Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDCal: California Unfair Trade Practices Claims Challenging Certain Sweetener Health Claims Proceed, (Apr 18, 2013)

By Tobias J. Gillett, J.D., LL.M.

Purchasers of Splenda sweeteners labeled as containing antioxidants, fiber, or B vitamins could proceed with California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA) claims asserting that the use of 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 could mislead consumers into believing that the vitamins were derived from fruit or provided the same benefits as real fruit, the federal district court in San Francisco has ruled (Bronson v. Johnson & Johnson, April 16, 2013, Breyer, C.). However, the court dismissed claims challenging other alleged health claims and the use of the term "Essentials" on the product labels, as well as claims contained in print and website materials.

Johnson & Johnson, Inc. and McNeil Nutritionals, LLC produce sweeteners called Splenda Essentials with Antioxidants, Splenda Essentials with Fiber, and Splenda Essentials with B Vitamins. On August 9, 2012, a putative class of purchasers of the sweeteners filed suit against the companies, challenging as misleading the defendants’ marketing with respect to the "(1) product name Splenda ‘Essentials’; (2) label on Splenda with Fiber, which includes the statement ‘1 gram of fiber in each packet’ and ‘healthy fiber’ placed next to a photo of fruit and whole-grain cereal; (3) label on Splenda 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) label on Splenda Essentials with B Vitamins, which includes the statement ‘helps support a healthy metabolism.’" They also claimed that the defendants’ print and website materials contributed to the deceptive nature of the marketing.

The purchasers asserted claims under the UCL, the FLA, and the CLRA, as well as claims for unjust enrichment and breach of the implied warranty of merchantability. The defendants moved to dismiss.

Standing. To have standing to bring a claim under the UCL, FAL, or CLRA, the court explained, plaintiffs must allege that they relied on the allegedly misleading material. Although the purchasers alleged that they relied on the packaging, they made no such allegation with respect to the print and website materials. Moreover, the defendants’ challenged marketing had begun in 2012, and therefore the purchasers had not been exposed to the kind of "extensive and long-term advertising campaign" that might permit them to rely on less specific allegations. Therefore, the court granted the motion to dismiss with respect to the print and website materials.

Preemption

The federal Food, Drug, and Cosmetic Act (FDCA) contains an express preemption clause added by the Nutritional Labeling and Education Act (NLEA). The clause does not preempt state law claims as long as "the requirements they seek to impose are either identical to those imposed by the FDCA and the NLEA amendments or do not involve claims or labeling information of the sort described in" the relevant sections of the FDCA.

Splenda Essentials with Antioxidants. The court first addressed the preemption issue with respect to the labeling on Splenda Essentials with Antioxidants, which claimed the product contained "20% of the daily value of antioxidant vitamins C and E, like those found in fruits and vegetables," and included a picture of berries. The court observed that the FDA permitted "express nutrient claims" such as "20% of the daily value of antioxidant vitamins C and E," and did not require that labeling must "distinguish between synthetically derived antioxidants and those derived from fruit." Therefore, the purchasers’ claim that the labeling was misleading for not making that distinction was preempted.

However, the claims with respect to the phrase "like those found in fruits and vegetables" were not preempted. The defendants argued that the FDA prohibits manufacturers from claiming "that a natural vitamin in a food is superior to an added or synthetic vitamin," and therefore the claims were preempted. The court rejected this argument, noting that the purchasers did not contend that the labels suggested vitamins contained in fruit were better, but rather that the phrase "like those found in fruits and vegetables" placed next to a picture of berries misleadingly suggested that the antioxidants were derived from fruits and vegetables or provided the same health benefits.

Splenda Essentials with Fiber. The court next found preempted the purchasers’ claim that the statement on the label of Splenda Essentials with Fiber that it contained "1 gram of fiber" was misleading because it did not "differentiate between the health benefits of whole, intact fibers found in whole grains, vegetables, fruits, and legumes, versus refined fibers." The FDCA, NLEA, and FDA regulations did not require manufacturers "to distinguish between fiber intrinsic and intact in plants and synthetically manufactured fiber."

Splenda Essentials with B Vitamins. However, the court determined that the purchasers’ challenge to the statement on the label of Splenda Essentials with B Vitamins that it would "help support a healthy metabolism" was not preempted. The defendants contended that the claim represented a "structure/function claim," which was expressly permitted by FDA regulations. The court observed that the FDA regulations regarding "structure/function claims" were issued pursuant to the Dietary Supplement Health and Education Act (DSHEA). The "plain language" of the DSHEA specifically applied only to dietary supplements, not to food like sweeteners, according to the court.

Implied preemption. The claims regarding Splenda Essentials with B Vitamins were also not impliedly preempted. The court rejected the defendants’ contention that the purchasers’ "claims would upend the FDA’s carefully calibrated scheme," noting that the FDA had not "created nuanced regulatory nuanced regulatory guidelines relating to food structure/function statements."

Safe harbor doctrine. The "safe harbor defense," which provides that "if the legislature has permitted certain conduct or considered a situation and concluded that no action should lie, courts may not override that determination," also did not apply to the Splenda Essentials with B Vitamins claims. Even if the statements on the label were permissible structure/function claims under the FDA regulations, the regulations also proscribed "misleading" labels. Since the purchasers claimed the labels were misleading, the safe harbor defense did not apply, in the court’s view.

Lack of substantiation. Having resolved the preemption issues, the court proceeded to address the defendants’ argument that purchasers’ claims were not based on "actually false or misleading" labels, but rather on a failure to provide adequate scientific substantiation for the labeling claims, a type of claim not cognizable under the California consumer protection laws.

The court agreed with this argument with respect to the Splenda Essentials with B Vitamins and Splenda Essentials with Fiber claims. The purchasers alleged that "no reliable studies have shown" that Splenda Essentials with B Vitamins promotes weight loss, that "there is no scientific consensus that refined fibers function like intact fibers," and that "research is inconclusive about the physiological benefits of refined, processed fiber," but did not "cite any source stating that B vitamins do not contribute to weight loss or that the effect of refined fiber is actually different than intact fiber." Therefore, the claims amounted to lack of substantiation claims not cognizable under the UCL, FAL, and CLRA.

However, the court found that the plaintiffs did adequately plead their claims regarding Splenda Essentials with Antioxidants. They alleged that the labeling suggested that the antioxidants in the product were derived from fruits and vegetables, when they were actually ascorbic acid and synthetic vitamin E, and cited a source stating that most antioxidant benefits come from the whole fruit rather than just vitamin C.

Reasonable consumer. The court then proceeded to apply the standard for deceptive labeling claims under the UCL, FAL, and CLRA—"whether a reasonable consumer would likely be deceived." The court initially rejected the purchasers’ claims that the use of the word "essentials" in the product names was misleading because it "cues customers to think this product is a necessity" and that the nutrients in it are necessary to be healthy. The court concluded that the word "essential" in this context represented mere "non-actionable puffery," and that "no reasonable consumer would conclude, based on the presence of the word ‘essential’ in the name ‘Splenda Essentials,’ that the Splenda products were essential to their diet or essential in order to receive the vitamins and nutrients in the products."

However, the court declined to dismiss under the "reasonable consumer" standard the purchasers’ claims that the Splenda Essentials with Antioxidants label "creates the misleading impression that the vitamins are derived from fruit or provide the same benefits as real fruit, even though they do not provide any notable health benefits." The court concluded that a reasonable consumer might receive those impressions from the defendants’ use of the phrase "like those found in fruits and vegetables" next to pictures of berries that are rich in antioxidants.

The court therefore dismissed without leave to amend the Splenda Essentials with Fiber claims and the Splenda Essentials with Antioxidants claims to the extent they were preempted and the claims regarding the Essentials name, and dismissed with leave to amend the claims regarding website and print advertising and the claims regarding Splenda Essentials with Fiber and Splenda Essentials with B Vitamins that relied on substantiation theories. However, the court denied the motion to dismiss with respect to the non-preempted portions of the Splenda Essentials with Antioxidants claims.

The court also dismissed with leave to amend a claim for unjust enrichment, because "unjust enrichment is not an independent cause of action in California." Although such claims could proceed if they were based on quasi-contract, the purchasers did not specify that their claims were based in quasi-contract.

The court declined to dismiss a claim for breach of the implied warranty of merchantability, noting that "courts refrain from dismissing implied warranty claims" when "plaintiffs challenge food labels that are not preempted by federal law and are otherwise allowed."

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.; McNeil Nutritionals, LLC

Cases: Advertising StateUnfairTradePractices ConsumerProtection CaliforniaNews