Troncoso v. TGI
Friday’s Inc., 2020 WL 3051020 (S.D.N.Y. Jun. 8, 2020) 

Troncoso purchased a
bag of snack chips labeled “TGI Fridays Potato Skins Snacks,” mistakenly believing
the chips to contain real potato skins given that the restaurant chain TGI
Fridays sells a Potato Skins appetizer that includes the flesh and peel of the
potato.

After holding that Troncoso lacked standing to pursue
injunctive relief, the court accepted as plausible one theory of falsity under  GBL §§
349 and 350: that the product falsely represented that it included actual
potato skins. 

Troncoso did not
plausibly plead that a reasonable consumer could believe that the snack chips
would taste identical to or would actually be identical to the TGIF Potato
Skins appetizer. “No reasonable consumer would believe that the snack chips,
shelf-stable and sold at room temperature in gas stations, would be identical
in taste or substance to an appetizer, prepared with perishable dairy products
and served hot in a restaurant.” Nor did she plausibly allege that the taste
didn’t “resemble” that of the appetizer, or that only a product containing
potato peels could in any way replicate the taste of the appetizer.  

Nor did she
plausibly plead that a reasonable consumer could believe that the snack chips
would contain thick slices of potato skins, given the picture on the front of
the snack chips’ packaging. 

However, it was
plausible that a reasonable consumer could be deceived about whether the
products included potato peels. Troncoso also alleged falsity, in that she
alleged that the only potato-based ingredients in the snack chips are potato
starch and potato flakes, and that those ingredients are made from peeled
potatoes (citing outside sources, including a video with an interview with the
plant manager about how the chips were made that didn’t mention potato peels;
while there was no explicit statement of “no potato peels,” it helped make
falsity plausible and not just possible). 

Defendants argued
that Troncoso couldn’t plausibly plead that she was misled into believing that
the snack chips were nutritious because they contained potato peels. But that
wasn’t her argument; she did allege that potato peels have extra nutrients, but
that was her argument for materiality/the existence of a price premium, which
defendants didn’t dispute on this motion. And the nutritional panel didn’t
dispel any confusion because she alleged that potato peels have certain
minerals not present in potato flesh, such as niacin, and niacin levels are not
reported on the nutritional panel. 

More generally, the
ingredients list wouldn’t dispel any misimpression based on the label. “A
reasonable consumer would not understand that potato starch and potato flakes
could not contain potato peels, and thus would not believe that the list of
ingredients reversed the label’s representation that the product contains
potato peels.” This is an implementation of the general principle that
consumers aren’t required to be experts on the components or characteristics of
every product they buy. 

However, defendants
Utz and TGIF left the case. Utz got out because it was just the corporate
parent and Troncoso didn’t sufficiently justify piercing the corporate veil. 

TGIF got out because
of the solicitude the law has for trademark licensors. “TGIF may be liable for
that misleading labeling under GBL §§ 349 and 350 and principles of common-law
fraud only if it engaged in making the misleading labeling.” Troncoso alleged
that TGIF had “control over the marketing of the” snack chips. But the
allegation of licensing “does not suggest that TGIF was involved in any aspects
of the labeling beyond its own trademark, which Plaintiff does not allege is
misleading,” and Troncoso’s allegations of control were conclusory. 

Question for the
audience: Suppose the plaintiff alleges the following: (1) Sophisticated
trademark licensors are aware of the risks of naked licensing, and thus they
both provide for control over the quality of the goods and their marketing and
actually exercise that control so as not to risk losing control of the
trademark, following standard industry practices. (2) Defendant is a
sophisticated licensor (perhaps with statements from corporate reports or
something like “ ‘Our approach to licensing is as important and
strategic as any other aspect of our marketing efforts,’ said Trey Hall, senior
vice president and chief marketing officer for T.G.I. Friday’s.”). Should this suffice to make sufficient
control plausible?

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