Antitrust Law Daily Wrap Up, ADVERTISING—NDCal: Deceptive Food Labeling Claims Against Conagra Proceed, (Dec 19, 2012)

By William Zale, J.D.

Purchasers of PAM cooking spray, Hunt’s canned tomatoes, and Swiss Miss cocoa can pursue a suit under the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) based on Conagra’s labeling claims including “natural,” “organic,” “antioxidant,” and “free of artificial ingredients and preservatives,” the federal district court in San Francisco has ruled (Jones v. Conagra Foods, Inc., December 17, 2012, Breyer, C.). However, the purchasers failed to plead that website health claims were likely to deceive a “reasonable consumer,” and some of the purchasers’ labeling-related claims were dismissed for failure to plead with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure.

Federal Preemption

The purchasers’ claims were not preempted by the Organic Foods Product Act (OFPA), the National Labeling and Education Act (NLEA), or the Federal Food, Drug, and Cosmetic Act (FDCA), the court determined. The dispute did not involve organic certification of Conagra’s products, and to the extent that the purchaser’s false advertising and deceptive practices claims were based on California Health and Safety Code provisions essentially the same as the NLEA and FDCA, the claims were not preempted.

Primary Jurisdiction

The doctrine of primary jurisdiction also did not bar the purchasers’ claims, according to the court. The Food and Drug Administration’s expertise was not necessary to determine whether the labels are misleading. The reasonable-consumer determination and other issues involved in the lawsuit were within the expertise of the courts to resolve.

Falsity, Reliance, Injury

Deceptive labeling claims under the UCL, CLRA, and FAL are evaluated by whether a “reasonable consumer” would be likely to be deceived, the court observed. The purchasers did not need to plead falsity and could state a claim by pleading that the public was likely to be deceived by the deceptive practice.

The purchasers stated a claim that Conagra’s antioxidant claims were false and that a reasonable consumer would be misled by “freshness” claims, the court found. Claims regarding website health representations were dismissed for failure to plead that the reasonable consumer would likely be deceived by the representations.

The proper standard of reliance is whether a reasonable consumer is likely to be deceived by the offending statements, the court said. The court found unpersuasive Conagra’s contention that the purchasers could not allege reliance based on Hunt’s claims that the products are “natural,” because the allegedly unnatural ingredients” were plainly disclosed in the ingredient list.” The purchasers based their claims, in part, on allegations that they were deceived because the ingredients themselves were mislabeled. The court also found that it could not be concluded as a matter of law that a reasonable customer would not be deceived by Conagra’s antioxidant claims (as with “Crunch Berries”).

The purchasers asserted injury and established standing by alleging that they paid an “unwarranted premium” for the allegedly mislabeled products and that, had they been aware that the labeling was inaccurate, they would not have purchased the defendant’s products.

Particularity in Pleading

With some exceptions, the purchasers pleaded “who, what, when, where, and how” in compliance with Rule 9(b). The court did not agree with Conagra that when and where were not pleaded by allegations that the purchasers had bought the products in California since April 2008.

The court did agree with Conagra that, in light of its recent changes to the PAM products label to include “(preservative)” after rosemary extract, it was necessary to know more specifically when the plaintiffs purchased PAM products that did not include “(preservative).” The court dismissed with leave to amend the claims for failure to plead with particularity the “when and where” as to the PAM products.

With regard to alleged purchases of “Hunt’s Petite Diced Tomatoes in a 14.5 oz can and other Hunt’s canned tomato products such as its tomato paste in an 8 oz. can,” the court also dismissed claims as to “other” canned tomato products. The court also dismissed with leave to amend claims regarding Hunt’s tomato paste in an 8 oz. can for failure to specifically plead whether the product contained citric acid, or both citric acid and calcium chloride.

The case is No. C 12-01633 CRB

Ben F. Pierce Gore (Pratt & Associates) for Levi Jones. Robert B. Hawk (Hogan Lovells US LLP) for ConAgra Foods, Inc.

Cases: Advertising ConsumerProtection StateUnfairTradePractices CaliforniaNews