ECJ and “All Natural” Claims Against Chobani Dismissed

A federal court in California has dismissed with prejudice the third amended
complaint filed by named plaintiffs on behalf of a putative class of purchasers
of Chobani Greek Yogurt products, alleging violations of state consumer
protection laws because the products were mislabeled under federal law
by listing evaporated cane juice (ECJ), instead of sugar, as an ingredient and
stating that the yogurts contain only natural ingredients, when they actually
contain fruit and vegetable juice—purportedly “highly processed unnatural
substances”—as well as turmeric for color. Kane v. Chobani, Inc., No. 12-2425
(N.D. Cal., decided February 20, 2014).

The court agreed with Chobani that the plaintiffs failed to sufficiently
allege reliance or to plead fraud with sufficient particularity and thus lacked
standing to pursue their claims under California’s Unfair Competition Law
(UCL), False Advertising Law and Consumers Legal Remedies Act. Apparently
annoyed that the plaintiffs had been given numerous opportunities to cure
pleading deficiencies and had been informed by the court exactly how to
cure the deficiencies, the court rejected their effort to convince the court to
change a previous holding “that Proposition 64, as interpreted by Kwikset,
requires actual reliance when a claim brought under the UCL’s ‘unlawful prong’
is grounded in fraud.”

According to the court, the third amended complaint alleges two theories of reliance, neither of which is plausible or sufficiently pleaded: the plaintiffs had no idea that ECJ was a sweetener, and the plaintiffs had no idea that ECJ was a sweetener but believed it was “some type of ingredient that was healthier than sugar.” In the court’s view, the allegations, amended to claim that the plaintiffs did not recognize that ECJ was a form of “added sugar,” fail to answer the question “of what Plaintiffs believed evaporated cane juice was when they purchased Defendant’s products.” The court further states, “it is simply implausible that Plaintiffs actually thought that the term ‘cane’ in ‘evaporated cane juice’ referred to other forms of cane when Plaintiffs read the term ‘evaporated cane juice’ on Defendant’s products.” The court found additional support for its conclusion in the third amended complaint’s repeated acknowledgement that “fruit juice concentrate” is a well known added sugar; this rendered implausible their “belief that Defendant’s yogurt products contained no ‘added sugars,’ given that Plaintiffs allege that they read the ingredient ‘fruit and vegetable juice concentrate’ on the Defendant’s product labels.”

The court also observes that the plaintiffs disavowed the only theory that the
court had previously found adequately pleaded—that they were unaware
that the products contained any sweeteners beyond “natural sugars from milk
and fruit” by alleging that “the term ECJ plausibly suggested to Plaintiffs that
ECJ was a form of sugar that is healthier than refined sugars and syrups.”

The court rejected as insufficiently pleaded the “all natural” claims, finding
the amended allegations conclusory. In this regard, the plaintiffs had alleged
that the fruit and vegetable juices added to the yogurt for coloring “were not
merely artificial because they were ‘color additives’ and ‘artificial colors’ and
forms of ‘artificial coloring’ and thus artificial ingredients but also because
these juices were highly processed unnatural substances far removed from
the fruits or vegetables they were supposedly derived from and in fact were
more akin to synthetic dyes like coal tar dyes.” The court found nothing in the
third amended complaint to explain how or why the juices were “far removed
from the fruits or vegetables they were supposedly derived from” and also
found that “[a] reasonable consumer could plausibly believe that ‘turmeric’
and ‘fruit and vegetable juice’ are, in fact, ‘natural ingredients,’ and Plaintiffs
have failed to allege facts that persuade the Court to conclude it was plausible
that Plaintiffs believed otherwise.”

Issue 514