Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Consumers’ worry about future fruit-snack false labeling enough to move case forward, (May 30, 2023)

By Melanie Hirschfelder, J.D.

Even though the purchasers knew that the snacks they had previously purchased contained untruthful labeling about whether they contained preservatives, they could still pursue an injunction over their uncertainty about whether future labels would be accurate.

Consumers of Welch’s fruit snacks could pursue their quest for an injunction against the company for allegedly falsely labeling the snacks as having “no preservatives,” a federal court in California ruled. The purchasers brought a putative class action against Welch Foods pursuant to several California consumer protection laws, claiming that the company purposely labeled its fruit snacks as having no preservatives to boost sales, despite the presence of preservatives citric and lactic acid. Welch Foods moved to dismiss three claims in the complaint: for injunctive relief, any claim for relief based on online advertising the consumers never saw, and the claim for unjust enrichment. The district court denied the motion in its entirety (Sinatro v. Welch Foods, Inc., May 22, 2023, Donato, J.).

Injunctive relief. The court first found that the consumers had standing to claim injunctive relief and that they had alleged a threat of future injury even though they had not specifically stated they would purchase the fruit snacks again if they did not contain any preservatives and now knew where to find information about preservatives on the packaging. What mattered instead was the purchasers’ confidence that future labels were accurate because “[k]nowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future.” The court pointed to the purchasers’ allegations that they were not confident about the truthfulness of future labeling and other statements that they would buy the fruit snacks in the future if they could be certain the labels were accurate about whether the product contained preservatives. For the purpose of a motion to dismiss, this was enough to plausibly allege a threat of future injury.

Online advertising. The consumers explained that allegations that Welch Foods made false claims in its online advertising were relevant to the materiality of the “no preservatives” misrepresentation to a reasonable consumer, as well as defendants’ knowledge and intent. Because the buyers were not bringing independent claims based on the company’s online marketing and advertising, the court declined to dismiss the claims for lack of standing even though the consumers had not seen the advertisements themselves before buying the fruit snacks.

Unjust enrichment. Finally, the court declined to dismiss the consumers’ claim for unjust enrichment even though they also brought a claim for breach of express warranty and under California law, there cannot be a claim based on quasi-contract where there exists between the parties a valid express contract covering the same subject matter. Rule 8(d) expressly provides for alternative theories of liability, and so both claims could stand at the motion to dismiss stage.

The case is No. 3:22-cv-07028-JD.

Attorneys: Ryan J. Clarkson (Clarkson Law Firm, P.C.) for Matthew Sinatro and Shane Winkelbauer. Amit Rana (Venable LLP) for Welch Foods Inc. and Promotion In Motion, Inc.

Companies: Welch Foods Inc.; Promotion In Motion, Inc.

Cases: Advertising CaliforniaNews