Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D.N.Y.: Nestlé may be liable for misrepresenting bacon content in Beggin’ strips, (Aug 15, 2016)

By Jody Coultas, J.D.

A dog treat purchaser stated New York General Business Law (GBL) claims against Nestlé Purina Petcare Company for allegedly misrepresenting the bacon content in its Beggin’ brand dog treats, according to the federal district court in New York City. The court, however, dismissed claims based on the Beggin’ strip website that stated that the products were made with bacon because the statement was true and not misleading (Kacocha v. Nestlé Purina Petcare Company, August 11, 2016, Karas, K.).

Nestlé Purina Petcare Company manufactures and markets pet food and pet treats worldwide, and is the largest pet food company in the United States. The Beggin’ dog treat are shaped and colored to look like real bacon and flavored to smell like real bacon. The packaging display panel includes the phase “made with real bacon” along with a large image of a crispy piece of bacon, an icon of a small frying pan containing two pieces of bacon, and an image of a purple ball with the text “bacon flavor” boldly displayed, the complaint alleges.

According to the complaint, bacon and bacon fat are present in only small quantities in the Beggin’ products. However, the real main ingredients are non-meat fillers, such as ground wheat, corn, soybean meal, water, sugar, and other processed ingredients. Beggin’ product purchasers filed New York General Business Law claims against Nestlé based on the allegedly false advertising. Nestlé argued that the complaint failed the “reasonable consumer test,” the consumers lacked standing, and that the advertisements were nonactionable puffery.

Standing. The purchaser had standing to assert the false advertising claims, according to the court. To establish Article III constitutional standing, plaintiffs must establish an injury in fact, which is concrete and particularized and actual or imminent, that was caused by the defendant, and that is likely to be redressed by a favorable resolution. While Nestlé expressed skepticism that the purchaser was deceived by the packaging and advertising, there was no question that the purchaser alleged injury—he allegedly paid a premium for the dog treats that he would not have paid had Nestlé not falsely advertised the products—which was sufficient for standing.

Nestlé argued that the purchaser lacked standing because he based claims on statements found on the website and in advertisements that he did not allege that he saw. A plaintiff has class standing if he plausibly alleges: that he personally has suffered an injury as a result of the defendant’s action, and that the defendant’s conduct implicated the same set of concerns as the conduct alleged to have caused injury to other members of the class. At issue here is what amount of variation among the disputed products or representations threatened not just class standing but also Article III standing. The court found that Article III jurisdiction survived at least modest variation among those products purchased or representations seen by the named plaintiff on the one hand and the putative class members on the other. Here, the variation between the advertisements were not meaningful enough to destroy subject matter jurisdiction.

Reasonable consumer test. No reasonable consumer would be misled by the ingredient and nutrient section of Nestlé’s website, according to the court. The webpage for the Beggin’ product line lists, under the heading ‘Ingredients & Nutrients,’ “Made with real bacon.” No other ingredients or nutrients were specified. This statement was true, and no reasonable consumer would take this to mean that bacon was the sole or one of the main ingredients.

Questions of law and fact precluded dismissal of the GBL claims regarding the packaging and television commercials, according to the court. This was not a case where a purchaser claimed that he thought there was an ingredient in the product he purchased when there was not. Rather, the purchaser alleged that consumers were led to believe by the packaging and advertising that Beggin’ dog treats were “predominantly made out of real pork bacon,” when, in fact, “bacon and bacon fat a[re] the tenth and twelfth ingredients,” out of nearly two-dozen ingredients. The court could not conclude, based on the facts presented, that the purchaser had not plausibly alleged that Nestlé’s conduct was materially misleading. Generally, the question of whether a business practice is deceptive presents a question of fact for a fact finder. The court recognized, however, that other courts faced with similar questions have reached different conclusions.

The purchaser claims monetary damages on the grounds that he “would not have paid the premium price he paid” to buy the Beggin’ products had he “known the truth.” This was sufficient at the motion-to-dismiss phase. There was ample case law allowing the GBL claims over allegedly deceptively labeled consumer goods to progress beyond the motion-to-dismiss stage, but there was also ample case law dismissing similar claims as being unlikely to deceive a reasonable consumer in the context of lawsuits brought pursuant to other consumer protection statutes, the court concluded.

Puffery. Claims are deemed puffery where a reasonable consumer would not interpret the statement as a factual claim, and is merely a generalized or exaggerated statement. Puffery is not actionable under the GBL. The bacon content of a product is not mere puffery as it can be measured and proven true or false. The package’s reference to “BacoNology” and the commercial’s comedic nature did not require a different conclusion.

The case is No. 15-CV-5489 (KMK).

Attorneys: Robert J. Berg and Jeffrey I. Carton (Denlea & Carton LLP) for Paul Kacocha. Henninger S. Bullock, Carmine R. Zarlenga, Keri E. Borders, and Rebecca B. Johns (Mayer Brown LLP) for Nestlé Purina Petcare Company.

Companies: Nestlé Purina Petcare Company

Cases: Advertising StateUnfairTradePractices NewYorkNews