Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Cal.: Antioxidant references on tea labeling raised sufficient misbranding claim, (Jan 7, 2015)

By Edward L. Puzzo, J.D.

Putative class action claims that antioxidant content statements in tea labeling were misleading and violated California consumer protection laws stated a claim sufficient to survive a motion to dismiss, the federal district court in Sacramento, California has ruled (Salazar v. Honest Tea, Inc., January 5, 2015, Mueller, K.).

Plaintiff Sarah Salazar brought a putative class action against Honest Tea, alleging that its tea product labeling violated California’s Consumers Legal Remedies Act (CLRA), Unfair Competition Law (UCL), and False Advertising Law (FAL). The defendant moved to dismiss, and the court denied defendant’s motion.

The labeling statements in question stated that the tea was “packed” with Epigallocatechin gallate (EGCG), a key green tea antioxidant, and was “the most potent antioxidant around.”

Misbranding. Honest Tea argued that plaintiff was not deceived into buying the product based on a factual misrepresentation and thus could not maintain a state law action. Salazar countered that the statements, even if technically true, violated California consumer protection law because they were misleading and unauthorized nutrient content claims proscribed by the FDA. She further argued that, unlike a claim that a statement is false, a claim that a statement is misleading or deceptive is a question of fact inappropriate for resolution in a motion to dismiss. The court found in Salazar’s favor, ruling that her claims were sufficient to establish an economic injury-in-fact in alleging that she would not have purchased the product but for the alleged unlawful label.

FDA regulations. Honest Tea also argued that the challenged labeling statements did not characterize the level of EGCG but merely indicated its presence. Salazar argued that, based on FDA warning letters, the terms were nutrient content claims subject to FDA regulations. The court agreed, stating that her allegations, for purposes of surviving a motion to dismiss, sufficiently alleged facts indicating that the statements were subject to, and possibly in violation of, FDA regulations.

Standing. Honest Tea contended that Salazar did not have standing to bring the claims because she failed to allege that the tea product she purchased contained the labeling statements in question. The court noted that there was a split of authority as to whether a named plaintiff can sue on behalf of another purchaser of a product when the named plaintiff did not purchase the product herself. Regardless of approach, the courts look to various factors to establish “substantial similarity” between the purchased and unpurchased products. The court found that Salazar did allege substantial similarity by noting that the same tea product was in circulation from 2008 through 2013, all variations of the product label contained references to antioxidant content in the teas, and that she and proposed class members suffered essentially the same injury. Questions about material differences between versions of the labeling should be reserved for the class certification stage and not the motion to dismiss stage, the court stated.

The case is Civil Action No. 2:13-cv-02318-KJM-EFB.

Attorneys: Annick Marie Persinger (Bursor & Fisher, PA) for Sarah A. Salazar. Steven A. Zalesin, PHV (Patterson Belknap Webb & Tyler LLP) and Tammy Beth Webb (Shook, Hardy & Bacon, LLP) for Honest Tea, Inc.

Companies: Honest Tea, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews