Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Fla.: Rice crisp maker unable to fry deceptive “All Natural” claims, (Jan 21, 2015)

By Greg Hammond, J.D.

A consumer of Riceworks Gourmet Brown Rice Crisps stated sufficient claims against the crisp maker for allegedly mislabeling its products as “All Natural” and containing “No Artificial Ingredients.” In partially denying the manufacturer’s motion to dismiss, the federal district court in Fort Pierce found that although the consumer’s claims should be limited to only products she purchased, she adequately alleged violations of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) (Bohlke v. Shearer’s Foods, LLC, January 20, 2015, Rosenberg, R.).

Background. Shearer’s Foods, LLC makes Riceworks Gourmet Brown Rice Crisps, which are available in various flavors. The products’ packaging allegedly states that the crisps are “All Natural” and contain “No Artificial Ingredients.” Consumer Elizabeth Bohlke purchased three varieties of Riceworks, the Sweet Chili, Sea Salt, and Salsa Fresca flavors. She filed a class action against Shearer’s alleging that the company’s “All Natural” and “No Artificial Ingredients” claims are untrue and misleading, because the crisps contain unnatural, synthetic, and/or artificial ingredients like masa corn flour, canola oil, maltodextrin, and caramel color. She asserted, in part, claims under the FDUTPA, and Shearer’s moved to strike the nationwide class-action allegations and to dismiss the first amended complaint.

Motion to strike. In support of its motion to strike, Shearer’s argued that Bohlke’s state law claims will require the court to apply the laws of 51 different jurisdictions, and that the laws are simply too different to certify nationwide classes, pursuant to Federal Rule of Civil Procedure 23. The court rejected this argument, noting that Bohlke could ultimately move to certify a very limited “nationwide” class and that the issues raised by Shearer’s may never materialize. Applying Federal Rule of Civil Procedure 12(f), the court concluded that nothing “redundant, immaterial, impertinent, or scandalous” was found in Bohlke’s allegations, and the motion to strike the nationwide class-action allegations was therefore denied.

Primary jurisdiction. In support of its motion to dismiss, Shearer’s first argued that analyzing and determining the meaning and implications of the term “natural,” as used on food labels, falls within the purview of the Food and Drug Administration’s (FDA) expertise, and that the court should therefore defer to the FDA, pursuant to the primary jurisdiction doctrine. Noting that the FDA is free to promulgate regulations regarding the term “natural,” the court found that the agency has not done so, and that interpreting the term “all natural” does not fall outside the court’s conventional experiences. The motion to dismiss based on primary jurisdiction was therefore denied.

Standing. Shearer’s also argued that Bohlke lacked standing to pursue claims involving varieties of Riceworks that she did not actually purchase, such as the Tangy Barbeque and Parmesan & Sundried Tomato flavors. The court agreed with Shearer’s argument, finding that a named plaintiff in a consumer class action cannot raise claims relating to products which she herself did not purchase. The motion to dismiss was therefore partially granted with regard to the claims pertaining to the Tangy Barbeque and Parmesan & Sundried Tomato flavors.

FDUTPA. Lastly, Shearer’s argued that the FDUTPA claim failed for three reasons: 1. it is barred by the Florida Food Safety Act (FFSA); 2. Bohlke failed to plead a plausible theory of actual damages; and 3. a reasonable consumer would not be deceived by the labels at issue. The court rejected all three arguments, noting that the FDUTPA can be violated in two ways: a per se violation premised on the violation of another law proscribing unfair or deceptive practice; and adopting an unfair or deceptive practice.

First, the court determined that it is not apparent whether Bohlke must be able to maintain a private cause of action under the FFSA to establish a per se violation under FDUTPA. Nevertheless, because she separately alleged that Shearer’s practices were “unfair and deceptive,” her FDUTPA claims stand. Second, the court found that Bohlke asserted a plausible theory of actual damages, because she alleged that she paid a price premium for the crisps due to the “All Natural” and “No Artificial Ingredients” labeling. She also met her burden at this stage of litigation on her alternative theory of actual damages—that the crisps were rendered valueless as a result of the alleged defect. Finally, the court concluded that a reasonable consumer could be deceived by the labels at issue, because—regardless of the ingredient list on the products’ packaging—a consumer could rely on the “All Natural” and “No Artificial Ingredients” representations without scrutinizing the ingredients, or a consumer could incorrectly believe that sugar, canola oil, dextrose, corn starch, and citric acid are “natural” ingredients. The motion to dismiss the FDUTPA claim was consequently denied.

The case number is 9:14-CV-80727-ROSENBERG/BRANNON.

Attorneys: Howard Weil Rubinstein for Elizabeth Bohlke. Kelly A. Kosek (Hahn Loeser & Parks LLP) for Shearer's Foods, LLC.

Companies: Shearer’s Foods, LLC

Cases: Advertising StateUnfairTradePractices FloridaNews