Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Nature’s Path not liable for allegedly misleading product labeling, (Nov 25, 2014)

By Jody Coultas, J.D.

A consumer failed, for the most part, to state California consumer protection law claims against Nature’s Path Foods, Inc. for allegedly mislabeling its cereal products, the federal district court in San Jose has held (Leonhart v. Nature’s Path Foods, Inc., November 21, 2014, Freeman, B.). Claims based on the use of the term “evaporated cane juice” were stayed pending the issuance of Food and Drug Administration (FDA) guidelines.

After purchasing Nature’s Path’s EnviroKidz Panda Puffs cereal and Heritage Flakes cereal, the consumer filed California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) class action claims on behalf of purchasers of the cereals and a variety of Nature’s Path’s other products.

The claims based on products the consumer did not purchase were dismissed by the court for lack of standing. Consumers have Article III standing to assert claims for unpurchased products where those products are substantial similar to the purchased products. Similarity is generally based on whether the challenged products are of the same kind, whether they are comprised of largely the same ingredients, and whether each of the challenged products bears the same alleged mislabeling. The consumer’s list of approximately 80 unpurchased products covered a wide spectrum including cold cereals, hot cereals, granolas, pancake mix, bars, toaster pastries, and waffles. The consumer failed to include the products’ ingredients or provide the products’ labeling. The complaint was dismissed without leave to amend.

Claims based upon the “misbranded” or “unlawful product” theory were also dismissed without leave to amend. The consumer also could not state claims based on websites she never saw.

The consumer’s claims based on the labeling including the term “evaporated cane juice” were stayed pending the FDA’s issuance of final guidance. Nature’s Path sought a stay under the primary jurisdiction doctrine. The court anticipated that revision of the evaporated cane juice claims will be necessary once the FDA issues its final guidance. Once the stay is lifted, the consumer must clarify which labels bore the term. Also, the court noted that the consumer’s allegation that she did not know the products contained sugar were implausible.

Claims based upon health and drug labeling on the purchased products was dismissed without leave to amend by the court. The consumer alleged that Nature’s Path claimed on its labeling that the ingredients in its cereals protected the immune system, had “heart protecting properties,” and had other health benefits. However, the allegation that cereals “such as” those bought by the consumer was not the same as an allegation that the cereals actually bought by the consumer bore those claims. The consumer was previously provided a clear road map regarding pleading requirements, and failed to comply. Therefore, the court inferred that the consumer was unable to adequately plead the claim.

The consumer failed to allege any details as to what low sodium claims appeared on the purchased products, according to the court. Therefore, the claims based upon low sodium were dismissed with leave to amend.

Nature’s Path’s motion to dismiss the consumer’s claims based upon preservative free labeling was granted by the court. The consumer claimed that the purchased product labeling stated that the product was free of preservatives but in fact contained chemical preservatives. However, the complaint made several references to citric acid being a preservative without making clear whether the consumer alleged that the EnviroKidz Panda Puffs contained citric acid. It also was unclear whether the consumer alleged that Heritage Flakes was labeled as preservative free. The consumer was granted leave to amend to clarify the bases for her preservative free claims as to each of the purchased products.

The consumer alleged that Nature’s Path employed slack filled packaging containing non-functional slack fill to mislead consumers into believing they were receiving more than they actually were. The allegations that the consumer did not realize that the purchased products were slack filled and that she would not have bought them had she realized that was the case were sufficient to state a claim, according to the court.

The case is No. 13-cv-00492-BLF.

Attorneys: Colin Harvey Dunn (Clifford Law Offices, PC) for Susan Leonhart. William Lewis Stern (Morrison & Foerster LLP) for Nature's Path Foods, Inc.

Companies: Nature’s Path Foods, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews