Antitrust Law Daily Wrap Up, ADVERTISING—NDCal: Suit Against Ghirardelli for Misrepresenting White Baking “Chocolate” Proceeds, (Apr 9, 2013)

By Jody Coultas, J.D.

A Ghirardelli Chocolate Premium Baking Chips – Classic White purchaser stated California consumer protection law claims against Ghirardelli Chocolate Company for allegedly misrepresenting the contents of the product, the federal district court San Francisco has held (Miller v. Ghirardelli Chocolate Co., April 5, 2013, Beeler, L.). Claims based on misrepresentation of other products the purchasers did not buy were dismissed

The purchaser allegedly reviewed the packaging in order to make sure he was buying white chocolate, but only reviewed the ingredient list after tasting the baking chips. The Baking Chips – Classic White do not contain white chocolate, cocoa, or cocoa butter.

The purchaser alleged that Ghirardelli misrepresented that its white chocolate and white chocolate flavored products contained real chocolate or white chocolate in violation of the California consumer protection statutes, including the unlawful prong of the California Unfair Competition Law (UCL). The purported class included all persons who, between August 27, 2008 and the present, purchased, in the United States, any of the following products: "Ghirardelli® Chocolate Premium Baking Chips – Classic White," "Ghirardelli® Chocolate White Chocolate Flavored Confectionary Coating Wafers," "Ghirardelli® Chocolate Sweet Ground White Chocolate Flavor," "Ghirardelli® Chocolate Premium Hot Beverage – White Mocha," or "Ghirardelli® Chocolate Frappé Classico – Classic White."

Because the purchaser only purchased the baking chips and the products were not of the kind of similarity to confer standing over similar, but unpurchased, products, the court dismissed the claims based on the four products that he did not purchase. To have standing, the party invoking federal jurisdiction must have suffered some actual or threatened injury, the injury must be fairly traceable to the challenged conduct, and a favorable decision would likely redress or prevent the injury. Where the alleged misrepresentations or accused products are dissimilar, courts tend to dismiss claims to the extent they are based on products not purchased. In this case, the products were different, were marketed to different consumers, and the labeling was different. The purchaser alleged that the labels for the wafers and white chocolate flavor employ the words "flavor" and "flavored," but those words are absent from the baking chips packaging. The mocha mix also had little discernible similarity to the baking chips.

The purchaser stated a UCL claim based on the unlawful prong, according to the court. The unlawful prong of the UCL is predicated on violations of other laws. Here, the purchaser based the claims on California’s Sherman Food, Drug and Cosmetic Law, which incorporates regulations promulgated by the FDA under the Food, Drug, and Cosmetics Act. Specifically, the purchaser alleged that Ghirardelli violated the sections concerning food labeling, the definition of chocolate, and the labeling of imitation products. The complaint gave notice of the claims, and alleged more than general assertions.

The court dismissed Ghirardelli’s argument that the Sherman Law was an unconstitutional delegation of the California Legislature’s lawmaking function because it incorporated all federal regulations promulgated on or after their effective date. The Sherman Law incorporated FDA regulations adopted after its effective date, but provides that any person can object to the incorporation and trigger a delay and review period before the regulation becomes California Law: The legislature did not abdicate its authority and instead cross-referenced a comprehensive regulatory framework that already applies to products such as Ghirardelli’s products anyway.

The case is No. C 12-04936 LB.

Attorneys: Adam Gutride (Gutride Safier LLP) for Scott Miller. Benjamin Jefferson Sitter (Farella Braun and Martel) for Ghirardelli Chocolate Company.

Companies: Ghirardelli Chocolate Company.

Cases: Advertising StateUnfairTradePractices CaliforniaNews