Court Narrows Labeling Claims Against Frito-Lay
A federal court in California has significantly narrowed the consumer-fraud claims that may be asserted against Frito-Lay involving a number of its snack products labeled as “All Natural,” “0 Grams Trans Fat” and “No MSG.” Wilson v. Frito-Lay N. Am., Inc., No. 12-1586 (N.D. Cal., order entered October 24, 2013). All claims dismissed were with prejudice.
The court dismissed claims based on products the plaintiffs did not purchase, because they failed to specify how or whether the 85 products added in their second amended complaint were substantially similar to the purchased products. The court also dismissed any claims based on statements the company made on its website. According to the court, the Food and Drug Administration (FDA) may have warned other companies about whether their Websites constituted labeling, but it had not done so as to the defendant’s products. The court also said, “The website address appears below Defendant’s physical address, not near the ingredients list or any nutritional facts. Nowhere on any Product’s packaging does Defendant direct consumers to its website for more facts about the labeled Product. The Court therefore does not find that Defendant’s website constitutes ‘labeling’ under the FDCA [Food, Drug, and Cosmetic Act].” The court also observed that the plaintiffs failed to plead “that they ever saw, read, or were even aware of any website before this suit.”
The court further took issue with the plaintiffs’ Unfair Competition Law (UCL) “misbranding theory,” i.e. that the labels are “unlawfully misbranded under the FDCA and the Sherman Law, and are therefore actionable under the UCL’s unlawfulness prong even absent allegations of reliance.” In the court’s view, simply alleging that a product is unlawfully labeled, without more, is not enough to state a claim. The UCL requires an economic injury as a result of the unfair competition alleged. “Otherwise plaintiffs who had no contact with the allegedly unlawful activity would have standing to sue,” the court said. And “Plaintiffs’ argument that they were harmed because the allegedly misbranded products were ‘legally worthless and had no economic value,’ is insufficient to save this claim.”
The plaintiffs will be allowed to proceed with their “All Natural” and “O Grams Trans Fat” claims, with the court finding their pleadings sufficient to survive a motion to dismiss. As to the “No MSG” labels, the court found that FDA statements about use of this labeling claim ambiguous before a November 2012 announcement interpreting the agency’s MSG rules. Thus, the court ruled that the defendant could not be held liable for failing to comply “with a regulation that was not explicitly clarified until November 19, 2012.” Finally, the court agreed with the defendant that the plaintiffs cannot pursue claims under California law on behalf of consumers who purchased the defendant’s products in other states.
Issue 502
