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…
Tag Archives California
A federal court in California has granted in part the motion for summary judgment filed by Twinings North America in a putative class action alleging that the company misbrands its tea products by stating that they are a “Natural Source of Antioxidants” and “a natural source of protective antioxidants." Lanovaz v. Twinings N. Am., Inc., No. 12-2646 (N.D. Cal., order entered January 6, 2014). Regarding the plaintiff’s claims that the company’s labels imply protection from disease, the court found the product representations “too general to relate to a ‘health-related condition’” and thus dismissed these claims. As to causation, the issue was whether the plaintiff admitted in her deposition that she did not rely on the green tea and Earl Grey tea labels or the company’s website when making her purchasing decisions. The court refused to read her deposition transcript as narrowly as the company urged and found that the label…
A federal court in California has granted in part the motion for summary judgment filed by Bumble Bee Foods in a putative class action alleging that certain labeling claims either deceived consumers or violate state and federal law. Ogden v. Bumble Bee Foods, LLC, No. 12 1828 (N.D. Cal., order entered January 2, 2014). Information about the complaint is included in Issue 436 of this Update. The court agreed with Bumble Bee that the plaintiff failed to raise a genuine issue of material fact regarding her standing to pursue consumer-fraud claims based on the company’s purported statements about vitamin A and iron, because those statements were made on the nutrition information panel, which the plaintiff “does not claim to have read in connection with purchasing the product.” Other similar statements appeared on the company’s Website, and “Ogden concedes that she did not visit this website prior to purchasing the Sardines Mediterranean…
A federal court in California has dismissed with prejudice the second amended complaint in a putative class action alleging that Wrigley Sales Co.’s chewing gum and candy products are misbranded because the labels state that they are “sugar free.” Gustavson v. Wrigley Sales Co., No. 12-1861 (N.D. Cal., decided January 7, 2014). The court determined that the product labels do not violate federal regulations, the plaintiff failed to adequately plead her alleged regulatory violations, and the plaintiff “is attempting to impose a labeling requirement that is ‘not identical to’ federal requirements.” Thus the court ruled that the “sugar free” component of the complaint was preempted and any further amendment of the complaint would be futile. The court dismissed the remainder the complaint relating to the defendant’s alleged failure to disclose that the products “are sweetened with nutritive and non-nutritive sweeteners or to detail the percentage of the product that nonnutritive…
A federal court in California has denied the plaintiff’s motion for class certification in a suit alleging that Ben & Jerry’s Homemade deceives consumers by using “all natural” on labels for ice cream, frozen yogurt and popsicle products that contain alkalized cocoa. Astiana v. Ben & Jerry’s Homemade, Inc., No. 10-4387 (N.D. Cal., decided January 7, 2014). Additional details about the lawsuit appear in Issue 366 of this Update. The action followed the court’s September 2012 denial of final approval for a class-action settlement in the case on the basis of issues raised by Dennis v. Kellogg, 697 F.3d 858 (9th Cir. 2012). Among other matters, the court agreed with the defendant that the plaintiff failed to establish that the class was ascertainable and that common issues predominate over individual issues. While the case was initially brought on behalf of a nationwide class of consumers, in its current posture, a…
Addressing a question of first impression, a California appeals court has dismissed a putative class action alleging that Herb Thyme Farms mislabeled its certified organically grown herbs as “USDA Organic” because the contents included a mix of organically and conventionally grown herbs. Quesada v. Herb Thyme Farms, Inc., No. B239602 (Cal. Ct. App., 2d Dist., Div. 3, decided December 23, 2013). According to the court, on appeal, the plaintiff changed her theory of liability from alleged violations of state consumer protection laws to violation of the California Organic Products Act of 2003, a federally approved state organic program. She cited Farm Raised Salmon Cases, 42 Cal. 4th 1077 (2008), to counter the trial court’s conclusion that her claims were preempted under federal law. Distinguishing Farm Raised Salmon Cases, the court was guided instead by Aurora Dairy Corp. Organic Milk Marketing & Sales Practices Litigation v. Aurora Organic Dairy, 621 F.3d 781…
A federal court in California has dismissed, without prejudice, the action for declaratory and injunctive relief brought against the San Francisco city attorney, seeking to halt his investigation of Monster Beverage’s energy drinks and efforts to regulate their formulation, labeling and promotion. Monster Beverage Corp. v. Herrera, No. 13-0786 (C.D. Cal., decided December 16, 2013). Additional information about the lawsuit appears in Issue 482 of this Update. The matter was before the court on the city attorney’s renewed motion to dismiss. Essentially, the court determined that the Younger abstention doctrine, which “counsels federal-court abstention when there is a pending state proceeding,” applied because a state action brought by the city attorney is pending, the action implicates important state interests, not all of the city attorney’s claims are preempted under federal food-labeling laws, and the state proceedings will be adequate for the consideration of Monster’s constitutional claims. Details about the city…
California EPA’s Office of Environmental Health Hazard Assessment (OEHHA) has added diisononyl phthalate—a plasticizer used in food contact materials—to the list of chemicals known to the state to cause cancer. OEHHA’s Carcinogen Identification Committee determined that “the chemical was clearly shown, through scientifically valid testing according to generally accepted principles, to cause cancer.” The addition, made under the “state’s qualified expert” mechanism of the Safe Drinking Water and Toxic Enforcement Act of 1986 (Prop. 65), takes effect December 20, 2013. OEHHA will next set a safe exposure level for the chemical. See OEHHA News Release, December 12, 2013; Bloomberg BNA Product Safety & Liability Reporter, December 13, 2013. Issue 508
A federal court in California has dismissed a number of claims with prejudice in the second amended complaint filed on behalf of a putative class alleging that the promotion of various snack products made by Procter & Gamble Co. and Kellogg Co. is false and misleading. Samet v. Procter & Gamble Co., No. 12-1891 (N.D. Cal., order entered December 10, 2013). The complaint challenges “0g Trans Fat,” “evaporated cane juice (ECJ),” “healthy and wholesome,” and “fortification” claims for snack chips, riblets and mixed berry snacks. The plaintiffs also bring slack-fill claims that survive. The court will allow “0g Trans Fat” claims to proceed, finding the allegations sufficient, but dismissed them with prejudice as to Pringles chip products that are “reduced fat” or sold in 100-calorie packs, finding that they have “insufficient fat content to require the disclosure in question.” The court also dismissed with prejudice causes of action based on…
The Environmental Research Center (ERC) has reportedly filed a lawsuit under Proposition 65 (Prop. 65) against a company that allegedly sells “meal replacement” shakes and “hunger blocker” bars containing lead, a chemical known to California as a reproductive toxicant and cause of cancer. ERC v. Ideal Shape LLC, No. __ (Cal. Super. Ct., Alameda Cty.). Under Prop. 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, private litigants such as ERC may bring enforcement actions after notifying an alleged violator that it has failed to provide warnings with products containing listed chemicals. ERC sent such a letter to Ideal Shape on May 17, 2013, alleging Prop. 65 violations every day since at least May 17, 2010. See Courthouse News Service, November 25, 2013.
