Class plaintiffs often accuse food manufacturers of misrepresenting some aspect of their product offerings. There are countless examples where the discrepancies latched onto by the plaintiffs’ bar between what the manufacturer advertised and what the consumer received are small. But how small is too small to matter? Lawyers have a name for this question: materiality. A claim for fraudulent misrepresentation can only go forward if the alleged misrepresentation is material.
The Seventh Circuit recently rejected a proposed settlement involving Subway, citing materiality as one reason. In In re Subway Footlong Sandwich Marketing & Sales Practices Litig., ___ F.3d ___, 2017 WL 3666635 (7th Cir. Aug. 25, 2017), class members sued Subway for marketing its trademark sandwich as a “footlong” when some sandwiches fell a little short. The parties presented a settlement to the district court that involved injunctive relief and up to $525,000 in attorney’s fees. The Seventh Circuit Court of Appeals rejected the settlement, calling it “utterly worthless.” Discovery established that the vast majority of sandwiches are 12-inches; minor variations in length were attributable to unpreventable vagaries in the baking process. Importantly, even if the sandwich was slightly shorter, each customer received the same amount of food. The court noted that “the element of materiality – a requirement for a damages claim under most state consumer-protection statutes – was an insurmountable obstacle to class certification” because “[i]ndividualized hearings would be necessary to identify which customers, if any deemed the minor variation in bread length material to the decision to purchase.” Because there was no compensable injury, the parties shifted to an injunctive relief class, which the court said “d[id] not benefit the class in any meaningful way.”
In the coming years, the Seventh Circuit is likely to see additional cases against food manufacturers addressing what seem to be similarly immaterial discrepancies.
Indeed, days after the Subway opinion, the Northern District of Illinois blessed such a lawsuit (at least at the pleading stage) against Lifeway Foods. In Block v. Lifeway Foods, Inc., No. 17-1717, 2017 WL 38955655 (N.D. Ill. Sept. 6, 2017), a consumer accused Lifeway of fraudulently misrepresenting that its kefir product contained 1% (or less) lactose, when it actually contained 3% more. The plaintiff alleged he purchased based on that representation. Although Lifeway did not move to dismiss based on materiality, the court fronted the issue, noting that “consumers have brought consumer fraud claims against food manufacturers based on discrepancies between the quality of the food and the manufacturer’s representations that are so minor as to be immaterial.” The plaintiff had cited “health benefits that come from not consuming lactose,” and the fact that 4% lactose is the same as regular milk. Plaintiff also argued that Lifeway deliberately misrepresented the percent of lactose in order to boost its sales and justify charging the same price for 32 ounces of kefir that consumers pay for 128 ounces of milk. Based on these arguments, the court found the discrepancy was “not marginal or immaterial.”
Another case recently filed in Illinois state court – that will likely be removed to federal court – also turns on the same key issue. In Tyksinski v. Wm. Wrigley Jr. Co., Case No. 2017-CH-11877 (Cook Cty., Ch. Div. Aug. 30, 2017), a consumer sued Wm. Wrigley Jr., Company and Mars Inc. for an alleged discrepancy between the calories disclosed on the front of a package of Starburst Gummies Sours – 130 calories – and the actual calorie count: a whopping 10 additional calories (for a total of 140 calories). The plaintiff’s allegations signaled that he is aware of the impending fight; he alleges that the product “contains materially more calories per serving” and “appreciably more calories than he intended” to consume. While this case was filed in state court, it is likely that the defendant will seek to remove to federal court under the Class Action Fairness Act, which makes a class action removable when the putative class is over 100 members, at least one class member is diverse from at least one defendant and more than $5 million is in controversy. Tyksinski is seeking to represent a nationwide class of “hundreds, if not thousands” of class members who purchased the Gummies Sours for the length of the statute of limitations period. This case is likely headed to federal court where a federal district court, and possibly the Seventh Circuit, will weigh in.
So the answer to the pop quiz is 3%, but that may change, so stay tuned