Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: ‘All Natural’ false labeling suit against Snapple can proceed, (Oct 15, 2024)

By Donielle Tigay Stutland, J.D.

A reasonable consumer could be misled by the “all natural” claims on the labels of Snapple’s juices and teas, as the products may contain manufactured citric acid.

A suit alleging that Snapple Beverage Corp.’s labeling of its certain juices and teas as “ALL NATURAL” is false and misleading survived a motion to dismiss from the drink maker, a federal district court in California determined. A consumer had brought a proposed class action suit against the drink maker arguing that he purchased Snapple’s Apple Juice, Peach Tea, and Lemon Tea and that labeling of the products as “ALL NATURAL” is false and misleading because the products contain manufactured citric acid (“MCA”) and coloring agents. While the court did dismiss false advertising claims alleging that products use of juice concentrates “for color” is unnatural, the court allowed the remaining claims to proceed. The court found that a reasonable consumer could be misled by the “all natural” claims on the labels of Snapple’s juices and teas, as they are alleged to contain manufactured citric acid (Fried v. Snapple Beverage Corp., No. 24-cv-653-DMS-DDL (S.D. Cal. Oct. 11, 2024)).

Background. A consumer in California was a purchaser of Snapple’s Apple Juice, Peach Tea, and Lemon Tea. He brought a suit alleging that the labeling of the products as “ALL NATURAL” is false and misleading because the products contain manufactured citric acid (“MCA”) and coloring agents. He alleged that the false labels allowed the drink manufacturer to charge a premium for the products.

The consumer’s complaint asserted six causes of action: (1) violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§17200, et seq.; (2) violation of the False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§17500, et seq.; (3) violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §§1750, et seq.; (4) breach of express warranties under Cal. Com. Code §2313(1); (5) breach of the implied warranty of merchantability under Cal. Com. Code §2314; and (6) unjust enrichment. Snapple filed a motion to dismiss.

UCL, FAL, and CLRA Claims. The court began its analysis by looking at the claims alleging violations of the UCL, FAL, and CLRA. The court laid out that the UCL, FAL, and CLRA are all governed by the “reasonable consumer” test. The court stressed that it must be “probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” The consumer argued that a reasonable consumer would be misled for two reasons. First, the consumer alleged that the use of juice concentrates “for color” is unnatural. Second, the consumer contended that the use of citric acid renders Snapple’s products unnatural.

With respect to the first argument, the court agreed with the manufacturer that the consumer’s assertion is a “legal conclusion that is not deemed true even on a motion to dismiss.” Additionally, the court highlighted that the juices’ ingredient lists clarify any misunderstanding a reasonable consumer would have. The back labels of the Apple Juice and Mango Madness Juice clarify that vegetable and fruit concentrates were added for color and that the color is not “a naturally-occurring constituent in the food.” The court found the allegation regarding what a reasonable consumer would assume was too conclusory and “lacks a factual foundation to support any determination as to what reasonable consumers do (or do not) believe.” The court concluded that the complaint did not plausibly allege that reasonable consumers would be deceived by the “ALL NATURAL” label on the products simply because they contain juice concentrates for color.

However, turning to the argument that the products are unnatural because they contain manufactured citric acid (“MCA”), the court did find the allegations plausible. The complaint alleged that that MCA, which is in the products, “is an industrial chemical derived, not from fruit or vegetables, but from the fermentation of crude sugars (e.g., molasses and corn starch).” As the court was required to assume the allegations as true at this stage of litigation, the court indicated, “assuming Defendant’s Products contain MCA, it is plausible that a reasonable consumer is “likely to be deceived” by Defendant’s “ALL NATURAL” labeling on its Products.” The court denied the motion to dismiss with respect to the UCL, FAL, and CLRA Claims.

Common law claims. The court next turned to the consumer’s claims alleging breach of express warranties, breach of the implied warranty of merchantability, and unjust enrichment. Looking at the breach of express warranty claim, the drink maker argued that this claim must fail because the consumer had not plausibly alleged that there is an “underlying misrepresentation.” The court rejected this argument and found that the consumer had sufficiently alleged at this stage that (1) the product labels convey to reasonable consumers that the products are “ALL NATURAL,” and that (2) the products nonetheless contain MCA, an industrial chemical, contrary to Snapple’s representations. The court denied the motion to dismiss the breach of express warranties claim.

As to the claim for breach of implied warranty of merchantability, the drink maker argued that this claim be dismissed because its products are “fit for their ordinary purpose—to be consumed as juice.” But the court pointed out that the consumer made an argument that the manufacturer failed to comply with the second interpretation of merchantability articulated in Hauter v. Zogarts, under “a different definition of merchantability, whether the product conforms with ‘the promises or affirmations of fact made on the container or label.’” Here, the court found that the consumer had plausibly alleged that the manufacturer has not conformed with its affirmation that its products are “ALL NATURAL.”

Finally, the court addressed the unjust enrichment claim, wherein the consumer alleged that he is entitled to restitution because the manufacturer derived “financial benefits” from the class members’ purchase of the products. The court determined that the consumer had sufficiently stated a quasi-contract cause of action: “Defendant enticed Plaintiff and class members to purchase their products through fraudulent misrepresentations and was unjustly enriched as a result.”

The case is No. 24-cv-653-DMS-DDL.

Judge: Sabraw, D.

Attorneys: Jack Fitzgerald (Fitzgerald Monroe Flynn PC) for Albert Fried. Charles C. Sipos (Perkins Coie LLP) for Snapple Beverage Corp.

Companies: Snapple Beverage Corp.

Cases: Advertising StateUnfairTradePractices CaliforniaNews