Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Ghirardelli charged with mislabeling white and dark chocolate products, (Jun 18, 2015)

By Linda O’Brien, J.D., LL.M.

A manufacturer of chocolate products has engaged in deceptive and false advertising and marketing practices, leading customers in U.S. territories to believe that they were purchasing, for a premium price, certain products containing chocolate, while such products contained no chocolate or cocoa derivatives as required by U.S. Food and Drug Administration (FDA) labeling regulations, according to a complaint filed by a consumer in the federal district court in San Juan, Puerto Rico (Vega-Encarnacion v. Ghirardelli Chocolate Company, June 16, 2015).

Ghirardelli Chocolate Company, a U.S. subsidiary of Swiss confectioner Lindt & Sprüngli AG, is a manufacturer and marketer of premium chocolate products. Victor Vega-Encarnacion is a consumer who has purchased Ghirardelli-branded chocolate products.

The complaint states that Ghirardelli markets itself as America’s premium chocolate company for more than 150 years and that it takes special steps in the manufacturing process to ensure that its premium chocolate delivers its signature chocolate taste. However, Ghirardelli markets and sells three white chocolate products as containing chocolate even though the products contain no chocolate, white chocolate, or cocoa butter — white chocolate baking chips and coating wafers, and hazelnut dark chocolate bars.

The FDA has issued regulations requiring that a food label accurately identify and describe the basic nature of the food or its characterizing ingredients and must include a statement of the presence or absence of any characterizing ingredients. The FDA has also adopted standards of identity for “chocolate” and “white chocolate,” providing that products bearing the name “chocolate” are expected to contain cacao-derived ingredients, the complaint alleges.

According to the complaint, the packaging for Ghirardelli’s white and dark chocolate products is inconsistent with the FDA regulations since it prominently uses the term “chocolate” on the primary label panel when the products, in fact, contain no white or dark chocolate, cocoa butter, cacao fat, or any cacao derivatives. Moreover, the defendant intentionally prices its white and dark chocolate products at the same price as its similar milk, semi-sweet, and bittersweet chocolate products which further deceive customers into believing that the white and dark chocolate products contain chocolate.

The complaint also alleges that Ghirardelli did not disclose that the white and dark chocolate products were not chocolate or flavored with chocolate. To do so, they would have been required, at a minimum, to state in an appropriate font size on the front or primary label “imitation,” “artificial” or “artificially flavored.” The packaging on the products is also deceptive in that the products are marketed as “premium” and “deep chocolate flavor or texture” when the products do not contain chocolate or are derived from cocoa beans. Furthermore, the defendant’s website touts the history and preeminence of Ghirardelli chocolate products with no indication that certain products are not in fact chocolate.

The plaintiff purchased a Ghirardelli hazelnut dark chocolate bar after reviewing the packaging to satisfy himself that that he was purchasing real chocolate. He relied on the defendant’s failure to adequately disclose that the product was imitation or artificial and was no chocolate. Had the defendant not misrepresented the true nature of the product, the plaintiff would not have purchased the product, or at a minimum, would have paid much less for the product.

The plaintiff asserts claims for breach of express warranty, unjust enrichment, and violations of the Puerto Rico Department of Consumer Affairs regulations and Virgin Islands Consumer Fraud and Business Practices Act. The action seeks declaratory and injunctive relief, disgorgement, compensatory damages, pre- and post-judgment interest, attorney fees, and any other just and proper relief.

The case is No. 3:15-cv-01821-CCC.

Attorneys: Manuel L. Morales Schmidt (Delgado & Morales) for Victor Vega-Encarnacion.

Companies: Ghirardelli Chocolate Company

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