Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Hershey not liable for nutrient content and health claims on product labels, (May 7, 2014)

By Jody Coultas, J.D.

The federal district court in San Jose dismissed a purchaser’s California consumer protection law claims against The Hershey Company for mislabeling its products (Khasin v. The Hershey Company, May 5, 2014, Davilla, E.). However, claims based on Hershey’s labeling concerning antioxidant levels in its products were adequately pleaded.

The purchaser alleged that Hershey falsely advertised and labeled several of its products in violation of the California Unfair Competition Law and Consumers Legal Remedies Act. Hershey allegedly made unlawful nutrient content, antioxidant, health, and sugar free claims and failed to abide by the standards of identities for its chocolate and cocoa products.

The court dismissed the purchaser’s claims predicated on the Magnuson-Moss Warranty Act and the Song-Beverly Act, but the purchaser’s California consumer protection law claims remained pending. Hershey then sought summary judgment on those claims.

The court rejected the purchaser’s argument that the court could not rule on Hershey’s motion at this stage. The purchaser argued that a court cannot rule on a dispositive motion until a class is certified and notice is given to the putative class. Hershey sought to waive the potential protection afforded by an early ruling on class certification. There was no prejudice to class members or the purchaser as a result of ruling on the summary judgment motion as putative class members remain entirely free to file suit against Hershey.

Hershey was granted summary judgment on all claims related to its website and off-label advertising, according to the court. The purchaser admitted that he did not view Hershey’s website and off-label advertising.

Because the purchaser failed to argue against dismissal of the California False Advertising Law and Consumers Legal Remedies Act claims, the court granted Hershey’s motion on these claims. Failure to oppose a dispositive motion is equivalent to abandoning the claims.

Hershey was granted dismissal of most of the purchaser’s California Unfair Competition Law claims (UCL) for failure to plead reliance, according to the court. To have standing to assert a UCL claim, the purchaser was required to allege that he would not have bought the product but for the alleged misrepresentation. With regards to any claims based on alleged misrepresentations or omissions regarding vanillin, PGPR, serving size, and alkalized cocoa powder, the purchaser could not establish reliance and, therefore, could not state claims based on those allegations.

The purchaser stated UCL claims based on antioxidant nutrient content claims on Hershey’s products, according to the court. Hershey’s label allegedly made it seem that the antioxidant level was similar to that found in tea and fruit. The purchaser alleged that the antioxidant claims violated California’s Sherman Law and lacked adequate scientific evidence about the antioxidant nutrients. The purchaser also stated that he read and relied on those claims when deciding to buy the products.

The case is No. 5:12-CV-01862-EJD.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Leon Khasin. Grace Y. Park (Bergeson, LLP) and Steven A. Zalesin (Patterson Belknap Webb and Tyler LLP) for The Hershey Co.

Companies: The Hershey Company

Cases: Advertising StateUnfairTradePractices CaliforniaNews