9th Circuit revives class action against allegedly mislabeled baby food

Bruton v. Gerber Prods. Co., 2017 WL 1396221, — Fed.Appx. —-, No. 15-15174 (9th Cir. Apr. 19, 2017)

Bruton sued Gerber, alleging that labels on certain Gerber baby food products included claims about nutrient and sugar content that were impermissible under FDA regulations incorporated into California law. The district court ruled against her.  The court of appeals, over a partial dissent, reversed and remanded.

First, the district court erred in dismissing Bruton’s claim for unjust enrichment/quasi-contract, because it was unclear at the time whether California allowed a separate unjust enrichment claim, but the California Supreme Court has subsequently clarified California law, allowing an independent claim for unjust enrichment to proceed.

Second, the district court erred in finding that a class would not be “ascertainable.” Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017), held that there was no separate “administrative feasibility” requirement for class certification.

Third, there was a genuine dispute of material fact on Bruton’s claims that the labels were deceptive in violation of the UCL, FAL, and CLRA.  The theory of deception doesn’t require literal falsity, but rather that “(a) the presence of the claims on Gerber’s products (in violation of FDA regulations), and (b) the lack of claims on competitors’ products (in compliance with FDA regulations), made Gerber’s labeling likely to mislead the public into believing that Gerber’s products were of a higher quality than its competitors’ products…. [I]t may be literally true that Gerber’s products are ‘As Healthy As Fresh,” but due to external facts—that Gerber does not comply with the FDA regulations that otherwise prevent its competitors from making the same claim—Gerber’s labels mislead in their implications.”

This theory of deception made sense:

Shoppers in a supermarket aisle look for cues about quality in the products they buy. If a shopper sees two products on a shelf and one says “Supports Healthy Growth & Development,” while the other makes no similar claim and is cheaper, a likely inference is that the first product will be viewed as healthier, explaining why it costs more. If the products had been of the same quality, then competitive pressures would have driven the maker of the second product to use the same attractive label. In the baby food market in particular—where measuring the effect of a particular food on one’s own baby’s growth and development is not practical—consumers have to make quality judgments before the baby is fed, based on what they see in front of them at the store. When everyone plays by the rules, this process works reasonably well. But when the maker of one product complies with a ban on attractive label claims, and its competitor does not do so, the normal assumptions no longer hold, and consumers will possibly be left deceived.

Even reviewing the nutritional information of the competing products wouldn’t help. “Consumers cannot easily check claims like ‘Supports Healthy Growth & Development,’ or ‘As Healthy As Fresh,’  against nutritional charts to determine their veracity. Consumers might believe, for instance, that the claims refer to the quality of the produce used or the particular canning process.”  Likewise, they can’t easily figure out the import of the absence of such claims.  Even for seemingly black and white claims like “No Added Sugar,” if Gerber’s product says “No Added Sugar,” and a competitor’s product doesn’t, the nutritional chart won’t the consumer whether any of the sugar in its product was added—it will simply list the amount of “Sugars.” “Nevertheless, the reasonable assumption would be that some of the sugar in that competitor’s product must have been added, or else the competitor would have used the attractive label ‘No Added Sugar.’”

Bruton also submitted enough evidence of likely consumer deception to create a genuine dispute of material fact. The key evidence was the labels.  “A reasonable jury observing Gerber’s labels and comparing them to those of its competitors could rationally conclude that Gerber’s labels were likely to deceive members of the public.”

The district court also erred in granting summary judgment to Gerber on Bruton’s claims that the labels were unlawful under the UCL, which “borrows” predicate legal violations and treats them as independently actionable. The reasonable consumer test is only a requirement under the UCL’s unlawful prong only when it is an element of the predicate violation. The predicate violation here was of California’s Sherman Law, which incorporates standards set by FDA regulations, which include no requirement that reasonable consumers be likely to be deceived.

Judge O’Scannlain dissented from the majority’s conclusion that there was a genuine issue of material fact about consumer deception.  Bruton’s testimony about her own confusion couldn’t satisfy the reasonable consumer standard, because “a few isolated examples of actual deception are insufficient” to create a material dispute over the likelihood of general consumer deception.  The majority’s reliance on the labels was insufficient because the labels weren’t clearly false, as compared to a label “Made in U.S.A.,” when significant parts of the labeled product weren’t made in the US.  “[T]he challenged statements themselves say nothing at all about the quality of Gerber’s products; they simply report—accurately—certain nutritional features of the products.”  Nothing “inherent” in the labels would support a leap from these correct statements to deceptive quality claims, especially because Gerber’s and competitors’ labels include detailed information about their ingredients. Judge O’Scannlain didn’t see any evidence that the challenged statements made Gerber’s labels objectively more “attractive” to a “a significant portion of the general consuming public,” or that consumers consumers would conclude that any price or quality difference between Gerber and its competitors was due “specifically to the challenged label statements (as opposed to any number of other reasons that may have led Gerber’s nationally recognized brand to carry more market power).”

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