint was dismissed without prejudice.

Article III standing. Dismissal of the plaintiffs’ claim for lack of standing was premature at the current state of the litigation, the court also ruled. The requirements of Article III constitutional standing are that a plaintiff must have suffered an injury in fact, there is a causal connection between the injury and challenged action, and the injury will be redressed by a favorable decision.

Gerber’s argument that the plaintiffs lacked standing to assert claims for its infant formula because no named plaintiff was alleged to have purchased the specific product was rejected. The court noted that the class included purchasers of both types of products and a class action plaintiff may assert claims for a product that he or she did not purchase as long the basis for the claims was the same, the products were closely related, and the defendants were the same. In this case, the plaintiffs sufficiently alleged that basis for their claims – Gerber falsely promoted the formula and cereal as having the same probiotic bacteria which promotes the development of children’s immune systems. The products were closely related. Finally, the defendant was the same because both products were manufactured by Gerber.

The case is No. 12-835.

Attorneys: James E. Cecchi (Carella Byrne Cecchi Olstein Brody & Agnello, PC) for Janna Thomas. Scott A. Ohnegian (Riker, Danzig, Scherer, Hyland & Perretti, LLP) for Gerber Products Co.

Companies: Gerber Products Co.

Cases: Advertising StateUnfairTradePractices NewJerseyNews