Antitrust Law Daily Wrap Up, ADVERTISING—NDCal: Claims against Kellogg for mislabeling snack products dismissed, (Jun 20, 2013)

By Jody Coultas, J.D.

Snack consumers could not state California Unfair Competition Law (UCL), False Advertising Law (FAL), or Consumers Legal Remedies Act (CLRA) claims against Kellogg Company or Procter & Gamble Company for allegedly mislabeling snack products, the federal district court in San Jose has held (Samet v. Procter & Gamble Co., June 18, 2013, Grewal, P.).

The consumers purchased Kellogg’s Pringles snack chips, MorningStar Farms Hickory BBQ Riblets, and Fruity Snacks Mixed Berry allegedly due to deceptive and false labeling and advertising of the products’ ingredients and nutritional value.

Standing. Paying a higher price for allegedly falsely advertised products was sufficient to show an economic loss, according to the court. Kellogg argued that the consumers lacked standing under both Article III and the economic injury requirements of the California statutes because the consumers did not allege that the products were tainted, spoiled, adulterated, or contaminated. The court held that the consumers’ allegations that they paid a higher price for the Kellogg products and would not have purchased the products had they not been deceived by the labeling were sufficient to show injury and confer standing.

Express preemption. The Food, Drug, and Cosmetic Act (FDCA), as amended by the Nutrition Labeling and Education Act (NLEA), expressly preempted some of the consumers’ state law claims, according to the court. The consumers claimed that the Fruity Snacks product packaging was misleading because it depicted strawberries, blueberries, and raspberries next to the statement “made with real fruit,” even though the only fruit ingredient was apple puree concentrate. Kellogg argued that the claim was expressly preempted because the FDCA and accompanying regulations allowed manufacturers to use the name and image of fruit on a product’s packaging to describe the flavor of the product, even if that product did not actually contain that fruit. Because the consumers’ claims went beyond the FDCA regulations and required more than what the FDA required, the claims were preempted. However, the consumers’ other claims were not preempted because they mirrored the FDA regulations.

Field preemption. Because the claims did not stem solely from FDCA violations, the court held that the claims were not preempted. Kellogg argued that the consumers were attempting to circumvent the FDCA’s bar on private enforcement and that the claims existed solely by virtue of the FDCA requirements. However, the claims vindicate the separate and independent right to be free from deceptive and misleading advertising. Congress and the FDA intended that the states would be free to adopt a statutory scheme paralleling the FDCA and offer a private suit of enforcement of those parallel state regulations.

Primary jurisdiction doctrine. The court declined to apply the primary jurisdiction doctrine to the claims. Kellogg argued that the court should refer the case to the Food and Drug Administration under the primary jurisdiction doctrine. Generally, the doctrine applies when the case involves an issue that has been placed by Congress within the jurisdiction of an administrative body that deals with an industry or activity that requires expertise or uniformity in administration. The court noted that deceptive labeling claims do not require consultation of the expertise of the FDA, nor does the FDA have exclusive jurisdiction over issues of food labeling. Nutrition labeling requires some uniformity, but the FDCA does not prohibit state law actions.

State law claims. The court dismissed the UCL, FAL, and CLRA claims with leave to amend. The consumers failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b) and offered only legal conclusions that the products were mislabeled. The consumers also failed to show that statements made on websites were advertising under the statutes.

The case is No. 5:12-CV-01891 PSG.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Sarah Samet. Brian G. Selden (Jones Day) for Procter & Gamble Co.

Companies: Procter & Gamble Co.; Kellogg Co.

Cases: Advertising CaliforniaNews