Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Mo.: Cape Cod not liable for labeling kettle cooked potato chips “all natural”, (Jan 28, 2015)

By Linda O’Brien, J.D., LL.M.

A consumer failed to state sufficient facts to pursue false and deceptive marketing claims against a snack food company over its use of the terms “all natural” and “no preservatives” in labeling and marketing its kettle cooked potato chips, the federal district court in Kansas City, Missouri has decided. Additionally, the consumer lacked standing to seek injunctive relief or to pursue claims regarding varieties of the potato chips that she did not purchase (Kelly v. Cape Cod Potato Chip Company, Inc., January 27, 2015, Whipple, D.).

Consumer Tonya Kelly filed a putative class action suit against Cape Cod Potato Chip Co., Inc. and Snyder's-Lance, Inc., alleging violations of the Missouri Merchandising Practices Act (MMPA). Cape Cod Potato Chip Co., a subsidiary of Snyder’s Lance, produces and markets the Kettle Cooked Potato Chip brand snack food. Kelly alleged that the defendants falsely labeled and marketed 16 different varieties of Cape Cod Chips as “all natural” and containing “no preservatives” when the chips were not all natural and contained preservatives. The false and deceptive marketing practices allowed the defendants to differentiate the chips from comparable chips and charge a price premium for the product. The defendants moved to dismiss the complaint.

MMPA. To present a claim under the MMPA, a plaintiff must allege that she (1) purchased product from the defendant; (2) for personal, family, or household purposes; and (3) suffered an ascertainable loss as a result of the defendant’s unlawful acts or practices. According to the court, the plaintiff alleged sufficient facts to show an ascertainable loss under the benefit of the bargain rule. Kelly asserted that she purchased the chips, which were represented as “natural” and containing “no preservatives,” and that, contrary to those representations, the chips were inferior as they were not natural and contained preservatives. The false representations caused her to pay more for the chips, which were worth less than they were represented to be. Those allegations supported her claim of an ascertainable loss.

However, the court found that Kelly failed to state a claim that the use of the term “natural” was false or deceptive under the MMPA. The dictionary definition in her complaint was “vague and ambiguous,” and no reasonable consumer would believe that the definition applied to the chips, since the chips were processed foods that did not exist in nature. The plaintiff’s assertions that the chips contained “no preservatives” were conclusory, and a review of the packaging for the chips showed there were no representations by the defendants that the chips contained “no preservatives.”

The product labels clearly disclosed the presence of allegedly unnatural ingredients, and it was not plausible that the plaintiff believed that the product did not contain the challenged ingredients based on the defendants’ “all natural” representations. The labels were in full compliance with Food and Drug Administration regulations. Thus, the plaintiff’s assertion that she was deceived by the defendants’ labeling was contradicted by the full disclosure of the product ingredients on the label, in the court noted.

Standing. The plaintiff lacked standing to seek injunctive relief because she stated in the complaint that she would not purchase the products as they presently exist. Since the complaint contained no allegations that the plaintiff intended to buy the Cape Cod chips in the future, she was not likely to suffer future injury.

Finally, the plaintiff lacked standing with regard to the 12 varieties of Cape Cod chips that she did not purchase. Because she admittedly did not purchase 12 of the 16 varieties of the chips, the plaintiff was not personally or actually harmed as to those products and could not maintain an action regarding the 12 varieties on her own behalf or on behalf of the class, the court concluded.

The case is No. 14-00119-CV-W-DW.

Attorneys: Brenda G. Hamilton (Shank & Hamilton, PC) for Tonya Kelly. George Francis Verschelden (Stinson Leonard Street LLP) for Cape Cod Potato Chip Co., Inc. and Snyder's-Lance, Inc.

Companies: Cape Cod Potato Chip Co., Inc.; Snyder's-Lance, Inc.

Cases: Advertising StateUnfairTradePractices MissouriNews