Food and beverage class actions surge during COVID

Food and beverage class actions surge during COVID

In the midst of the COVID-19 pandemic, a record number of false advertising food and beverage class actions cases were filed in 2020. These lawsuits are part of a growing trend: 177 actions were filed in 2019, up from 164 in 2018. Class actions in this area have more than tripled over time: only 53 of these cases were filed in 2011.

Almost all food and beverage false advertising cases are filed in the 9th, 2nd and 7th U.S. Circuit Courts of Appeals, respectively. According to a recent report from the U.S. Chamber of Commerce, three quarters of the nation's consumer class actions targeting food and beverage marketing are filed in New York and California alone, with Illinois a distant third.

Unfortunately for both businesses and consumers, the vast majority of these class actions are frivolous and do nothing to meaningfully benefit consumers.

State consumer protection laws and federal regulations prohibit companies from making misleading or deceptive claims to consumers in food and beverage advertising and labeling. "Claims" made in advertising or promotional materials across a wide range of platforms can give rise to allegations of false advertising by plaintiffs.

Courts have applied a "reasonable consumer" test to determine if a product's advertising and labeling is misleading. The reasonable consumer test is meant to be objective, and to ask the question of whether an advertisement would mislead an objectively reasonable consumer, not whether the actual plaintiff was or was not misled. The reasonable consumer standard requires a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled. The reasonable consumer test requires litigants to show that "members of the public are likely to be deceived" by a product's advertisements. Williams v. Gerber Prod. Co., 552 F.3d 934, 938 (9th Cir. 2008).

Case law about the reasonable consumer standard has been convoluted over time, and the fundamental question of what information a reasonable consumer would consider before purchasing a product is still unclear. An initial line of cases found that a reasonable consumer would consider both the information in advertisements and on the front of the package, and information on the side panel and back of the box, including a product's ingredient list. However, in 2008, the 9th Circuit held in Williams that a reasonable consumer could not be expected to read an ingredient list in order to correct misleading images in the front of a box of fruit snacks showing fresh fruits.

Similarly, a 2020 7th Circuit decision held that average consumers should not be held to be responsible to closely parse labels rather than being able to rely on front of the box claims. "Consumer-protection laws do not impose on average consumers an obligation to question the labels they see and to parse them as lawyers might for ambiguities, especially in the seconds usually spent picking a low-cost product. Bell v. Publix Super Markets,Inc., 982 F.3d 468, 476 (7th Cir. 2020).

In a similar case, Kellogg Co. was sued over "Whole Grain" labeling of Cheez-It crackers. The front of the Cheez-It box said the products were "made with whole grain" in bold letters. However, the crackers contained a small amount of whole grain and were primarily made with enriched white flour. The district court initially found that the labels would not mislead a reasonable consumer because it was factually accurate in that there was some whole grain in the crackers. The court further found that the ingredient label was accurate, and a reasonable consumer would have reviewed that label. The 2nd Circuit reversed the lower court and held that the product was likely to mislead a reasonable consumer because the product was made with significantly more enriched white flour than whole grain. The court also agreed with the 9th Circuit that a "reasonable consumer should not be expected to consult the Nutrition Facts panel on the side of the box to correct misleading information set forth in large bold type on the front of the box." Mantikas v. Kellogg Co., 910 F.3d 633, 637 (2d Cir. 2018). The court held that it would be an improper precedent for companies to be able to use a tiny portion of an ingredient to justify labeling the product inaccurately.

A large number of recent lawsuits have targeted flavored food and beverage products, claiming that these products are deceptive because consumers would assume that the product contains genuine ingredients. This proliferation of food and beverage advertising lawsuits often results in a chilling effect on speech forces companies to question every component of a product's label and ad copy.

Vanilla has been the focus of the largest number of false advertising cases filed regarding a single word. Claims allege that defendants' "vanilla"-labeled products contain flavoring ingredients that do not come from vanilla beans, and instead come from artificial flavors. Courts have considered and dismissed the vast majority of these cases, including a string of rejections by the court of these vanilla cases, with Aldi, Trader Joes, Whole Foods, and the maker of Dove ice cream bars successfully defeating lawsuits in 2021. A Sept. 21 dismissal by a magistrate judge of an Aldi vanilla case in the Southern District of New York found that a "reasonable consumer would understand that the word 'vanilla' on the front of the carton describes how the Product tastes, not what it contains, especially in circumstances where the ingredients listed on the Product container do not mention vanilla at all." Parham v. Aldi Inc., 19-8975 (S.D.N.Y.).

Similar flavoring cases have been filed regarding whether Frito-Lay chips marketed as having a "hint of lime" are deceptive because the product contains lime flavoring rather than actual lime; whether products labeled as "fudge" were deceptive because they were produced with vegetable oil substitutes instead of butter and milk; and whether flavoring chemicals used in juice and sparkling water are "artificial flavors."

Despite these cases increasingly being dismissed at the early stages of litigation, a small but prolific group of plaintiffs' attorneys appears determined to continue filing food and beverage false advertising lawsuits.

False advertising and labeling cases are here to stay. Food and beverage brands and their attorneys must be aware of the reasonable consumer standard and ensure that advertisements and product labels are decipherable for an average consumer. While courts have been willing to dismiss cases early if they fail to pass the laugh test for what the reasonable consumer could expect, contradictions between how a product is marketed and what it is made of could prove extremely costly.