Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Some food labeling claims against Johnson & Johnson’s Splenda Essentials could proceed, (Oct 24, 2013)

By Peter Reap, J.D., LL.M.

Certain claims brought in a second amended class action complaint against Johnson & Johnson, Inc. and McNeil Nutritionals, LLC—alleging deceptive and misleading information on labels for Splenda Essentials products—were entitled to proceed, while others that had been previously dismissed with prejudice and realleged were dismissed, the federal district court in San Francisco has decided (Bronson v. Johnson & Johnson, Inc., October 21, 2013, Breyer, C.).

Specifically, the court granted the defendants’ motion to dismiss with prejudice for the claims previously dismissed with prejudice. The district court also granted the motion to dismiss with prejudice for the Plaintiffs’ claims regarding Fiber and B-Vitamin products, and denied the motion for remaining, non-preempted claims regarding the B-Vitamin products.

Background. Like their first amended complaint, the second amended complaint centered on three of defendants’ products: Splenda Essentials with B Vitamins, Splenda Essentials with Antioxidants, and Splenda Essentials with Fiber. Specifically, the plaintiffs took issue with: (1) the product name Splenda “Essentials”; (2) the label on Splenda Essentials with B Vitamins, which includes the statement “helps support a healthy metabolism”; (3) the label on Splenda Essentials with Antioxidants, which includes the statement “20% of the daily value of antioxidant vitamins C and E, like those found in fruits and vegetables” placed near a picture of berries; and (4) the label on Splenda Essentials with Fiber, which includes the statements “1 gram of fiber in each packet” and “healthy fiber” placed next to a photo of fruit and whole-grain cereal. The plaintiffs also allege that print and website materials for all three products contribute to the misleading and deceptive marketing.

The named plaintiffs claimed that they “relied heavily on the written misrepresentations” and “deceptive health claims” appearing on Splenda Essentials’ labels when they chose to purchase the product. Further, named plaintiff Barbara Bronson alleges that, after an initial purchase of Splenda Essentials, she “reviewed claims on the Splenda website and (based upon the representations contained therein) purchased more.” Splenda Essentials costs 25% more than regular Splenda, and the plaintiffs purchased Splenda Essentials at full price at various grocery stores in California.

The plaintiffs reasserted claims originally asserted in the first amended complaint for violation of: (1) California’s Unfair Competition Law; (2) California’s False Advertising Laws (“FAL”); (3) Consumer Legal Remedies Act (“CLRA”); and (4) Breach of Implied Warranty of Merchantability.

Realleged claims previously dismissed with prejudice. The plaintiffs realleged two claims that were previously dismissed with prejudice in the court’s prior order. First, they realleged that the name “Essentials” falsely implies that consumers need Splenda Essentials products to maintain a healthy lifestyle. Second, they realleged that the statement “1 gram of fiber” on the Splenda Essentials with Fiber label misleads consumers by failing to distinguish between synthetic and natural fibers within the product. The plaintiffs contended that they were required to reallege all previously dismissed claims in order to preserve a right to appeal.

The plaintiffs were incorrect, according to the court. Following the dismissal of claims with prejudice, litigants are not required to reallege dismissed claims in a subsequent amended complaint in order to preserve the right to appeal dismissal. Thus, the motion to dismiss with prejudice for Plaintiffs’ realleged claims that were previously dismissed with prejudice was granted.

Fiber and B-vitamin products claims. In the prior order, the court dismissed plaintiffs’ UCL, FAL, and CLRA claims regarding the Fiber and B-Vitamin products. With respect to the Fiber product, the court found that the plaintiffs’ claims were preempted by federal law where they alleged that defendants failed to differentiate between natural fiber and synthetic fiber. The court dismissed the pre-empted fiber claims with prejudice and dismissed the remaining fiber claims because they relied on a lack-of-substantiation theory, but granted leave to amend. Regarding the B-Vitamin product, the court found that the plaintiffs’ claims were not preempted, but dismissed the claims with leave to amend because they also relied on a lack-of-substantiation theory.

The SAC now realleged the non-preempted Fiber and B-Vitamin claims. Because the plaintiffs’ amended claims remained defective as lack-of-substantiation claims, they were dismissed with prejudice, the court ruled.

Regarding the Fiber product, the plaintiffs offered two amended claims: (1) the product misleads consumers by suggesting it provides the same health benefits as natural fiber in whole foods; and (2) the product misleads consumers by suggesting it has the same impact on satiety as natural fiber in whole foods. Both claims were founded on an assumption that synthetic and natural fibers differ in how they impact the body. Although this assumption could be true, the claims were insufficient because they failed to cite authority suggesting that a meaningful difference exists between synthetic and natural fiber. Without evidence suggesting a differing benefit between the fiber in Splenda Essentials with Fiber and the fiber in whole foods, the claims remained lack-of-substantiation claims.

Similar to the claims regarding the Fiber product, the amended claims regarding the B-Vitamin product remained defective, the court held. As with the FAC, the Plaintiffs offered no evidence in support of their claims. Without some evidence suggesting that B Vitamins did not support weight loss, the Plaintiffs failed to establish that such a representation was deceptive. Similarly, no evidence was offered as to the quantity of B Vitamins that would provide health benefits, and no evidence was offered to suggest a difference exists between the benefits from B Vitamins within foods and the benefits from B Vitamins present in Splenda.

Antioxidant product. In the prior order, the court found the UCL, FAL and CLRA claims regarding the antioxidant product pre-empted insofar as they claimed that the defendants failed to differentiate between natural and synthetically derived antioxidants in the product. The court dismissed the pre-empted claims with prejudice. As to the remaining Antioxidant claims, the court found they were not defective as lack-of-substantiation claims, but dismissed the claims with leave to amend where they relied on defendants’ web advertising.

In the first amended complain, plaintiffs failed to allege reliance on defendants’ online marketing campaigns. Further, at the hearing on the motion to dismiss the first amended complaint, plaintiffs’ counsel confirmed that the plaintiffs’ did not rely on the defendants’ web advertising. Subsequently, in the second amended complaint, the plaintiffs allege that plaintiff Bronson did rely on representations from the Splenda Essentials website when purchasing additional Splenda Essentials products. They supported the new and inconsistent allegation with a clarification that plaintiffs’ counsel had been mistaken at the hearing, and a declaration from counsel establishing Bronson’s reliance on the Splenda Essentials website. The plaintiffs’ actions in amending the complaint did not suggest bad faith, the court reasoned.

Because the offering of inconsistent allegations was not grounds to dismiss the allegations from the second amended complaint, the plaintiffs’ representations that Bronson relied on the Splenda Essentials website were sufficient to establish standing to challenge defendants’ web advertisements. Insomuch as the defendants argued that the plaintiffs’ antioxidant claims failed because the plaintiffs did not allege reliance on the defendant’s web advertising, the defendants’ motion was denied.

Next, the defendants argued that the plaintiffs’ remaining antioxidant claims failed because they did not satisfy the heightened pleading standards for fraud claims under Rule 9(b). However, the plaintiffs sufficiently alleged particular facts satisfying the heightened pleading requirements under Rule 9(b) in their second amended complaint, the court held. The second amended complaint attacked specific representations on the Splenda Essentials website and product packaging, and identified why those representations were misleading. Further, the second amended complaint alleged that Bronson relied on the website, established that she viewed the website after her first purchase of Splenda Essentials products, and alleged all of the plaintiffs relied on the package when they purchased the antioxidant product.

The second amended complaint set forth with specificity the claims that were allegedly misleading and why they were misleading. Therefore, insomuch as the motion to dismiss attacked the pleadings for lack of specificity under Rule 9(b), the defendants’ motion was denied.

The case is No. C 12-04184 CRB.

Attorneys: Corey Benjamin Bennett (The Mills Law Firm) for Barbara Bronson. Michael James Stortz (Drinker Biddle & Reath LLP) for Johnson & Johnson, Inc.

Companies: Johnson & Johnson, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews