Antitrust Law Daily Wrap Up, TOP STORY—9thCir: Consumers Can Challenge Juice Maker's “Brain Development” Advertising, Labeling Under California Law , (Mar 11, 2013)

By Jeffrey May, J.D.

A divided U.S. Court of Appeals in San Francisco has revived a putative class action asserting claims under California’s Unfair Competition Law (“UCL”) and False Advertising Law against the maker of Juicy Juice beverages. Complaining consumers' allegations regarding the marketing of Juicy Juice Brain Development supported viable FAL and UCL fraudulent business practices claims, according to the court. Dismissal of the “Brain Development” claims was reversed, and the matter was remanded (Chavez v. Nestle USA, Inc., March 8, 2013, per curiam).

According to the court's not-for-publication decision, the consumers adequately pled that “members of the public are likely to be deceived” by the Juicy Juice Brain Development labeling and advertisements. The consumers challenged Nestle USA, Inc.'s representations that Juicy Juice Brain Development provides children with the omega-3 fatty acid docosahexaenoic acid (DHA), which helps promote brain development. The consumers alleged that the product actually contains very small amounts of the touted ingredient, DHA. They pled that in order to obtain enough DHA from Juicy Juice to promote potential brain development, young children would need to consume an impractical and extremely high quantity of juice—more than a bottle’s worth each day. These allegations, combined with the consumers’ claims of “injury in fact” and “lost money or property” resulting from the misrepresentations, were adequate to state a claim.

The court also noted that the primary jurisdiction doctrine did not provide an alternative basis for dismissing the Juicy Juice Brain Development claims. The consumers' claims did not necessarily implicate primary jurisdiction, and the FDA has shown virtually no interest in regulating DHA in this context.

Dissent.

A dissenting opinion suggested that the majority was improperly permitting the plaintiffs to base their false advertising claims on a lack of substantiation. Only the FTC is permitted to demand such substantiation.

The dissent went on to say that the majority’s reading was contrary to the “common sense” and plausibility required by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 2007-1 Trade Cases ¶75,709, and Ashcroft v. Iqbal, 129 S. Ct. 1937, 2009-2 Trade Cases ¶76,785.

“It is not plausible that any reasonable person would understand Nestle’s ads to mean that all a child needs is Juicy Juice,” according to the dissent. “When a child’s mother tells him to eat his broccoli because it is good for him, she is not misleading the child, even though eating only broccoli and nothing else would probably be bad for the child.”

The case is No. 11-56066.

Attorneys: Raymond P. Boucher (Kiesel, Boucher & Larson) for Mauricio Chavez. Dale Joseph Giali (Mayer Brown LLP) for Nestle USA, Inc.

Companies: Nestle USA, Inc.

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