2018 was another eventful year for food-labeling litigation, and 2019 is shaping up to be lively as well. The McGuireWoods food-labeling litigation team monitors food-labeling litigation nationwide and has identified five trends for those in the food and beverage industry to watch in 2019.
1. Shifting Litigation
The number of food-labeling cases continues to rise. More food-labeling cases were filed in 2018 than in 2017, and the industry can expect this trend to continue in 2019. But the nature of the claims filed, how courts are treating these claims, and where the lawsuits are being filed are rapidly evolving. Food-labeling litigation is relatively mature, and both the hunters and hunted have become more sophisticated over time. Those in the food and beverage industry have become more risk-averse and largely have stopped using the riskiest label claims. As a result, most of the “low-hanging fruit” is gone. Plaintiffs had to look in new directions for prey, and they did just that. Some of the newer claims are more technical and “in the weeds,” while others are more macro — focusing on the overall impression that packaging and labeling gives to consumers. Essentially, plaintiffs in 2018 experimented with a new generation of food-labeling claims to see what would stick. Some stuck, and others did not, as explained in more detail below.
These evolving claims had important implications for the state of food-labeling litigation nationally. Because of this experimentation of new claims, fewer cases are surviving defendants’ motions to dismiss. Courts are not as likely to allow a borderline claim to survive as they once were. This is good news for those in the food and beverage industry. But there is bad news related to class certification. Courts are more willing to certify food-labeling class actions than ever before. It is unclear exactly why, but it may have to do with recent rulings in the 9th U.S. Circuit Court of Appeals that expanded standing. It may also be due to the 9th Circuit’s approval of proposed damages models by plaintiffs in these suits, which has long been a difficult hurdle for plaintiffs.
The location where these suits are filed is also changing. For most of the last decade, the Northern District of California has reigned supreme as the jurisdiction where the overwhelming majority of food-labeling lawsuits were filed. In 2018, New York, particularly the Eastern District of New York, emerged as an important alternative jurisdiction. While there have been such suits in New York for several years, they spiked in 2018 to where New York threatened to surpass California for highest number of food-labeling lawsuits filed. The Southern District of California also became more popular with plaintiffs in 2018. Other venues — including Florida, Illinois, and Missouri — also saw an increase in these suits in 2018. Expect to continue to see more food-labeling cases filed in jurisdictions other than the Northern District of California in 2019.
Finally, the past few months saw an increase in cases filed in state court, as opposed to federal court. It is unclear whether plaintiffs believe they can keep the cases in state court or if they are simply trying to force defendants to clear the additional hurdle of removing the cases to federal court. Either way, this could be an important new front in the food-labeling conflicts ahead.
2. Death of Slack-Fill Litigation
One significant development in 2018 was plaintiffs’ lack of success with slack-fill lawsuits — suits alleging that the packaging of a product gives a false impression of the volume of the product purchased. Approximately 18 months ago, the number of slack-fill lawsuits spiked to such an extent that it became one of the most popular food-labeling lawsuits, even more so than “natural.” But in 2018, these suits endured an epic losing streak.
It began with two suits alleging that the amount of coffee in a cup was less than advertised. In Strumlauf v. Starbucks Corp., the U.S. District Court for the Northern District of California on Jan. 5, 2018, dismissed a lawsuit asserting that latte drinks contained milk foam, making the volume of the drinks less than advertised. The court held that “[n]o reasonable consumer would be deceived into believing that lattes which are made up of espresso, steamed milk, and milk foam contained the promised beverage volume excluding milk foam.” Then, the 9th Circuit in Forouzesh v. Starbucks Corp. affirmed the dismissal of another suit, this one complaining about the amount of ice in drinks: “no reasonable consumer would think … that a 12-ounce ‘iced’ drink, such as iced coffee or iced tea, contains 12 ounces of coffee or tea and no ice.”
There is some evidence that courts have grown weary of certain plaintiffs’ inattention to common sense in these suits. In dismissing a suit challenging the amount of Junior Mints in a box, the U.S. District Court for the Southern District of New York explained on Aug. 1 in Daniel v. Tootsie Roll Industries LLC that “[t]he law simply does not provide the level of coddling plaintiffs seek” and “[t]he court declines to enshrine into the law an embarrassing level of mathematical illiteracy.” Even in slack-fill suits that survived motions to dismiss, the news was still bad — two courts recently denied class certification in suits alleging slack-fill. See, for example, White v. Just Born, Inc., decided Aug. 7 in the Western District of Missouri; and Spacone v. Sanford LP, decided Aug. 9 in the Central District of California.
However, it bears mentioning that a few slack-fill cases resulted in settlements with manufacturers in 2018. For instance, the parties in a suit over “theater boxes” for popular candies like Jujyfruits and Now and Laters agreed to a settlement of approximately $2.5 million. And last month, the parties reached an undisclosed settlement in another candy slack-fill suit involving the maker of Mike and Ike’s and Hot Tamales. That settlement followed the denial of class certification in August.
Not surprisingly, given the courts’ recent reception of these claims, the number of new slack-fill suits filed dropped dramatically in 2018. In 2019, expect to see even fewer of these suits, and expect to see plaintiffs focus on other labeling claims.
3. Evolution of Natural Claims
Another significant development in 2018 was the evolution of “natural” claims. For a number of years, “natural” was one of the most popular targets in food-labeling litigation. These claims slowed once the Food and Drug Administration indicated that it was working on a definition of “natural” in 2016. There was some sense that the days of lawsuits targeting natural claims were coming to an end, but that has not come to pass.
In fact, these claims experienced a resurgence and represented one of the biggest success stories for plaintiffs in 2018. This new generation of “natural” claims has a different focus than past suits — they target the use of particular ingredients that were once widely considered “natural,” even by the plaintiffs’ bar. Synthetic malic acid is a popular target. A number of suits filed in the Southern District of California alleged that claims such as “all-natural” or “no artificial flavors” are misleading when the food product contains synthetic malic acid, rather than naturally sourced malic acid. And almost all of these lawsuits are surviving motions to dismiss by defendants. See, for example, Allred v. Frito Lay, decided April 10 in the Southern District of California; and Allred v. Kellogg Co., decided Feb. 23, also in the Southern District of California. More importantly, the Southern District of California granted class certification on Nov. 29 in one such case, Hilsley v. Ocean Spray Cranberries, Inc.
Given plaintiffs’ successes with these suits in 2018, expect to see more of them in 2019. Expect also to see other ingredients targeted, such as fumaric acid, sodium diacetate, ascorbic acid, xanthan gum, caramel color, citric acid, and others. Those in the food and beverage industry should take a close look at the ingredients in the products labeled as “natural” or “no artificial preservatives and/or flavors” and make sure they know each ingredient’s purpose and whether it is synthetic.
4. Re-emergence of Reasonable-Consumer Standard
One welcome development in 2018 for those in the food and beverage industry was the re-emergence of the reasonable-consumer standard at the motion-to-dismiss stage. This standard governs whether a label claim is misleading; if a reasonable consumer would be misled, then it is misleading as a matter of law. Conversely, if a reasonable consumer would not be misled by a label claim, then it is not misleading as a matter of law. Many less-than-credible food-labeling lawsuits have survived motions to dismiss over the years because courts have been reluctant to invoke the reasonable-consumer standard at the motion-to-dismiss stage, instead viewing it as a jury question.
But in 2018, courts used the reasonable-consumer standard to dismiss a number of food-labeling lawsuits. For instance, on April 8, the Northern District of Illinois in Killeen v. McDonald’s Corp. dismissed a lawsuit against McDonald’s that claimed its “value meals” were no cheaper than buying the food separately. The court found that consumers had access to information that would eliminate the confusion and that, “[u]nderstandably, plaintiff may not have wished to take the time to compare prices, but there is no question that doing so would have dispelled the deception on which her claims are based.”
Similarly, the 2nd U.S. Circuit Court of Appeals on Dec. 3 in Jessani v. Monini, affirmed the dismissal of a class action alleging that truffle oil does not contain actual truffles. It stated that “[i]t is simply not plausible that a significant portion of the general consuming public acting reasonably would conclude that [defendant]’s mass produced, modestly-priced olive oil was made with the most expensive food in the world.” Other courts have reached similar conclusions using the reasonable-consumer standard. See, for example, Campbell v. Freshbev LLC, decided in July in the Eastern District of New York; Becerra v. Dr. Pepper/Seven Up Inc., decided Aug. 21 in the Northern District of California; and Maxwell v. Unilever U.S., decided in March, also in the Northern District of California.
As described above, courts are dismissing more food-labeling lawsuits at the motion-to-dismiss stage. A big reason why is the increased willingness of courts to find as a matter of law that a reasonable consumer would not be deceived by a label claim. Expect to see more of this in 2019. There is a critical mass of recent food-labeling decisions using the reasonable-consumer standard to dismiss claims in a variety of jurisdictions, and those in the industry facing such lawsuits will be able to rely on these decisions going forward. The chances of obtaining dismissal of a food-labeling lawsuit at the motion-to-dismiss stage have never been better.
5. New Targets
The final trend on the industry’s radar is the expansion of targets by the plaintiffs’ bar. One of the most prominent examples is a focus on glyphosate (an ingredient in the herbicide Roundup) and other toxic chemicals in food, even at low levels. The $289 million jury verdict in a Roundup suit in August 2018 led to a number of new suits in this area. These include Doss v. General Mills in the Southern District of Florida; Steckler v. PepsiCo, Inc., filed on Oct. 26 in the Central District of California; and Daly v. Pret A Manger, Ltd., filed on Sept. 24 in the Eastern District of New York. Some suits focus on other chemicals, like the insecticide Acetamiprid. See, for example, Yu v. Dr. Pepper Snapple Group, Inc., filed on Nov. 1, in the Northern District of California. Expect to see a lot more of these suits in 2019.
Another new target in food-labeling litigation is environmentally-friendly label claims. Labels that claim the product is compostable or that the animals that provide the product have “outdoor access” or are “happy” or that the product is “environmentally-friendly” have all been the subject of lawsuits in 2018. See, for example, Organic Consumers Assoc. v. Ben & Jerry’s Homemade Inc., filed in July in the Superior Court of the District of Columbia; Kelly v. Cameron’s Coffee and Distribution Co., filed in January in the Circuit Court of Jackson County, Missouri; Gibson v. Wal-Mart Stores, filed in January in the Northern District of California; and Mattero v. Costco Wholesale Corp., filed on Sept. 17 in the Northern District of California. This will undoubtedly continue in 2019.
Another target is the label claim “Made with Real ____.” This is not a new target, but a resurgence of this type of claim. See, for example, Reyes v. Crystal Farms Refrigerated Distribution Co., filed in April in the Eastern District of New York; and Childers v. Dr. Pepper Snapple Group Inc., filed in July in the District Court of Dallas County, Texas. In fact, in June 2018, the Northern District of California certified a class in Fitzhenry-Russell v. Keurig Dr. Pepper targeting the label claim “Made with Real Ginger” on ginger ale. In November, the Fitzhenry-Russell court relied heavily on consumer survey data in partially denying the defendant’s summary judgment motion. Expect this outcome to spur even more such suits in 2019.
The “Made with Real ____” focus is part of a larger trend where the plaintiffs’ bar is targeting ingredients more generally. The focus on malic acid was discussed above. Other suits focused on supposedly inferior ingredients when label claims suggest otherwise. See, for example, Skinner v. Ken’s Foods, Inc., filed in January in the Central District of California, claiming that an olive oil dressing contains soybean and canola oils that are less expensive than olive oil; Feldman v. Utz Quality, filed on July 3 in the Southern District of New York, claiming that the defendants switched from a blend of vegetables and replaced it with a cheaper synthetic blend. Still other suits focus on whether front-label claims match the ingredient list. Richburg v. Rebbl Inc., filed in March in the Eastern District of New York, alleged that a label claim of “made with coconut milk” is misleading because the actual ingredient is coconut cream and water. Pizzirusso v. Chicago Bar Co., filed on June 15 in the Eastern District of New York, alleged that a label claim of “made with egg whites” is misleading because the actual ingredient is egg white protein powder. This focus on ingredients is one of the areas that saw the most growth in terms of lawsuits in 2018, and the industry can expect this trend to continue in 2019. Those in the food and beverage industry should pay very close attention to their ingredients and whether those ingredients are consistent with the various label claims on the product.
Still another significant trend is that of lawsuits targeting label claims and packaging that suggest that a product is healthy. See, for example, Levin v. Stremick’s Heritage Foods, filed on Sept. 26 in the Central District of California, which alleged that the product contains too much sugar and is not healthy despite visual depictions of fruit on packaging. In January 2018, in Zemola v. Carrington Tea Co., the Southern District of California denied a motion to dismiss a lawsuit alleging claims that coconut oil is healthy are misleading given its high saturated-fat content. These suits do not necessarily target a particular claim, but the general “aura” or “halo” of the packaging, such as pictures of fruits on the front label. These suits are particularly hot right now because the Northern District of California granted class certification in Hadley v. Kellogg Sales Co., a suit targeting various cereals. Because of this precedent, expect to see many more of these suits in 2019.
Finally, expect to see an increase in standard of identity and origin claims in 2019. These suits were fairly popular in 2018. See, for example, Cohen v. East West Tea Co., where the Southern District of California on Aug. 2 denied a motion to dismiss related to whether kombucha should contain live organisms; and Peacock v. The 21st Amendment Brewery Café, LLC, where the Northern District of California ruled in January on a case alleging that beer was not brewed exclusively in California, when representations and packaging suggest that it was. On March 27, a Massachusetts federal court partially denied a motion to dismiss in O’Hara v. Diageo-Guinness, USA, Inc., a suit alleging that a beer maker falsely claimed it brewed all the Extra Stout sold in the United States in Ireland. The maker of Tabasco settled a “Made in the U.S.A.” suit filed in California for approximately $650,000, as well as agreeing to remove the “Made in the U.S.A.” from its product labeling and advertising in California. Much like the targeting of “healthy” products above, these suits focus to a greater extent on the “aura” or “halo” of the packaging rather than specific claims. This seems to be a trend for the plaintiffs’ bar in food-labeling suits, and 2019 will see more of these suits.