Antitrust Law Daily Wrap Up, ADVERTISING —N.D. Cal.: Marie Callender’s may be liable for “all natural” labeling on specialty foods, (Feb 6, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in San Francisco has declined to dismiss deceptive advertising and unfair business practices class action claims filed against Marie Callender’s gourmet products division by a consumer who was alleged deceived by the company’s baking mix products “all natural” label (Musgrave v. ICC/Marie Callender’s Gourmet Products Division, February 5, 2015, Tigar, J.).

ICC/Marie Callender’s Gourmet Products Division advertises and sells a variety of bread and muffin mixes that are labeled “all natural.” Marie Callender’s promotes the products through web pages, social media, and food expositions.

Consumer Edward Musgrave purchased two types of Marie Callender’s corn bread mix on several occasions at different retailers over a course of three years. After learning that the products contain sodium acid pyrophosphate (SAPP), a synthetic ingredient, Musgrave filed a putative class action suit against Marie Callender’s, alleging, in part, violations of California’s False Advertising Law (FAL), Consumer Legal Remedies Act (CLRA), and Unfair Competition Law (UCL). Specifically, Musgrave asserted that the company misrepresented its products as “all natural” and misled consumers into purchasing products, ingesting ingredients, and supporting a company that contributes to environmental, ecological, or health damage. Marie Callender’s moved for dismissal.

False advertising claims. The court determined that the plaintiff sufficiently pleaded that a reasonable consumer was likely to be deceived by the term “all natural.” According to the court, the plaintiff was not required to allege that every consumer shares the same definition of “all natural, ” only that a reasonable consumer could interpret the term to exclude synthetic compounds. In this case, Musgrave alleged that SAPP was a synthetic product and, under Food and Drug Administration (FDA) policy, a product is not “natural” if it contains synthetic substances. The defendant’s argument that USDA regulations allow manufacturers to include SAPP in products which are labeled “organic,” a designation that is more restrictive, was rejected. The court noted that there was no evidence that reasonable consumers were aware of the USDA regulations regarding the definition of “organic” or assumed that the definition applied to “natural” as well.

Injury. Additionally, the plaintiff plausibly alleged that he was personally deceived or injured. In his complaint, Musgrave asserted that he purchased Marie Callender’s products after reading and relying on the truthfulness of the labels and paid more money for those products than he would have paid for similar products that were not “all natural.” He also alleged that, if he had known that the products were not “all natural,” he would have purchased another “all natural” brand. These allegations were sufficient to state plausible claims of reliance and causation, in the court’s view.

Specificity. The court determined that the plaintiff had pleaded his deception and misrepresentation claims with the degree of specificity required under Federal Rule of Civil Procedure 9(b). The plaintiff specified the product labels that contained the misrepresentations, clearly described the misleading statements, described the social media, advertising, blog posts, and food shows used to promote the defendant’s products, and stated that he purchased the products in the reliance on the truthfulness of the labels. The allegations established the “who,” “what,” “when,” “where,” and “how” of the misconduct charged.

Products not purchased. The plaintiff had standing to pursue his claims with respect to products that he did not purchase at the current stage of the litigation. According to the court, the plaintiff’s allegations that he paid more money for those products than he would have paid for similar products that were not “all natural” and if he had known that the products were not “all natural,” he would have purchased another “all natural” brand, were sufficient to show economic injury. The court noted that it will determine at class certification whether Musgrave could represent the proposed class of individuals who purchased Marie Callender’s products that he did not purchase himself.

Injunctive relief. However, the plaintiff was not entitled to injunctive relief since he could not show there was a sufficient likelihood that he would be wronged in the future. Although the plaintiff claimed that he purchased Marie Callender’s products and suffered damages and injury, he did not state that he maintained an interest in purchasing the defendant’s baking mix products in the future. Thus, the plaintiff lacked standing to pursue injunctive relief, the court concluded.

The case is No. 14-cv-02006-JST.

Attorneys: Molly Ann DeSario (Scott Cole & Associates, APC) for Edward Musgrave. Richard Martin Williams (Gray & Duffy, LLP) for ICC/Marie Callender's Gourmet Products Division.

Companies: ICC/Marie Callender's Gourmet Products Division

Cases: Advertising StateUnfairTradePractices CaliforniaNews