The U.S. Court of Appeals for the Second Circuit sided with three class action plaintiffs and reversed the dismissal of a false advertising dispute involving Cheez-It crackers.
In 2016, a trio of California and New York residents sued the Kellogg Company over the snack’s packaging, which stated “Whole Grain” or “Made with Whole Grain” in bold letters on the front of the box. However, since the ingredient list mentioned “enriched white flour” first and the crackers contained just 5 to 8 grams of whole grain, the plaintiffs told the court, consumers were tricked into thinking the product was predominantly made of whole grain.
A New York federal court judge found that the labels would not mislead a reasonable consumer because the “Made with Whole Grain” statement was factually accurate and was qualified by the ingredient label.
The plaintiffs appealed, and the Second Circuit, after applying a standard of whether the allegedly deceptive conduct was “likely to mislead a reasonable consumer acting reasonably under the circumstances,” reversed and remanded the case for further proceedings.
Considering the challenged advertisement as a whole, including the disclaimers and qualifying language, the court said that the “Whole Grain” and “Made with Whole Grain” statements are “misleading because they falsely imply that the grain content is entirely or at least predominantly whole grain, whereas in fact, the grain component consisting of enriched white flour substantially exceeds the whole grain portion.”
The panel rejected Kellogg’s argument that the ingredient label disclosed enough detail about the content of the crackers, finding that the disclosures failed to cure the deceptive quality of the “Whole Grain” claims as alleged by the plaintiffs.
Further, “a reasonable consumer should not be expected to consult the Nutrition Facts panel on the side of the box to correct misleading information set forth in large bold type on the front of the box,” the court wrote. “Plaintiffs plausibly allege that the Nutrition Facts panel and ingredients list on whole grain Cheez-Its—which reveals that enriched white flour is the predominant ingredient—contradict, rather than confirm, Defendant’s ‘whole grain’ representations on the front of the box.”
The panel distinguished cases proffered by Kellogg as involving consumers who were allegedly misled about the quantity of an ingredient that obviously was not the products’ primary ingredient (such as vegetables in crackers or fruit in cookies).
“In our case of Cheez-Its crackers, in contrast, reasonable consumers are likely to understand that crackers are typically made predominantly of grain,” the Second Circuit said. “They look to the bold assertions on the packaging to discern what type of grain. The representation that a cracker is ‘made with whole grain’ would thus plausibly lead a reasonable consumer to conclude that the grain ingredient was entirely, or at least predominantly, whole grain. That same consumer, confronted with the claim that a cracker is ‘made with real vegetables,’ likely would not likely conclude that the cracker was made predominantly of vegetables.”
The court also expressed concern about embracing Kellogg’s position—that, as a matter of law, it is not misleading to state that a product is made with a specified ingredient if that ingredient is in fact present—which the court said would “validate highly deceptive advertising and labeling.”
“Such a rule would permit Defendant to lead consumers to believe its Cheez-Its were made of whole grain so long as the crackers contained an iota of whole grain, along with 99.999% white flour,” the panel wrote. “Such a rule would validate highly deceptive marketing.”
Concluding that the plaintiffs made sufficient factual allegations to state a claim that Kellogg’s conduct was deceptive, the Second Circuit reversed the dismissal of the lawsuit and remanded it to the district court for further proceedings.
To read the opinion in Mantikas v. Kellogg Company, click here.
Why it matters: The Second Circuit panel had little difficulty concluding that a reasonable consumer would likely be deceived by the labeling, holding that the defendant’s disclosures on the ingredient list were insufficient to overcome the bold claims made on the front of the packaging.