A federal court in California has dismissed putative class claims relating to any product other than Mott’s 100% Apple Juice because the plaintiff failed to properly allege that the company’s numerous sauce products are mislabeled under state and federal law. Rahman v. Mott’s LLP, No. 13-3482 (N.D. Cal., order entered January 29, 2014). The court also dismissed claims under the state’s False Advertising Law, the fraud prong of the Unfair Competition Law (UCL) and the Consumers Legal Remedies Act because they were not sufficiently pleaded, and further dismissed the plaintiff’s claim for negligent misrepresentation for failure to plead justifiable reliance. The court disagreed that the action should be dismissed under the primary jurisdiction doctrine or that the UCL claim should be dismissed for failure to allege facts that would satisfy the reasonable consumer test. As to the latter, the court reiterated that this test “does not apply to claims brought…
Category Archives Litigation
In response to a court order requiring the parties to respond to the U.S. Food and Drug Administration’s (FDA’s) refusal at the court’s request to determine whether foods with genetically modified (GM) ingredients may be labeled “natural” or “all natural,” the parties to litigation involving tortilla chips have filed their pleadings. Cox v. Gruma Corp., No. 12-6502 (N.D. Cal., filed January 24, 2014). Information about FDA’s January 6 letter appears in Issue 509 of this Update. Gruma argues that the case continues to meet “all the factors for invoking primary jurisdiction. . . . The FDA’s response is simply that for its own procedural and budgetary reasons it does not intend to consider the referred issue at the current time in this particular posture. The FDA response, if anything, reinforces why the FDA should be the one to resolve this issue. This is particularly true because the same issue of…
Food activist and blogger Nancy Huehnergarth has reportedly filed a complaint with the New York attorney general (AG) over a purportedly deceptive “viral advertising campaign” from 2013 featuring a mobile game that promoted Gatorade® as a performance enhancer while denigrating water as “the enemy of performance.” According to a news source, gamers using the app navigated an avatar through an obstacle course and picked up bottles of Gatorade® to increase his speed while avoiding drops of water that slowed him down. Huehnergarth, who co-founded the New York State Healthy Eating and Physical Activity Alliance and was instrumental in getting “junk” food removed from school vending machines in her community, apparently filed the complaint because she believed the campaign provided an inaccurate message to children. “It’s preying on youth while slipping past parents who don’t necessarily police a mobile device quite as carefully as they do a computer. I think it’s…
A California resident has filed a putative statewide class action in a California federal court against Diamond Foods, Inc., alleging that the company misleads consumers by prominently labeling its line of TIAS Tortilla Chips® as “All Natural” when they contain artificial ingredients such as maltodextrin and/or dextrose. Surzyn v. Diamond Foods, Inc. No. 14-136 (N.D. Cal., filed January 9, 2014). The complaint has been crafted to avoid some of the pitfalls that other plaintiffs have encountered bringing similar claims, including express references to the defendant making “the exact same ‘All Natural’ claim in the exact same prominently displayed location on the front packaging,” to forestall a court finding that the plaintiff lacks standing to pursue claims for products she did not actually purchase. Alleging economic injury, that is, not receiving the benefit of the bargain, and expressly not seeking “to contest or enforce any state law that has requirements beyond those…
Eric and Ryan Jensen, who owned the cantaloupe farm linked to a deadly 2011 Listeria outbreak, have reportedly urged a court, following their pleas to charges related to the incident, not to sentence them to prison. Additional details about the plea and charges appear in Issue 500 of this Update. They apparently claim that they do not need correctional treatment and have done everything possible to make the victims whole, including declaring bankruptcy to make a pool of money available to compensate them. The brothers pleaded guilty to six misdemeanor charges that each carry potential sanctions of one year in prison, a $250,000 fine, or both, as well as one year of supervised release. A sentencing hearing will be held in late January 2014. According to Eric Jensen’s brief, “this case has already prompted a new awareness of food safety law and the strict liability imposed on producers and food…
A putative class of workers employed by Benihana Inc. in its New York City-based Haru Restaurants has filed an unopposed motion for preliminary approval of an agreement that would resolve claims that the company did not pay employees all the pay to which they were entitled and did not provide certain employees with valid tip credits. Lin v. Benihana Nat’l Corp., No. 10-1335 (S.D.N.Y., motion filed January 14, 2014). Under the agreement, the company would create a $600,000 settlement fund that would reimburse certain class members the full amount of their spread-of-hours premium and other members 80 percent of purported back pay due to an invalid tip credit. Under New York law, employees who work more than 10 hours during a work day are entitled to an extra hour of pay, referred to as spread-of-hours wages. Attorney’s fees and expenses would also be paid from the fund. Issue 510
According to news sources, San Francisco City Attorney Dennis Herrera and New York Attorney General Eric Schneiderman have entered an agreement to share documents and otherwise coordinate efforts in their ongoing investigations of Monster Beverage Corp., which, they allege, illegally markets highly caffeinated beverages to children. Herrera reportedly said, “Up until now, we have been working in parallel fashion, but now you will see greater cooperation. I have enormous respect for Attorney General Schneiderman and am glad to be working with his office in this major consumer protection issue.” Herrera further claimed that the company continues “to market its potentially dangerous products to children, despite the known risks it poses to young people. Hopefully, our efforts can lead to a reform of those practices.” The agreement was apparently struck about the same time that a court dismissed Monster Beverage’s attempt to stop Herrera’s investigation. Details about the ruling appear in…
The Sixth Circuit Court of Appeals has determined that Kentucky has a rational basis for restricting the types of retailers that may be issued licenses to sell liquor and wine, thus ruling that the law does not violate grocers’ equal protection rights. Maxwell’s Pic-Pac, Inc. v. Dehner, Nos. 12-6056, -6057, -6182 (6th Cir., decided January 15, 2014). A state law adopted in 1939 that today prohibits the issuance of a retail drink license to “any business in which a substantial part of the commercial transaction consists of selling at retail staple groceries or gasoline and lubricating oil,” was interpreted in 1982 by the Alcohol Beverage Control Board in a regulation that defines “substantial part” (10% or greater of the monthly gross sales) and “staple groceries” (foods intended for human consumption other than soft drinks, candy, hot foods, and foods prepared for immediate consumption). Grocers challenged the restrictions on equal-protection, separation-of-powers…
Oregon Attorney General (AG) Ellen Rosenblum has reportedly filed an action in state court against the companies that make and promote 5-hour ENERGY®, a drink purportedly linked to adverse incidents including fatalities, seeking to enforce her demand for information about the product. The lawsuit against Innovation Ventures, Living Essentials and Microdose Sales, filed in Multnomah County Court, apparently seeks enforcement of the AG’s Civil Investigative Demand for information under the state’s Unlawful Trade Practices Act (UTPA). According to a news source, the AG says she has “reason to believe that respondents have made misleading statements regarding 5-hour Energy in three issue areas: (1) whether users experience ‘no crash’ when using the product; (2) a ‘Doctors Recommend’ advertising campaign; and (3) the product’s suitability for children, all potentially in violation of . . . the UTPA.” She seeks an order requiring the respondents to respond to her demand with unredacted documents,…
The U.S. Securities and Exchange Commission (SEC) has filed a complaint against Diamond Foods, Inc. and two former executives alleging that the company “materially misstated its financial results in multiple SEC Forms 10-Q, 10-K, and 8-K from at least February 2010 and ending in September 2011. In this timeframe, Diamond reported artificially inflated earnings per share that beat Wall Street earnings estimates on a quarterly and yearly basis.” SEC v. Diamond Foods, Inc., No. 14-0123 (N.D. Cal., filed January 9, 2014). Information about shareholder litigation involving the alleged price manipulation and financial misstatements at the root of the SEC’s complaint appear in Issue 464 of this Update. According to the SEC, Diamond Foods has agreed to pay $5 million to settle the charges, and former CEO Michael Mendes has agreed to a settlement. The claims against former CFO Steven Neil continue. SEC claims that increasing walnut prices and pressure to meet…
