Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: Packaging of Whole Foods’ ice cream bars not likely to deceive reasonable consumer, (Apr 12, 2022)

By Martin A. Steinberg, J.D.

Even though the chocolate included other ingredients, Whole Foods never advertised its product as exclusively or 100% chocolate and the product contained an accurate ingredients list.

A consumer failed to sufficiently allege that the product packaging of ice cream bars sold by Whole Foods Market Group, Inc. was likely to deceive a reasonable consumer because the chocolate coating contained more non-chocolate ingredients than actual chocolate. Even though the consumer was misled by Whole Foods’s packaging, her interpretation of the labeling was unreasonable. An Illinois resident, Kayla Cerretti, brought a class action suit against Whole Foods Market Group, Inc. (Whole Foods), for falsely labeling its chocolate covered ice cream bars. The suit claimed that the packaging depicted that the bars were dipped in organic chocolate, when, in fact, most of the coating’s ingredients were not chocolate, thereby constituting a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of express and implied warranties, negligent misrepresentation, fraud, and unjust enrichment. Whole Foods’ motion to dismiss the complaint for not stating a basis for relief was granted (Cerretti v. Whole Foods Market Group, Inc., April 8, 2022, Shah, M.).

Background. Cerretti purchased a box of Whole Foods’ brand of organic ice cream bars based on the description of the product on the packaging. The front of the packaging described the bars as “Organic Vanilla Ice Cream Dipped in Organic Chocolate,” and showed the dessert surrounded by chunks of chocolate. The box further described the chocolate coating as: “Our Organic Ice Cream Bars are made the old-fashioned way with the finest organic ingredients. We start with fresh cream and cane sugar, then dunk our rich ice cream in chocolate for a smooth, thick shell. Indulge in the pure decadence of our organic ice cream bars.” Whole Foods was well-known to sell quality organic products. The ingredients list on the package, however, revealed that the first ingredient of the chocolate coating was palm kernel oil instead of chocolate liquor or cocoa butter. Cerretti filed suit representing a purported class of similarly situated consumers who purchased this product, claiming that the bars were worth less than they appeared because the chocolate coating contained more non-chocolate ingredients than actual chocolate.

Though all of the claims raised by Cerretti were state claims, the court maintained subject-matter jurisdiction under the Class Action Fairness Act for three reasons: (1) diversity existed since Cerretti was a citizen of Illinois while Whole Foods was a citizen of Delaware and Texas, (2) the amount of the controversy exceeded $5 million, and (3) Cerretti sought to represent a class of more than 100 members. The substantive law of Illinois applied though.

Statutory and common law fraud. Cerretti’s claims of violation of the Illinois Consumer Fraud Act and common law fraud essentially overlapped. To satisfy both counts, Cerretti needed to show that Whole Foods committed a deceptive or unfair act intending others to rely on the deception, that the acts occurred in the normal course of trade or commerce, and that it caused actual damages. The common law fraud claim added the element of a false statement of material fact.

Cerretti failed to sufficiently allege that the product packaging was likely to deceive a reasonable consumer, and that a sizable portion of the consuming public or targeted consumers would be misled. The product did contain chocolate as claimed on the package and Whole Foods never represented that it contained 100% chocolate. The court also rejected Cerretti’s attempt to rely on FDA regulations regarding the proper constitution of chocolate since consumers were typically unaware of the regulations and therefore would not have relied on them in making their decision whether to purchase the product. Likewise, Cerretti’s use of a survey was rejected since no fraud or misrepresentation occurred. Accordingly, these claims were dismissed.

Breach of warranty. The court rejected Cerretti’s claim that the defective products were a violation of express and implied warranties. Illinois law required that prior notice be given to the seller before a person can pursue a breach of warranty claim. Cerretti argued in vain that her filing the lawsuit constituted notice to Whole Foods. The court dismissed these claims for failure to comply with the state notice requirement.

Negligent Misrepresentation. Cerretti’s claim of negligent misrepresentation was dismissed for two reasons. First, Cerretti failed to show that Whole Foods made a false statement to her. Second, Illinois’s economic-loss rule bars recovery for solely economic loss under the tort theories of strict liability, negligence, and innocent misrepresentation. Instead, Cerretti should have pursued a breach of contract claim since she only alleged an economic loss for paying a higher price for the product than she would have otherwise.

Unjust enrichment. This claim also failed since it is not an independent cause of action but instead rested on a violation of another related claim, however, the other claims were dismissed. Accordingly, the court dismissed this claim as well.

The court granted Whole Foods’s motion to dismiss in its entirety. The negligent misrepresentation claim was dismissed with prejudice. The claims for statutory and common-law fraud, breach of warranty, and requests for unjust enrichment and injunctive relief were dismissed without prejudice. The court gave Cerretti leave to file an amended complaint by April 22, 2022. If she failed to do so by then, this dismissal would convert to a dismissal with prejudice and final judgment would be entered.

The case is No. 1:21-cv-05516.

Attorneys: Spencer Sheehan (Sheehan & Associates, PC) for Kayla Cerretti. Brian Richard Blackman (Blaxter | Blackman LLP) and Joseph Daniel Ryan (Law Offices of Joseph D. Ryan, PC) for Whole Foods Market Group, Inc.

Companies: Whole Foods Market Group, Inc.

Cases: Advertising StateUnfairTradePractices GCNNews IllinoisNews