food and beverage class actions: litigating false...

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Presenting a live 90-minute webinar with interactive Q&A

Food and Beverage Class Actions:

Litigating False Advertising, Labeling,

Slack-Fill Packaging or Food Safety Claims Navigating Issues of Ascertainability, Predominance, Preemption, Standing and More

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

THURSDAY, JULY 13, 2017

Robert E. Boone, III, Partner, Bryan Cave, Los Angeles

Yvonne M. McKenzie, Partner, Pepper Hamilton, Philadelphia

Robert D. Phillips, Jr., Partner, Alston & Bird, San Francisco

Charles C. Sipos, Partner, Perkins Coie, Seattle

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Filing Trends

- Overview

- Slack-fill

- Sugar

- Natural claims

Litigation Strategies

- Dispositive motions

- Class certification

- Trial

Agenda

5

Food and Beverage Class Actions

6

Food and Beverage Class Actions: 2017 Filings Above Pace

* 2017 Filings as of March 2017 7

Food and Beverage Class Actions: Type of Filings a Mixed Bag

8 * 2017 Filings as of March 2017 8

Food and Beverage Class Actions: Renewed Focus on California?

9

Food Industry Class Actions by Jurisdiction

* 2017 Filings as of March 2017 9

• Brazil v. Dole (9th Cir. Sept. 30, 2016)

(mem. dispo.)

• Clarified proof necessary to defeat SJ

• Third-party surveys qualify

• FDA guidance qualifies

• Affirmed damages-based decertification

• Regression model to prove ”premium” not

common to the class

• No activity in N.D. Cal. post-remand

• Not cited for damages holding

Class Cert Decisions: Brazil Remand: Damages Ruling Affirmed

10

Food and Beverage Class Actions: Ascertainability Struck Down

• In re Conagra Foods (Jan. 2017)

• Published opinion: Rejects ascertainability

as not required under Rule 23

• Not consistent with language or purpose of

Rule 23

• Unpublished opinion: Affirms same

damages model rejected in Brazil

• Tees up Ascertainability Circuit Split:

• Cert petition filed Apr. 10, 2017

• Industry supporting petition

11

Food and Beverage Class Actions: Supreme Court Docket Modest 2016-17

• Microsoft v. Baker

• Can plaintiff get interlocutory review of

class cert with voluntary dismissal?

• Court highly skeptical of Plaintiff’s at Mar.

21 argument

• Consolidated NLRB Decisions

• Do class action waivers apply in labor

agreements covered by NLRA?

• Possible NLRB will moot case

12

Food and Beverage Class Actions: Effect of Judge Gorsuch

• Hammond v. Stamps.com

• Deferential reading of CAFA

• Shook v. Board of Comm’n

• Affirm denial of 23(b)(2) class due to lack

of common question on treatment of

disabled prisoners

• BP v. Edmonson

• CAFA remand order appealable

• Likely to vote similarly to Scalia

• Kennedy will remain key

• Gorsuch influence?

13

Food and Beverage Class Actions: New Breed “Natural”: Glyphosate

• Glyphosate: Targets residual presence of glyphosate in products labeled “natural”

• Tethered to WHO reports re: glyphosate as alleged carcinogen

• But, present in produces at levels below EPA 30PPM standard

• And, may be subject to primary jurisdiction defense

• Motions remain pending

• Beyond Pesticides v. Monsanto (D.C. Sup. Ct.) (Apri. 2017)

• Targets Monsanto directly

• Challenges Monsanto’s claim that glyphosate only targets enzymes “found in plants”

14

Food and Beverage Class Actions: Status of “Natural” Stays

• “Natural”

• Nov. 2015 FDA request for comments on “natural”; 7,600+ received

• Most stays remain in place

• But signs of impatience (Morales v. Kraft; In re Hain Celestial (C.D. Cal.))

• “Healthy”

• Sept. 2016 FDA request for comments on “healthy” and related terms

• March 2017 FDA seminar signaled possible movement

• Comment period closes April 26, 2017 (1,000 comments so far)

• Effect of E.O. 13771 / Gottleib?

15

Food and Beverage Class Actions: Corporate Responsibility Dismissals on Appeal

• “Corporate Responsibility” Class Actions

• Allege defendants failed to disclose use of forced labor in supply chain

• Multiple Rule 12 Dismissals

• “Safe Harbor” based on CTSCA compliance

• No duty to disclose

• Appeals now before Ninth Circuit

• Pending motions to certify duty to disclose issue to California Supreme Court

16

Food and Beverage Class Actions: 2017 Key Settlements

• CSPI / Naked Juice Settlement

• Private settlement on CSPI website

• Changes to labeling including

• Statement of identity and juice content

• Images to reflect “predominant” ingredients

• Minimizing “no sugar added” claims

• Monetary settlement undisclosed

17

Food and Beverage Class Actions: Stealth Claims

• Settlement at the CLRA Letter Stage

• Plaintiff’s counsel

• Tim Howard

• Bursor & Fisher

• Michael T. Fraser (via Rubenstein)

• Joseph Kravec

• David Greenstein

18

Food and Beverage Proposition 65 Actions: Acrylamide & Heavy Metals Notices on the Rise

19 * 2016 Filings as of October 2016 19

Food and Beverage Proposition 65 Actions : Acrylamide Litigation and Notices

• Coffee: 2017 Phase II Trial

• Cereal: pending SJ motion on preemption grounds

• 2017 notices set to triple 2016 notices

• Potato / Sweet Potato Snack Foods

• Vegetable Chips

• Prune Juice

• Bread

• Molasses

• Olives

20

• Cadmium

• Cocao nibs and cocoa powder

• Seaweed and shellfish products

• Lead

• Fruits, teas, cocoa powder

• Spices

• Supplements

• 87 lead notice in 2016

• 29 cadmium notices in 2016

Food and Beverage Proposition 65 Actions : Heavy Metals

21

Food and Beverage Proposition 65 Actions : New “Clear and Reasonable Warnings” Regulations

• Effective August 30, 2018

• Focuses responsibility on manufacturers

• Warning language

• Tailored to specific chemical

• Effectively requires additional testing and analysis by manufacturers prior to warning

• Requires reference to Prop 65 website

• Allows for shelf warnings

WARNING: Consuming this product can expose you to chemicals

including lead and cadmium, which are known to the State of

California to cause cancer and birth defects or other reproductive

harm. For more information go to www.P65Warnings.ca.gov/food.

22

23

Slack Fill Class Actions

Presented by Robert E. Boone III

July 13, 2017

24

Slack fill is the difference between the

actual capacity of a container and the

volume of product contained therein –

in other words, the empty space in the

package.

WHAT IS SLACK FILL?

25

• Federal slack fill regulation = 21 C.F.R. §100.100

• California slack fill statute = Bus. & Prof. Code§12606.2

• Purpose of slack fill statutes = Avoid consumer confusion

over how much product the consumer is purchasing.

• Manufacturer’s goal should be to allow the consumer

enough information – be it appropriate labeling and/or

the ability to view the contents of the package – to make

an informed decision when buying the product.

SLACK FILL STATUTES

26

• Slack fill in and of itself is not illegal or misleading. What

is prohibited is “nonfunctional” slack fill.

• Not misleading/no violation if the consumer can clearly

see through the packaging to determine how much how

much product is in the container, no violation – e.g., a

clear glass jar or a clear plastic bag.

• Translucent materials may or may not violate the statute

– e.g. if it must be held up to light or to transparent

containers with labels or graphics that impede the

consumer’s clear view of the contents, arguably a

violation.

NONFUNCTIONAL SLACK FILL

27

Slack fill is nonfunctional, and thus prohibited, unless it:

(1) is required for the protection of the contents of the package

(2) is needed for the operation of manufacturing machinery

(3) results from unavoidable product settling during shipping/handling

(4) is necessary for a specific function, such as the preparation or consumption of the food, if that function is inherent to the nature of the food and is clearly communicated to consumers

(5) results from packaging that contains a reusable container (like gift products)

(6) is needed to meet mandatory labeling requirements

SAFE HARBORS

28

U.S. Food & Drug Administration

Misleading Containers; Nonfunctional Slack-Fill, 58 Federal

Register 2957-01

(Jan. 6, 1993)

U.S. Food & Drug Administration

Misleading Containers; Nonfunctional Slack-Fill, 58 Federal

Register 64123

(Dec. 6, 1993)

LEGISLATIVE HISTORY

29

• Any portion of the empty space in the package that does

not serve the functional purpose of any of the safe

harbors constitutes nonfunctional slack fill.

• Accurately stating the net weight or volume of the

contents of the package does not protect the consumer

against misleading slack fill

FDA’s POSITION

30

• Optimize packaging design to minimize/eliminate empty

spaces

• Know the physical characteristics of the products and the

capabilities (and limitations) of packaging machinery

• If cannot minimize or eliminate empty spaces, make sure

you satisfy one or more of the safe harbors

• Adequately label product to avoid consumer confusion

over amount of contents

WHAT SHOULD MANUFACTURERS DO

TO COMPLY?

31

• Transparent packaging. Use whenever possible.

• Clear and conspicuous disclosures. Provide information on the package about the need for empty space.

• Clear internal records. Maintain re packaging design decisions, including what other options were considered, why the chosen design was selected, and why the need for slack fill.

• Product quantity changes. Re-evaluate packaging whenever reducing amount of product being offered. Reducing the amount of food or drink in a package without changing the package size can create risk to claims of misrepresentation or deception.

• Multi-packs. Packaging containing multiple packages of product – e.g., bulk sales – may be susceptible to attack even if the individual packages are not.

PRACTICAL TIPS

32

• Privilege. Should you cloak your package design analysis with the attorney-client privilege and/or attorney work product doctrine? – If you doubt the outcome of the analysis will be favorable, you may

want to do so.

– If the analysis is favorable, you may at some point want or need to waive those privileges in order to use that information to defend your packaging design.

• Evidentiary standards. Ensure that you use a scientifically sound and accepted methodology for how you analyze and test your packaging designs so that such evidence is admissible under the applicable evidentiary standards, such as the Daubert test used in federal courts. – You don’t want to spend valuable resources on an expert consultant

to validate your design and then not be able to get that evidence admitted in court.

LITIGATION CONSIDERATIONS

33

• Packaging violates federal and/or state slack fill statute by including nonfunctional empty space.

• Packaging is deceptive and unlawful because its runs afoul of the “reasonable consumer” standard. – Reasonable consumer expects more product and would not

have bought it had they known – i.e., “I didn’t get my money’s worth.”

– Packaging violates state UDAP laws

• California Unfair Competition Law (Bus. & Prof. Code §§ 17200 et. seq.)

• Missouri Merchandising Practices Act (“MMPA”) and unjust enrichment

• Unjust enrichment

SLACK FILL CLAIMS/THEORIES

34

• Hershey’s Whoppers and Reese’s candy

• Barilla pasta products

• Sour Patch Watermelon candy

• M&M’s Minis

• Nabisco Go-Paks

• Rice-A-Roni

• Pasta Roni

• McCormick pepper

• Starbucks’ lattes and iced beverages

• Tropicana orange juice

PRODUCTS ATTACKED

35

• Decisions mixed but the courts getting tougher on

plaintiffs’ pleadings.

• Courts are conducting a more rigorous analysis of their

factual allegations to determine if they state valid slack

fill claims, using a reasonable consumer standard.

• Prior decisions were much more lenient and held less

factual allegations sufficed.

• A court may determine as a matter of law that an

allegedly deceptive practice would not have misled a

reasonable consumer.

CHALLENGING THE PLEADINGS

36

• A reasonable consumer cannot suspend common sense or ignore

other methods of observation such as feeling the contents of the

package, or avoid reading the cooking instructions on the package.

• By picking up a bag and either feeling its contents or reading the

package labeling, a reasonable consumer should, in many cases,

be able to ascertain and understand that the package is not bursting

at the seams with product and generally to what extent it is filled.

• Manufacturers are making these arguments more frequently and

submitting evidence on motions to dismiss (via requests for judicial

notice) for courts to consider, with increasing success.

CHALLENGING THE PLEADINGS

37

Bush v. Mondelez Int’l, No. 16-CV-02460-RS, 2016 WL 5886886 (N.D. Cal. Oct. 7, 2016) (“Bush I”) and 2016 WL 7324990 (N.D. Cal. Dec. 16, 2016) (“Bush II”)

• Mini Chips Ahoy!, Mini Oreo, Golden Oreo Mini, Nutter Butter Bites, Mini Nilla Wafers, Ritz Bits, and Teddy Grahams

• Court twice granted a motion to dismiss defectively pleaded slack fill claims.

• Plaintiff argued that “the container size leads consumers to believe that there will be more snack food than there actually is” and that “he would not have purchased the products had he known the containers were not ‘adequately filled.’”

• Plaintiff recited the six safe harbors under the federal regulation and, in conclusory fashion, alleged that “none of these circumstances apply here.”

• Court: Such allegations are conclusory and “insufficient to support a claim of unlawful packaging.”

• Now on appeal

IMPORTANT COURT DECISIONS

38

Bautista v. Cytosport Inc., 2016 WL 7192109 (S.D.N.Y.

Dec. 13, 2016)

• Court held that “a plaintiff must possess some factual

basis before bringing a [nonfunctional slack fill claim].

• Dismissed the plaintiff’s conclusory allegations as

insufficient to state a nonfunctional slack fill claim.


39

Strumlauf v. Starbucks Corporation, 192 F. Supp. 3d 1025 (N.D. Cal. 2016)

• Plaintiffs adequately stated UCL, CLRA, false advertising and breach of express warranty claims that Starbucks deceptively selling its latte drinks by providing less liquid than stated on its menu.

• Starbucks argued that reasonable customer would know stated quantity includes foam from steamed milk, not just the liquid. Court: Question of fact that can’t be decided on motion to dismiss.

• Plaintiffs failed to state breach of implied warranty of merchantability claim because made to order lattes are not packaged goods.

• Plaintiffs failed to allege Art. III standing for injunctive relief because they would not buy lattes if knew drink did not contain fluid equal to ounces stated on menu. Court: “Now they now.”


40

Forouzesh v. Starbucks Corp., 2016 WL 4443203 (C.D.

Cal. Aug. 19, 2016)

• Plaintiffs alleged Starbucks deceptively marketed its iced

drinks because they did not contain the stated amount of

liquid, if you excluded the amount of space taken by ice.

• Court granted motion to dismiss on grounds that

reasonable consumer knows an iced drink contains ice

and that the drink would contain some portion of liquid

and some portion of ice in the designated cup size.


41

Izquierdo v. Mondelez Foods, 2016 WL 6459832 (SDNY

Oct. 26, 2016)

• Plaintiffs failed to state a claim under NY’s UDAP statute

because they did not allege facts establishing that they

paid more for the Sour Patch candy than they otherwise

would have, absent the alleged deceptive packaging.

• Court rejected Mondelez’ arguments that a reasonable

consumer would have been able to determine how much

candy was in the package, and that it contained slack fill,

by handling/shaking it. Court: Question of fact not

appropriate for motion to dismiss.


42

Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016)

• Not a food case but a good decision for manufacturers.

• 9th Circuit affirmed district court’s dismissal with prejudice of plaintiff’s claims that (1) Fresh had used deceptively large packaging that was misleading to “the reasonable consumer,” and (2) its packaging violated California’s slack fill rules.

• Ebner claimed Fresh’s “Sugar” lip balm is packaged in an oversized tube that actually dispenses only 75% of the product and therefore is deceptive, and the unaccessible 25% of the product constituted nonfunctional slack fill.

• 9th Circuit: Industry standard that some portion of product does not get pushed out of the tube. Reasonable consumer understands this, and can see it and actually access it if he/she wants (with their finger). Space with inaccessible product is not slack fill.


43

State of California v. Tropicana Products, Inc., Cal. Superior Ct., Los Angeles Cty, Case No. 30-2017-00904499

• AG sued Tropicana for non-functional slack fill in its cardboard OJ containers; alleged containers too big for amount of product inside.

• Alleged violations of California’s Unfair Competition Law (§ 17200) and False Advertising (§ 17500).

• Consent judgment entered March 2017

• $700,000 civil money penalty

• California’s costs of investigation (approx. $65,000)

• Injunction requiring Tropicana to increase by 10% the font size of ounces per carton designation

• Future compliance with CA slack fill statutes

STATE AG ACTIONS

44

None of the recent slack fill class actions have reached class certification stage yet.

Plaintiffs in the McCormick & Co. Pepper Products Marketing & Sales Practices MDL must file their class certification motion by mid-July.

May be difficult to defeat class certification because:

• Federal slack fill statute applies re any unlawful claims

• Reasonable consumer test applies re unfair/deceptive claims

• Uniform packaging may not create many individualized issues

CLASS CERTIFICATION CONSIDERATIONS

Yvonne M. McKenzie Partner

“Sugar” Class Actions

Strafford CLE/July 13, 2017

45

Sugar: The Latest Target

46

FDA:

- “The scientific evidence underlying the 2010 and the 2015-2020 Dietary Guidelines for Americans support reducing caloric intake from added sugars; and expert groups such as the American Heart Association, the American Academy of Pediatrics, the Institute of Medicine and the World Health Organization also recommend decreasing intake of added sugars”

- “In addition, it is difficult to meet nutrient needs while staying within calorie requirements if you consume more than 10 percent of your total daily calories from added sugars”

World Health Organization:

- Endorses a 10 percent cap on sugars, excluding those in fresh fruits, vegetables and milk

- Encourages people to aim even lower, limiting sugars to 5 percent of caloric intake for greater health benefits

Regulators Views on “Added Sugar”

47

“Added Sugar”

48

Lawsuits filed against a broad spectrum of food and beverage manufacturers. Many cases brought by Jack Fitzgerald

Added sugar described as “toxic” and alleged to increase the risk of heart disease, diabetes and other chronic illness

Plaintiffs allege that “no sugar added” labeling implies that the products contain less sugar, and are healthier than other comparable products without such labels

“No added sugar” Litigation

49

Plaintiffs rely on 21 C.F.R 101.60(c)(2)(iv), which prohibits the use of phrases like "no added sugar” unless "the food that it resembles and for which it substitutes normally contains added sugars"

Plaintiffs also rely on 21 C.F.R. 101.60(c)(2)(v), which provides that a “no added sugar” claim can only be made “if the product bears a statement that the food is not ‘low calorie’. . . and that directs consumers’ attention to the nutrition panel for further information on sugar and calorie content”


50

Major v. Ocean Spray Cranberries, Inc., 12-cv-03067 (N.D. Cal.)

- Ninth Circuit affirmed summary judgment

Wilson v. Odwalla, 17-cv-02763 (C.D. Cal.)

- District Court denied MTD

Rahman v. Mott's,13-cv-03482 (N.D. Cal.)

- Ninth Circuit upheld denial of cert for liability-only class

Lipkind v. PepsiCo, 16-cv-05506 (E.D.N.Y)

- Brought by CSPI (Center for Science in the Public Interest)

- Settled


51

October 2009: FDA characterizes “ECJ” as misleading in nonbinding Draft Guidance.

- Guidance triggers litigation, but many cases are stayed under primary jurisdiction doctrine

May 2016: FDA issues Final Guidance.

- “ECJ” is (still) misleading

- Recommends the term “sugar”

Evaporated Cane Juice

52

Suits stayed under primary jurisdiction are reactivated and new suits are on the rise

Some courts have issued decisions on MTD:

- Swearingen v. Santa Cruz Natural, Inc., 2016 U.S. Dist. LEXIS 109432 (N.D. Cal. Aug. 17, 2016) (MTD granted in part) (now settled)

- Swearingen v. Late July Snacks LLC, 2017 U.S. Dist. LEXIS 69280 (N.D. Cal. May 5, 2017) (MTD granted in part)

- Swearingen v. Healthy Bev., LLC, 2017 U.S. Dist. LEXIS 66938 (N.D. Cal. May 2, 2017) (MTD granted)

Current Landscape

53

www.alston.com © Alston & Bird LLP 2017

“Natural” Class Action

Lawsuits

Robert D. “Bo” Phillips, Jr.

Partner, Alston & Bird LLP

Jonathan J. Kim

Associate, Alston & Bird LLP

© Alston & Bird LLP 2017 55

“Natural” or “All Natural” Claims

No general consensus on definition of “natural” with respect to labeling on products.

Consumers purchase products labeled “natural” often in the false belief that they are purchasing a product without GMOs, hormones, pesticides, or artificial ingredients.

FDA sought public comments in November 2015 seeking to regulate the industry’s use of the term “natural” on food labeling where most “natural” labeling was found.

Public comment period closed on May 10, 2016 with 7,690 comments received. Since then, FDA has not issued a rule or opinion.


Importance of Defining “Natural”

Over the last few years, plaintiffs have aggressively

sued food and beverage manufacturers asserting that

“natural” food labeling is misleading because of the

ingredients contained in the products.

Plaintiffs claim that “natural” labeling misrepresents

health benefits or ingredients of the products.

The term “natural” in these lawsuits may be dispositive

of the entire action.


“Natural” Food Labeling Class Actions – In re:

KIND LLC “Healthy & All Natural” Litigation, 2016

WL 4991471 (S.D.N.Y. Sept. 15, 2016)

In KIND, plaintiffs alleged that KIND falsely labeled its products as “all natural” and “Non-GMO” despite containing synthetic and artificial ingredients.

The court stayed the “all natural” claims under the primary jurisdiction doctrine, concluding that the case should be stayed in deference to the FDA’s discretion and superior technical expertise.

Court states that this would “harmonize court rulings” with regard to the term “natural.”


“Natural” Food Labeling Class Actions –

Scholder v. Riviana Foods Inc., 2017 U.S.

Dist. LEXIS 98330 (E.D.N.Y. June 23, 2017)

Plaintiff filed a class action against defendant for violation of NY’s consumer protection statute for labeling its dry pasta products as “All Natural” and “100% Whole Grain.”

Dry pasta products contained glyphosate, an agricultural herbicide.

Based on the authorities in this growing area of “natural” and “all natural” litigation, court found that the trend amongst courts was to stay actions pending pertinent guidance from the FDA.

Plaintiff ’s action was stayed under primary jurisdiction doctrine with a direction to apprise the court of any material developments by the FDA.



Burton v. Hudgson Mill, Inc., 2017 U.S. Dist.

LEXIS 53160 (S.D. Ill. Apr. 6, 2017)

However, some courts have allowed plaintiffs’ actions to proceed despite the trend to stay actions pending the FDA’s guidance.

In Burton, plaintiff filed a class action lawsuit against defendant for labeling its pancake mix as “all natural” when in fact it contained synthetic agents such as monocalcium phosphate.

Defendant moved to dismiss plaintiff ’s complaint on various grounds including, that because there was no fixed definition for “all natural,” such use of that label could not form the basis for an affirmative misrepresentation.

Court noted that the definition of “all natural” was a question left best for members of the jury.



Martin v. Tradewinds Bev. Co., 2017 U.S.

Dist. LEXIS 72698 (C.D. Cal. Apr. 27, 2017)

In Martin, plaintiff filed a class action lawsuit against a defendant after the company packaged its iced tea products with the statement “100% Natural” and “100% Natural Ingredients.”

Iced tea products contained a caramel color additive, an artificial ingredient.

Defendant sought to dismiss plaintiff ’s complaint under primary jurisdiction doctrine arguing that FDA was pending determination of the definition of “natural” with respect to all natural food labeling.



Martin v. Tradewinds Bev. Co., 2017 U.S.

Dist. LEXIS 72698 (C.D. Cal. Apr. 27, 2017) Court disagreed with defendant, holding that FDA had already

determined that added coloring to food rendered the food not “natural.”

Court doubted that any guidance from the FDA was imminent or in the “foreseeable future.”

May signal a new trend by courts to take a narrow view of the FDA’s rulemaking process with regard to natural food labeling where distinctions are made between type of ingredients—for example, between food coloring and other artificial or synthetic ingredients for purposes of natural food labeling.

Indicates that courts may not be willing to stay cases under primary jurisdiction doctrine for all “natural” food labeling claims.


New Trends in “Natural” Class Actions – Brittany

Sebastian v. Kimberly-Clark Corporation et al., No.

3:17-cv-00442-WQH-JMA (S.D. Cal. Mar. 3, 2017) One response by plaintiffs has been to pivot toward cleaning

products, personal care products, and cosmetics.

In Sebastian, plaintiff purchased Huggies Natural Care wipes after she allegedly relied on defendant’s representation that the wipes had “natural” qualities to the product.

Wipes contained non-natural, synthetic, and/or artificial ingredients, including phenoxyethanol, caprylyl glycol, cocamidopropyl betaine, and sodium citrate.

Plaintiff alleges that defendant marketed and labeled its wipes as “natural,” causing consumers to purchase defendant’s wipes under a misrepresentation.


New Trends in “Natural” Class Actions – Garret

Shank v. Presidio Brands, Inc., No. 3:17-cv-00232

(N.D. Cal. Jan. 1, 2017)

In Shank, plaintiff purchased defendant’s company’s lotion, face scrub, and face wash, after its products were labeled as “all-natural,” and the packaging labeled “naturally derived.”

Defendant’s products contained several synthetic ingredients including cocamidopropyl betaine, dimethicone, ethylhexyglycerin, and phenoxyethanol, which are artificially produced in a lab.

Plaintiff filed class action on January 1, 2017.

Takeaway: likely we will see a rise in “natural” class actions in cleaning, personal care, and cosmetic products.


Recent Trends In Class Actions In Food,

Beverage and Nutrition Litigation

“Rigorous analysis” of Rule 23 requirements post-Dukes

Rule 23(a) commonality

Rule 23(b)(3) predominance

Focus on labeling and advertising issues


Key Issues In Recent Litigation

Reliance on label information

Reliance on advertising claims

“Healthy” claims

“Natural” claims

Efficacy claims for nutrition products and dietary supplements


Key Issues In Current Litigation

Ascertainability

Price premium/product superiority claims

Article III “injury in fact”

Materiality of label information/claims

www.alston.com © Alston & Bird LLP 2017

Thank You Robert D. “Bo” Phillips, Jr.

Partner, Alston & Bird LLP

[email protected]


68

Standing

- Products plaintiff did not buy

- Injunctive relief

Preemption

Primary Jurisdiction

FRCP 9(b)

- Courts usually allow plaintiffs to amend

Reasonable Consumer

Defense Strategy: Motions to Dismiss

69

Whether a statement is false/misleading is judged under a “reasonable consumer” standard

The test is whether “it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled”

Reasonable Consumer Test

70

Cruz v. Anheuser-Busch, Cos., 2017 U.S. App. LEXIS 4673 (9th Cir. Mar. 16, 2017) (unpub)

Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016)

Hadley v. Kellogg Sales Co., 2017 U.S. Dist. LEXIS 40825 (N.D. Cal. Mar. 21, 2017)

Dumas v. Diageo PLC, 2016 U.S. Dist. LEXIS 46691 (S.D. Cal. Apr. 6, 2016) [similar conclusion reached in Bowring v. Sapporo]

Galanis v. Starbucks Corp., 2016 U.S. Dist. LEXIS 142380 (N.D. Ill. Oct. 14, 2016)

MTD Granted/Upheld on Reasonable Consumer Grounds

71

Some success with slack-fill and place of origin claims

Ingredient list cannot cure potentially deceptive labeling claims

Disclaimers are helpful, but not always feasible

Generally difficult to win on a motion to dismiss unless “rare” circumstances exist

Takeaways on Reasonable Consumer

72

Class certification

Trial

Best practices


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food and beverage class actions: litigating false...

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