Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Standing denied in baby food mislabeling claims for failure to show products were substantially similar to those purchased, (Jan 21, 2014)

By Edward L. Puzzo, J.D.

A consumer did not have standing to pursue claims against Gerber for mislabeling of baby food products for products she did not personally purchase, absent a showing that those products were substantially similar to what she purchased, the federal district court in San Jose, California has ruled (Bruton v. Gerber Products Company, January 15, 2014, Koh, L.).

Background. Natalia Bruton, on behalf of a putative class, alleged that products of Gerber, producer of retail food products for consumption by infants and children under two years of age, were misbranded because of “unlawful and deceptive misrepresentations” on products on Gerber’s websites, including: (a) nutrient content claims, such as “Excellent Source,” “Good Source,” “As Healthy As Fresh,” and “No Added Sugar”; (b) “natural” claims; and (c) sugar-related claims. Bruton asserted that, at the point of sale, she did not know or have reason to know that the products were misbranded and that she would not have bought the products if she had known more.

On September 6, 2013, the court ruled that Bruton had adequately stated claims under the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) and further ruled the claims were not preempted by federal law because California had adopted requirements which were parallel to federal law.

Standing. At this point in the litigation, Gerber alleged that Bruton lacked Article III standing to pursue claims regarding the Substantially Similar Products that Bruton did not personally purchase. The court favored the viewpoint that a plaintiff may have standing to assert claims for unnamed class members based on products she did not purchase as long as the products and alleged misrepresentations are substantially similar. In this scenario, Bruton was suing over an injury she personally suffered and asserting that others who purchased similar products suffered substantially the same injury, even if the products that caused the injury were not identical in every respect. Accordingly, the court rejected Gerber’s contention that Bruton lacked Article III standing to sue over the Substantially Similar Products merely because Bruton did not personally purchase every product identified in the her complaint.

Substantial similarity. Even with standing to sue over the Substantially Similar Products, however, Bruton failed to adequately allege substantial similarity between the Purchased and Substantially Similar products—namely various beverage products, certain cut-up fruit or vegetable products, certain dehydrated fruit or vegetable products, and certain squeezable fruit products. Given that Bruton failed to explain how these categories of products were substantially similar in kind to the Purchased Products in spite of having been warned she would need to do so in a prior order, Gerber’s motion to dismiss with regard to these products and eight other categories of products was granted, with prejudice, the court ruled.

Statements not viewed. Gerber also alleged that Bruton lacked standing to pursue claims based on statements on the Gerber website that Bruton did not view. Despite Bruton’s disavowals that her claims were based on statements on Gerber’s website, the court found that certain claims in the complaint were based on statements she did not view, showing a failure to demonstrate actual reliance. Thus the court dismissed those claims with prejudice.

Reliance. Gerber also alleged that Bruton lacked standing to bring claims under the UCL, FAL, and CLRA in the absence of allegations that she actually relied on, and was injured by, Gerber’s allegedly unlawful and misleading label statements. Gerber alleged that her allegations of reliance and injury were “entirely implausible.”

Although the court agreed with Bruton’s position that reliance and injury were not required for standing under the UCL’s unlawful prong, actual reliance and injury are required to establish statutory standing under the UCL’s unlawful prong whenever the underlying alleged misconduct is deceptive or fraudulent, the court ruled. However, the court concluded, Bruton did adequately plead injury and reliance.

Gerber contended that no reasonable consumer would have been misled by Gerber’s label statements in context, but this was a fact dispute not appropriately resolved on a motion to dismiss, the court stated. Accordingly, the court denied Gerber’s motion to dismiss on these grounds.

Failure to state a claim. Gerber next moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. One of their arguments in support was that some of the statements complained of were non-actionable puffery. The court explained that California consumer protection law distinguishes between concrete statements about a product and generalized boasts or statements of opinion; only the former is actionable under the UCL, FAL, and CLRA. However, the supposed puffery in this case included “Healthy” claims, that are covered by federal and state regulations, which impose specific labeling requirements and which assume that consumers rely on health-related claims on food products in making purchasing decisions. Thus, the court ruled, it could not conclude as a matter of law that no consumer would rely on these statements. These were questions of fact ill-suited for resolution on a motion to dismiss, and were sufficiently plausible to survive a motion to dismiss, the court ruled.

Gerber also argued that Bruton failed to state a claim because its “Excellent/Good Source” and “Healthy” labeling complied with FDA regulations. Bruton, however, cited a different interpretation of those regulations. Gerber fell well short of establishing that its interpretation of the regulations was correct as a matter of law, the court stated. Accordingly, Gerber’s motion to dismiss on this basis was denied.

The case is No: 12-CV-02412-LHK.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Natalia Bruton. Bryan Alexander Merryman (White & Case LLP) for Gerber Products Company.

Companies: Gerber Products Company

Cases: Advertising StateUnfairTradePractices CaliforniaNews