Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Splenda false advertising case can proceed on questions about diabetic use or benefit, (Jul 22, 2024)

By Justin Marcus Smith, J.D.

Consumers challenged whether the maker of Splenda zero calorie sweetener falsely advertised it as beneficial for diabetes care in light of the “special dietary use” status the Food and Drug Administration conferred in 1999.

A group of consumers did not need to show or allege that sucralose, a key ingredient of Splenda food sweetener, was unsafe in order to proceed with false advertising claims against Splenda’s maker, TC Heartland, LLC (TC Heartland), held a federal district court in San Jose, California. On TC Heartland’s Fed. R. Civ. P. 12(b)(6) motion to dismiss, the court found the litigants presented conflicting questions of fact about how reasonable consumers would have perceived Splenda advertising and whether or not TC Heartland had presented it as beneficial for the management of diabetes, questions the court said it could not resolve on a motion to dismiss. The court held that a 1999 Food and Drug Administration (FDA) permitted use of sucralose as a food additive did not preempt the consumers’ claims. The court also held the consumers asserted economic injury sufficient for Article III standing. The court denied TC Heartland’s motion to dismiss apart from the consumer’s unconstitutional request that the court compel TC Heartland to engage in putatively corrective advertising about sucralose (Prescott v. TC Heartland, LLC, No. 5:23-cv-04192-PCP (N.D. Cal. July 18, 2024)).

Background. Four consumers brought a putative class action lawsuit on behalf of a nationwide class and a California class alleging that TC Heartland, LLC engaged in consumer fraud. More specifically, they alleged that TC Heartland marketed Splenda to health-conscious consumers, including those with Type 2 diabetes, as a sugar alternative with health benefits. They said Splenda product labeling misleadingly linked Splenda consumption with diabetes improvement, whereas some have claimed that Splenda’s primary ingredient, sucralose, can worsen or even cause diabetes by allegedly destabilizing blood sugar, among other supposed concerns.

The consumers asserted claims that TC Heartland: 1) violated the California Consumer Legal Remedies Act (CLRA); 2) violated California’s False Advertising Law (FAL); 3) violated California’s Unfair Competition Law (UCL); and, 4) breached warranty. The consumers also argued unjust enrichment and requested restitution; sought to enjoin TC Heartland from selling Splenda products with the purportedly deceptive labels; and, sought injunctive relief that would have forced TC Heartland to engage in an affirmative advertising campaign to dispel supposed public misperception of Splenda products.

TC Heartland moved to dismiss under Fed. R. Civ. P. 12(b)(6). TC Heartland argued the FDA’s sucralose safety determination preempted the consumers’ claims. TC Heartland also argued the consumers had “cherry-picked” studies that did not actually support their assertion that sucralose is unsafe. TC Heartland also argued that the consumers had no physical injury for Article III standing, that they failed to plead that Splenda product labeling would be likely to mislead reasonable consumers, and the consumers’ request for a corrective advertising campaign violated the First Amendment.

1999 regulation. The court noted that the FDA issued a regulation in 1999 permitting the use of sucralose as a food additive, specifically, as a general-purpose sweetener, after conducting a review of about 100 scientific studies and various clinical trials. Food Additives Permitted for Direct Addition to Food for Human Consumption; Sucralose, 63 Fed. Reg. 16417, 16430 (Apr. 3, 1998). The FDA’s corresponding regulations additionally provided that sucralose qualified as a “special dietary use,” for example, in the diets of diabetics. This “special dietary use” determination pertained to labeling under 21 C.F.R. § 172.831(d), which did not require any labeling specific with respect to diabetic diets, only with respect to “reducing or maintaining minimum body weight[.]”

No preemption. First, the court determined the FDA’s 1999 determination did not preempt the consumers’ claims. In TC Heartland’s view, the consumers sought to use California law to usurp FDA authority about sucralose safety. The consumers responded that the FDA’s recognition that sucralose is generally safe did not give TC Heartland license to make specific false or misleading health claims about sucralose benefits for diabetics. The consumers also said there was no conflict because 21 C.F.R. § 101.14(d)(2)(iii) required health claims to be “complete, truthful, and not misleading.”

The court agreed with the consumers that the FDA regulations TC Heartland cited did not preempt the state law claims. Determining whether health claims that Splenda products were “suitable for people with diabetes” or appropriate for “diabetes care” to whatever extent they “help manage blood sugar” posed no conflict with the FDA general safety determination. The consumers’ claims paralleled 21 C.F.R. § 101.14 prohibiting misleading health claims on food labels.

Standing. Contrary to TC Heartland’s argument that the consumers failed to allege physical injury, the court found they sufficiently alleged an economic injury-in-fact for purposes of Article III standing. Specifically, the consumers said they would not have bought the Splenda products, at least not at the price they paid, but-for TC Heartland’s purported misrepresentation that the products were healthy for diabetics. The alleged economic injury was consistent with Ninth Circuit precedent.

Plausibility. The court agreed with the consumers that they did not need to show or allege that sucralose was unsafe to proceed with their false advertising claims. TC Heartland’s first argument about the sufficiency of the consumers’ claims under Fed. R. Civ. P. 12(b)(6) was that the FDA’s 1999 general safety determination with “special dietary use” for diabetics made claims about ill effects implausible given 21 C.F.R. 105.3(a)(2). However, the court noted the regulation only governed labeling requirements for foods purporting to serve special dietary uses. It did not necessarily represent an FDA affirmative endorsement of such claims.

As for the studies the consumers cited, TC Heartland argued they did not support sweeping claims about sucralose being unsafe, nor, more specifically, that it could cause weight gain, metabolic syndrome, or type 2 diabetes. The consumers again emphasized that they were contending that sucralose is not beneficial to controlling blood sugar. They said they were not questioning its general safety. Conversely, the FDA findings on general safety did not address whether sucralose could improve conditions for diabetics.

The court emphasized it did not need to delve into the specifics of the studies the consumers presented, nor did it need to determine whether sucralose has bad effects on human health. The court said it only needed to consider whether the consumers pleaded that health claims presented on Splenda products went beyond the assertion that sucralose is generally safe. It also appeared that TC Heartland did not contest that none of the studies the consumers cited showed a positive health benefit of sucralose for diabetics. The court concluded that such claims could plausibly be deceptive.

Under the reasonable consumer test, words like “care” and “help” could, as the consumers were alleging here, imply that products provide a health benefit to diabetic consumers. TC Heartland said that understanding was only a mere possibility, noting that Splenda literally did not contain sugar, which would tend to exacerbate diabetes. TC Heartland also argued that the phrases “diabetes care” and “helps manage blood sugar” were not misleading because they accorded with the FDA finding that zero-calorie sweeteners are “appropriate for the ‘diets of diabetics and [are] therefore a special dietary use.’” 21 C.F.R. § 105.3(a)(2). In TC Heartland’s stated view, reasonable consumers would understand that Splenda products would not cure or improve diabetes, they just would not worsen it. The court concluded that all of this back and forth between the litigants presented an issue the court could not resolve on a motion to dismiss.

Forced advertising. The court held the consumers could not seek an injunction requiring TC Heartland to engage in an affirmative advertising campaign to dispel putative public misperceptions about the products. That kind of relief would violate the First Amendment. The consumers argued clarifying disclosures would not be unconstitutional where the speech was commercial in nature, but the court said requiring affirmative speech was only permitted in contexts involving purely factual information. The plethora of studies the consumers cited showed, to the contrary, that the information at issue here was a matter of controversy.

The Case is No. 5:23-cv-04192-PCP.

Judge: Pitts, P.

Attorneys: Alan Gudino (Clarkson Law Firm PC) for Steven Prescott. Kelsey Elling (Clarkson Law Firm PC) for Richard Tilker and Rochelle Wilson. Alexander Michael Smith (Jenner and Block LLP) for TC Heartland, LLC.

Companies: TC Heartland, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews