A federal court in California has dismissed certain claims, with leave to amend, in putative class litigation challenging various aspects of labels for Wallaby Yogurt Co. and Trader Joe’s Co. food products; it has refused to abstain from deciding the matters under the primary jurisdiction doctrine. Morgan v. Wallaby Yogurt Co., Inc., No. 13-296, Gitson v. Trader Joe’s Co., No. 13-1333 (U.S. Dist. Ct., N.D. Cal., orders entered October 10, 2013). Both suits include claims, among others, that the companies mislead consumers by using “evaporated cane juice” instead of “sugar” on their product labels.
In Wallaby, the court rejected the defendant’s argument that the plaintiffs lacked standing to bring their claims because they had not plausibly alleged actual injury. Wallaby apparently said, “Plaintiffs paid for food products. They consumed the products without incident or physical injury. The goods were not tainted, spoiled, adulterated, or contaminated. They do not allege that the ingredients were not fully disclosed on the side panel or that the nutrition information was false. Nor do they dispute that the products they purchased and consumed would have been exactly the same even if the labels had been different.” According to the court, this argument misconstrues the allegations. “The plaintiffs’ point is that they were misled, not that the products would somehow be different merely by placing a different label on the packaging. Wallaby’s argument leads to the untenable conclusion that consumers have no legal recourse for intentionally misidentified products.”
The court agreed with the defendant, however, that the plaintiffs failed to adequately plead fraud as to certain claims, noting “While the plaintiffs claim that they would not have purchased Wallaby’s products had they known that the products ‘contained sugar or dried cane syrup,’ that claim is contradicted by the fact that the plaintiffs nonetheless purchased products despite the fact that the sugar content is listed right next to the ingredients list.”
The Trader Joe’s complaint presented the court with some challenges in parsing which claims pertained to which products, whether any allegations were made as to products just mentioned as having been purchased and how to address allegations as to unspecified products. The court found that the pleadings as to “unspecified products,” labeled with “evaporated cane juice,” containing added preservatives or artificial colors, or represented to be a form of milk without satisfying the standard of identity, failed to meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). The “no additive” claims as to products the plaintiffs purchased were also insufficiently pleaded, with the court observing that the relevant product labels do not make representations relevant to these allegations.
The court rejected out of hand the “cane juice” and “soy milk” claims because they fail the reasonable consumer test. According to the court, the product labels at issue plainly disclose the sugar content and the soy milk product labels plainly state that they are “LACTOSE & DAIRY FREE” and are alternatives “to dairy milk.” The court said, “This is one of those rare cases where the accused label itself makes it impossible for the plaintiff to prove that a reasonable consumer is likely to be deceived.” The court further granted the defendant’s motion to strike any allegations about “natural” or “all natural,” finding them immaterial, because the plaintiffs failed to allege that the products make these representations. While the court allowed the plaintiffs to amend their complaint, it dismissed the cause of action for restitution with prejudice.