Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Mars and Wrigley may be liable for mislabeling snack products, (Sep 18, 2013)

By Jody Coultas, J.D.

A purchaser stated California consumer protection law claims against Wrigley Sales Company and Mars, Inc. for allegedly mislabeling their products, the federal district court in San Jose has held (Gustavson v. Wrigley Sales Company, September 16, 2013, Koh, L.).

The purchaser alleged that Mars misrepresented the amount of flavanols contained in its product and the percentage of one’s daily value of calories contained in the products, failed to identify the ingredient “polyglycerol polyricinoleic acid” (“PGPR”) by its common name, and failed to comply with the standard of identity for milk chocolate. Wrigley allegedly included on its product labels “low calorie” claims, “sugar free” claims, and “serving size” claims. Both companies allegedly made a series of unlawful “health” claims on their websites. Mars and Wrigley are separate legal entities and were not involved in one another’s labeling decisions.

Preemption. The Federal Food, Drug, and Cosmetics Act (FDCA) did not impliedly preempt the purchaser’s claims that sought to impose labeling requirements identical to current Food and Drug Administration regulations, according to the court. In order to prevail on their argument that the claims seeking to impose labeling requirements were preempted by the FDCA, Mars and Wrigley had to overcome the presumption against preemption. Food labeling is an area traditionally within the purview of the states’ police powers. Congress has not set forth a “clear and manifest” statement that it intended state food labeling claims to be subject to implied preemption. The purchaser sought to impose labeling requirements identical to current FDA regulations and brought claims based on conduct that violates the FDCA. Therefore, the claims were not expressly preempted. The Nutrition Labeling and Education Act, an amendment to the FDCA, explicitly states that the FDCA did not preempt state law unless the law was expressly preempted. The court found that the companies failed to overcome the presumption against preemption.

The purchaser’s claims that sought to enforce labeling requirements identical to those of the FDA were not expressly preempted, according to the court. States may not establish any food labeling requirements concerning nutrition information or nutrition levels and health-related claims that are not identical to the FDA requirements. The purchaser presented sufficient facts to show that Mars’s statements concerning the presence of flavanols in certain chocolate products violated FDA regulations governing when a food may be described as a source of a given nutrient. Mars did not identify any regulation governing the purchaser’s claim that Mars’ use of the acronym PGPR to describe polyglycerol polyricinoleic acid was unlawful.

Because the purchaser’s attempted to impose requirements not identical to FDA regulations, the court found that those claims were expressly preempted. Mars’s calorie-related claims complied with all applicable federal regulations and any finding that these claims were unlawful or deceptive would impose requirements not identical to regulations. Federal law permitted Mars to use the term “milk chocolate” on the front of its packages without including disclaimers involving alkali, vanillin, or other optional ingredients, and preempted the purchaser’s claim concerning Mar’s failure to disclose that its milk chocolate is processed with alkali and/or contains vanillin.

The claims against Wrigley based on its low calorie nutrient claims were also expressly preempted. The purchaser argued that Wrigley’s website claims that its sugar free gums were “low calorie” were subject to federal regulations that prohibit manufacturers from making such claims on food labels if the foods contain more than 40 calories per 50 grams. However, the purchaser failed to explain how low calorie claims made on a website not linked to the product labels constituted labeling. This attempt to impose additional requirements not required by the federal regulations was preempted.

Wrigley failed to show that the purchaser’s claims related to its products’ sugar free nutrient content claims and serving size claims were expressly preempted, according to the court. The purchaser argued that Wrigley’s use of the “sugar free” label violated federal regulations concerning disclaimers regarding special dietary usefulness, and that the single mint (0.2 gram) serving size Wrigley used for sugar free breath mints misstated the “legally mandated serving size” for breath mints by a magnitude of ten. The court was not persuaded that Wrigley’s labels fully complied with federal regulations governing the term “sugar free.” The controlling regulation for breath mints continues to set the serving size at two grams, and the FDA’s stated intentions to change the serving size did not make the purchaser’s claims inconsistent with federal law.

Primary jurisdiction. The primary jurisdiction doctrine applies when the issue at hand is within the jurisdiction of an administrative body having regulatory authority pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that requires expertise or uniformity in administration.

The purchaser’s serving size claims were dismissed under the doctrine of primary jurisdiction by the court. There was a substantial possibility that the FDA may change its breath mint serving requirements. Thus, the court found it necessary to step back and allow the FDA regulatory process to play out.

However, the rest of the claims were not subject to the primary jurisdiction doctrine, according to the court. Only claims raising issues of first impression or particular complexity are appropriately dismissed or stayed based on primary jurisdiction. The issues at hand were neither complex nor novel.

State law claims. The purchaser had constitutional and statutory standing to assert the claims at issue, according to the court. Wrigley and Mars alleged that the purchaser’s claimed injury—that she purchased products that were “legally worthless”—did not amount to actual injury, let alone economic injury. The allegations that the purchaser spent money that she would not have spent but for the alleged misrepresentations were sufficient to show an injury-in-fact. Similarly, the loss of money was clearly an economic injury.

The court declined to dismiss the purchaser’s mislabeling claims. Whether a practice is deceptive, fraudulent, or unfair is generally a question of fact that is not appropriate for resolution on the pleadings.

The purchaser failed to state a claim under the unlawful prong of the California Unfair Competition Law, according to the court. The allegations that the companies engaged in a “widespread practice of making unlawful and unauthorized health claims” on their websites, were too vague to state a claim. The purchaser failed to identify the websites from which it allegedly quoted or to explain the circumstances under she viewed these websites and relied on them in purchasing the products.

The case is No. 12-CV-01861-LHK.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Phyliss Gustavson. Stephen David Raber (Williams & Connolly LLP) for Wrigley Sales Company.

Companies: Wrigley Sales Company; Mars, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews