This blog previously reported on the Seventh Circuit oral argument in Bell v. Albertson Companies Inc.—a case turning on whether a reasonable consumer would understand the phrase “100% Grated Parmesan cheese” on a cheese canister to mean that the product contained literally nothing but cheese. The Defendants had argued that reasonable consumers could not be deceived by such a claim, even though their products contained a small amount of cellulose powder and potassium sorbate mixed in with the grated Parmesan to act as a preservative. This was so, they maintained, since (1) the ingredient list expressly disclosed that non-cheese ingredients were present in the canisters, and (2) the canisters’ position on unrefrigerated store shelves should have signaled that a preservative was present. The district court dismissed these “100% claims” for failure to state a claim, and Plaintiffs appealed.

The Seventh Circuit has now issued a decision resolving the appeal in the Parmesan buyers’ favor, holding that—notwithstanding the product’s ingredient list and sale in grocery stores alongside other nonperishables—their nothing-but-cheese interpretation of the labeling claim was not unreasonable as a matter of law. In reaching that conclusion, the Court held that “an accurate fine-print list of ingredients does not foreclose as a matter of law a claim that an ambiguous front label deceives reasonable consumers.”[1] Nor did the Court find compelling the district court’s determination that “common sense” would solve this problem given the placement of the canister (on the shelf) at the grocery store. And finally, the Court rejected the manufacturers’ argument that the buyers’ state-law claims were, in any event, preempted.

The Ingredient List

The core issue in Bell is one courts have been debating for some time: the extent to which an accurate ingredient list can clarify any arguable ambiguity created by front-label statements or claims. Here, the Seventh Circuit refused to endorse what it described as the “ambiguity rule” employed by the district court. The Court described the “ambiguity rule” applied by the district court thusly: “Where a plaintiff contends that certain aspects of a product’s packaging are misleading in isolation, but an ingredient label . . . would dispel any confusion, the crucial issue is whether the misleading content is ambiguous; if so, context can cure the ambiguity and defeat the claim.” Rejecting this standard, the panel claimed that “[u]nder the district court’s [approach], as a matter of law, a front label cannot be deceptive if there is any way to read it that accurately align[s] with the back label”—“even if the label actually deceived most consumers, and even if it had been carefully designed to deceive them.”[2]

The Court drew on recent examples from other circuits in concluding that the reasonable consumer standard does not necessarily presume that shoppers will test front-label claims by examining the ingredient list on the back, especially when purchasing “low-priced, everyday items.”[3] The familiar cases the Court trotted out—Dumont v. Reily Foods Co., 934 F.3d 35 (1st Cir. 2019), Mantikas v. Kellogg Co.,910 F.3d 633 (2d Cir. 2018), and Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008)—had similarly posited that a manufacturer cannot always rely on ingredient-list disclosures to remedy a potentially misleading message on the front label. (As we have covered previously, the analysis in these cases does not hold up to scrutiny.)

The Court also surveyed other legal territory—including cases brought under the Federal Trade Commission Act, trademark and trade dress claims, and claims under the Fair Debt Collection Practices Act—before concluding that the question of what message a reasonable consumer takes away “may not be answered as a matter of law simply because lawyers can construe an ambiguous claim in a way that would not be deceptive.”[4]

“Common Sense Does Not Solve the Problem”

The Court then rejected the district court’s reasoning that the canister’s placement on grocery shelves (rather than in the refrigerated section) should indicate to a reasonable consumer that it contained non-cheese ingredients because—according to the district court—cheese cannot be “shelf stable” without refrigeration. The Court challenged the underlying premise, noting that pure grated Parmesan cheese can indeed be shelf-stable for a long periods of time without refrigeration.[5] And, in any event, the Court fell back on its core position that—at least in this case—a reasonable consumer’s expectation about the need to utilize either additives or refrigeration cannot be decided as a matter of law.[6]

Federal Preemption of State-Law Claims

As a last blow to the Defendants, the Court rejected their preemption arguments. Defendants brought two such arguments to the table: First, Plaintiffs’ claims were preempted because they sought to impose a labeling requirement—i.e., a requirement that would prohibit Defendants from using the phrase “100% cheese”—that was not “identical” to requirements established by the federal Food, Drug, and Cosmetic Act (“FDCA”). Second, the FDA’s prior approval of Kraft’s use of the labeling statement “100% Grated Parmesan Cheese” many years earlier rendered the Plaintiffs’ challenge both conflict-preempted and barred by state-law safe harbor provisions.[7]

As to the former argument, the Court found Defendants’ reading of the FDCA’s express preemption provision to be too broad. Under the FDCA, the FDA is delegated the authority to “promulgate regulations fixing and establishing for any food . . . a reasonable definition and standard of identity.” 21 U.S.C. § 341. “These standards of identity determine what a food product must contain to be marketed under a certain name. They also often establish requirements for how the product must be made or sold.”[8] While the FDA’s standard of identity for “grated cheese” allows Defendants to add certain ingredients such as anticaking agents and preservatives to the product—and still call the product “grated cheese”—nothing in the standard of identity addresses whether the products may be labeled with the additional modifier of “100%.” Thus, Plaintiffs’ state-law claims challenging the addition of “100%” to the canister label were not preempted.

As to the latter argument—that FDA had condoned this labeling statement by issuing a permit for “100%” grated cheese—the Court also found no grounds for preemption. Many years back, Kraft had been issued a permit by the FDA to market-test a product designated as “100% Grated Parmesan Cheese.” The permit allowed Kraft to experiment with a different curing period for the cheese, but had little (if anything) to do with the labeling of the product. Thus, per the Court, the FDA never “approved the 100% claim” for the particular product formulation in question and, therefore, there was no conflict between state and federal mandates.[9]

* * * * *

Although Bell rejected all of the Defendants’ main arguments, this decision is not all bad news for food manufacturers. The Seventh Circuit did reinforce certain other core principles involving alleged-deceptive labeling cases. For example, “deceptive advertising claims should take into account all the information available to consumersand the context in which that information is provided and used.”[10] This is critical, as it underscores the fact that context remains relevant in advertising. For example, proper disclaimers will still be taken into account by courts and juries when assessing the message that a reasonable consumer should take away from a particular ad. The Court also commented that, “where plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified.”[11] Finally, the Court did not hold as a matter of law that the manufacturers’ packaging was indeed deceptive—merely that, at least in this case, deception was an issue to be decided at a later juncture. Thus, the manufacturers may well win the “reasonable consumer” dispute in the end (though not without costly discovery).

We find it somewhat difficult to square Bell’s ringing endorsement of “context” in the reasonable consumer inquiry with its ultimate conclusion to reverse the district court. After all, “the information available to consumers” when purchasing a product includes the package’s ingredient list. Shoppers are well aware that these ingredient lists are present. A “reasonable” shopper who considers the absence of any preservatives or caking agents to be a sine qua non of their purchase decision could be expected to take the additional step of consulting that ingredient list to verify that such ingredients are absent. Bell offered no real explanation of how it could be “reasonable” for such a consumer to refuse to take that step in the face of an ambiguous front-of-package statement. Nor did it explain why consumers could reasonably be expected to deploy common sense to conclude, as a matter of law, that crackers “made with real vegetables” contained ingredients in addition to vegetables (as held in one case the Court relied on [12]), but not to figure out that 100% grated cheese sold among canned goods is likely to contain preservatives.

In the end, despite the Court’s enigmatic reasoning, one thing seems clear: at least in the Seventh Circuit, defendants will face an uphill battle at the pleading stage if the only argument they bring to the (dinner) table is that a reasonable consumer would test a confusing front-of-package ingredient claim by flipping over a product in the grocery aisle and perusing the ingredient list.