Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: “Sunflower Dream” consumer proceeds with “All Natural” misbranding claims, (Apr 9, 2015)

By Greg Hammond, J.D.

A consumer of the non-dairy beverage Sunflower Dream Sunflower Drink Unsweetened had standing and stated plausible claims that the product and “substantially similar” products were deceptively misbranded as “All Natural.” The federal district court in San Jose, California therefore denied a motion to dismiss the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA) claims (Anderson v. The Hain Celestial Group, Inc., April 8, 2015, Davila, E.).

Background. Natural and organic foods company The Hain Celestial Group, Inc. is the producer of the Sunflower Dream drink and other “Dream Products,” such as Rice Dream and Soy Dream. Barbara Anderson purchased Sunflower Dream, allegedly relying on the “All Natural” statement located on the front of the drink’s packaging label. She claims that Hain unlawfully misbranded and falsely, misleadingly, and deceptively represented in marketing and on the drink’s labeling that Sunflower Dream was “All Natural,” when it contained various artificial or synthetic ingredients. Hain moved to dismiss Anderson’s false advertising claims, as well as her claim for injunctive relief.

Unpurchased products. In support of its motion to dismiss, Hain first argued that Anderson does not have standing to assert California consumer protection claims for products she did not purchase. While Anderson’s complaint alleges that Hain misbranded eight additional products she did not purchase, the court determined that her complaint adequately described a similar misleading feature between the “substantially similar products” and Sunflower Dream, namely that the other “Dream” line flavors contain the same “All Natural” misrepresentation in a similar location on the front label, but also contain artificial, synthetic, or extensively processed ingredients. The court therefore concluded that due to the similarity between the products, a resolution of whether the “All Natural” label violates the UCL, FAL, and CLRA will result in a resolution of the same claims asserted against the “substantially similar products.” Anderson therefore pleaded sufficient facts to demonstrate standing and the motion to dismiss the claims based on unpurchased “substantially similar products” was denied.

Injunctive relief. Hain next argued that Anderson is now aware of the Sunflower Dream drink’s ingredients and she will therefore not rely on the product’s “All Natural” label in the future, demonstrating a lack of future harm needed for an injunction. The court agreed, finding that Anderson failed to allege she will re-purchase any of the “Dream” line products and that such an allegation would be implausible because she knows that the products are not “natural” enough for her. The motion to dismiss was therefore granted with regard to the injunctive relief claim.

Plausibility. Anderson’s mislabeling claims were pleaded with sufficient particularity to survive Hain’s motion to dismiss, according to the court. “[O]ne does not have to suspend reality to understand” a consumer’s conclusion that a product containing the unqualified statement “All Natural” signifies that the product does not include any unnatural ingredients, and a reasonable consumer is not expected to look beyond the misleading misrepresentations on the front of a box to discover the truth from the ingredient list in small print on the side of the box. Anderson also sufficiently alleged reliance with particularity because she identified the “All Natural” statement on the product’s front label. The court consequently found that Hain does not need to engage in any guesswork because Anderson’s allegations on reliance are specific enough to provide Hain with notice of what conduct is at issue. The motion to dismiss the UCL, FAL, and CLRA claims was therefore denied.

The case number is 5:14-cv-03895-EJD.

Attorneys: Chant Yedalian (Chant & Co.) for Barbara Anderson. Claudia Maria Vetesi (Morrison & Foerster LLP) for The Hain Celestial Group, Inc.

Companies: The Hain Celestial Group, Inc.

Cases: Advertising CaliforniaNews