Last year, I posted about a couple of recently filed putative class action lawsuits against General Mills related to their Cheerios cereals. One of the cases stemmed from a well-publicized incident involving the accidental unloading of gluten-free flour onto trucks that previously carried wheat flour, resulting in a voluntary recall by General Mills of Cheerios produced on certain days that were wrongly labeled “Gluten Free.” In May, Judge Morrison C. England, Jr. of the Eastern District of California granted in part and denied in part General Mills’ motion to dismiss that action for lack of subject matter jurisdiction and failure to state a claim. See Lengen v. Gen. Mills, Inc., No. 215CV02262MCEKJN, 2016 WL 2602416 (E.D. Cal. May 5, 2016). Specifically, the court in Lengen held that plaintiff’s claim for damages under the California Consumers Legal Remedy Act survived, rejecting General Mills’ argument that its refund program rendered the claim moot.
More recently, better news for General Mills came out of the District of Oregon, where that court dismissed all claims in a similar lawsuit, this time accepting the argument that the plaintiff failed to allege any ascertainable injury beyond the $15.98 he paid for mislabeled Cheerios, which was fully covered by the recall/refund program. Hamilton v. Gen. Mills, Inc., No. 6:16-CV-382-MC, 2016 WL 4060310 (D. Or. July 27, 2016). The plaintiff, Christopher Hamilton, paid $15.98 for two twin-packs of gluten-free cereal in September 2015. Although he has celiac disease, Hamilton did not claim he suffered any adverse effects or that he even consumed the cereal. He brought the action on behalf of a proposed class of consumers who purchased “mislabeled Cheerios,” alleging that General Mills engaged in mislabeling, false advertising, and deception in violation of the Oregon Uniform Trade Practices Act (“UTPA”) and various other states’ laws. General Mills moved to dismiss for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted and moved to strike plaintiff’s class action allegations. Id. at *1.
With respect to subject matter jurisdiction, General Mills argued, as it had in California, that its recall program and refund offer rendered plaintiff’s claims moot. Hamilton did not dispute that the Cheerios he purchased fell within the recall/refund period, but rather, argued that the program was inadequate because it did not meet the full extent of his requested relief. The court examined the question of whether Hamilton was injured as a result of purchasing recalled Cheerios, and whether that injury conferred standing upon him to sue for damages despite the refund offer. Id. at *4.
In addition to the Article III requirement that a plaintiff must show a “concrete and particularized” injury in fact, in order to state a viable claim under Oregon’s UTPA, one must allege an “ascertainable loss of money or property.” Id. The court rejected Hamilton’s argument that his $15.98 expenditure on the Cheerios supported standing to sue for relief beyond the refund offer, and also expressed doubt at the theory of liability underlying his claims:
“Rather than mitigate his damages by accepting General Mills’ recall/refund offer, Hamilton is suing General Mills’ for false labeling, marketing, and promotion of the product. Hamilton paints a discreet, manufacturing mishap as a grand scheme of deceptive advertising, marketing, and labeling. I find this to be creative at best.”
Id. at *5. Additionally, the court held that Hamilton lacked standing to sue for injunctive relief because he failed to identify any actual or imminent threat of future harm. By contrast, the facts suggested that his alleged harm arose from an “isolated incident” with no evidence of impending threat of future related incidents. Id. at *5.
Finally, the court dismissed the UTPA claims because Hamilton failed to allege two required elements of a claim under that statute: ascertainable loss and “reckless or knowing” misconduct. At most, the court reasoned, Hamilton established that General Mills “made a mistake” when it unloaded its gluten-free flour onto trucks that previously carried wheat flour because of a rail car incident. Id. at *6. Hamilton similarly failed to state a claim under quantum meruit, as he established no unjust gains General Mills made that it was not disgorged of through its widely publicized recall and refund program. Id.
The court here rightfully curbed yet another effort to capitalize on General Mills’ isolated manufacturing error with a big plaintiffs’ pay day. At bottom, the plaintiff did not and could not allege that he suffered any injury as a result of General Mills’ alleged wrongdoings except the $15.98 he paid for Cheerios, for which he was entitled to a refund. As in the California action, the plaintiff here argued that his allegations required discovery to shed light on the nature and extent of General Mills’ mislabeling practices and whether its recall was adequate. This essentially amounts to an argument that “perhaps if we dig deeper we will discover we are entitled to something more.” The court rightfully rejected this argument because Hamilton and the proposed class members all purchased Cheerios within the recall period, and, seemingly, because their “creative” efforts to paint General Mills’ accidental mislabeling incident as a fraudulent or deceptive scheme were not well-received.