“made with aged vanilla” can be misleading even if not the main ingredient

Sharpe v. A&W Concentrate Co., — F.Supp.3d —-, 2020
WL 4931045, No. 19-cv-768 (BMC) (E.D.N.Y. Aug. 24, 2020)

Plaintiffs alleged that defendants violated NY GBL §349 by
misleadingly labeling their root beer and cream soda beverages as “MADE WITH
AGED VANILLA,” even though the vanilla flavor comes predominantly – if not
exclusively – from an artificial, synthetic ingredient called ethyl vanillin. Although
the court found that plaintiffs lacked standing for injunctive relief because
they knew the truth now, it rejected defendants’ argument that a reasonable
consumer couldn’t be misled because the products contain real vanilla and were
conspicuously labeled as “Natural and Artificially Flavored.”

The complaint alleged that, even if the products contain any
aged vanilla, “it is in trace or de minimis amounts not detectable by advanced
scientific means.” Therefore, defendants’ misleading message that the drink
contains “aged vanilla” wasn’t dispelled by the information that the beverages
are “Natural and Artificially Flavored,” “which fails to communicate that the
quantity of the artificial flavoring far exceeds the quantity of natural
vanilla.” Plaintiffs alleged that they relied on the label, believing flavor of
the product was vanilla and that any flavor came from macerating the bean and
infusing/extracting the flavor. They also alleged that, in a March 2020 survey
of 411 consumers, around 89% of the consumers stated this representation led
them to believe that the product was vanilla flavored:

These consumers also interpreted
the representation to mean that the vanilla flavor came exclusively (if not
predominantly) from the natural vanilla – not artificial sources. Specifically,
around 68% of surveyed consumers believed that the statement meant that the
vanilla flavor “comes from a vanilla plant, such as a vanilla extract, which is
made from vanilla beans from the vanilla plant.”

Scientific testing by an independent laboratory allegedly revealed
that the vanilla flavoring of the products does not come from the vanilla
plant. Instead, testing allegedly disclosed that the predominant, if not
exclusive, source of the vanilla flavor derives from an artificial, synthetic
ingredient – ethyl vanillin. This is allegedly a cheap and inferior substitute
for real vanilla, and plaintiffs alleged that they wouldn’t have paid a premium
price for the beverages if they’d known the truth, though they also alleged
that they’d buy the drinks again in the future if they were reformulated with
real vanilla or no longer deceptively labeled.

The parties used competing images of the products; the
images plaintiffs used show the products prominently displaying the “MADE WITH
AGED VANILLA” label and from an angle from which the “Natural and Artificially
Flavored” disclosure defendants relied upon is not visible, while plaintiffs
shot the product from a different angle, in which the “MADE WITH AGED VANILLA”
statement was masked and unintelligible, while the statement “Natural and
Artificially Flavored” was clearly visible. The court considered both images,
while drawing all reasonable inferences in plaintiffs’ favor.

plaintiffs’ image
defendants’ image

Even if plaintiffs conceded that the products contained aged
vanilla (which they did not), that was not enough to conclude that reasonable
consumers wouldn’t be misled. The key case is Mantikas v. Kellogg Co., 910 F.3d
633 (2d Cir. 2018), which held that prominent “WHOLE GRAIN” and “MADE WITH
WHOLE GRAIN” labeling could mislead a reasonable consumer on a product that was
predominantly enriched white flour, even when the ingredients list accurately
disclosed “enriched white flour” as the first ingredient and disclosed the
number of grams of whole grain per serving.  The Second Circuit held 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.”

So too here. The court emphasized that “the use of the word ‘aged’
suggests to consumers that the vanilla content is naturally derived and has
acquired a desirable quality upon the passage of time.” In Mantikas,
whole grain was “at least present in a discernable quantity,” while plaintiffs
alleged that vanilla wasn’t, making this a stronger case. And the Nutrition
Facts panel in Mantikas was undisputedly accurate, while here “the existence
of ethyl vanillin, the substance plaintiffs allege is exponentially present
compared to natural vanilla, is never explicitly disclosed to consumers.”
Advanced scientific testing was required to reveal its presence.

Plaintiffs plausibly alleged that the “MADE WITH AGED
VANILLA” representation – “prominently displayed underneath the A&W logo
and on front of the bottle or box, bolded and in all capital letters” – falsely
implied that any vanilla content derives “predominantly” from the vanilla plant.
The court said that “the persuasive extrinsic evidence that the overwhelming
percentage of consumers share this misconception” bolstered this conclusion.

True, the labels disclose that the beverages are “Natural
and Artificially Flavored.” “A consumer, however, does not know if this is
referring to vanilla or to the host of other ingredients present in the drinks,
including the root beer or cream soda flavoring.” And more importantly, Mantikas
says that consumers don’t have to rotate the package to correct misleading
information in large bold type on the front.

Nor was Mantikas distinguishable on the basis that
the case involved a misrepresentation as to the cracker’s primary or main
ingredient. The Second Circuit did mention this fact, but the court found that Mantikas
actually rejected the argument that only primary ingredients count:

[T]he rule that [d]efendant
contends emerges from these district court decisions – that, as a matter of
law, it is not misleading to state that a product is made with a specified
ingredient if that ingredient is in fact present – would validate highly
deceptive advertising and labeling. Such a rule would permit [d]efendant to
lead consumers to believe its Cheez-Its were made of whole grain so long as the
crackers contained an iota of whole grain, along with 99.999% white flour. Such
a rule would validate highly deceptive marketing.

This principle is equally true when dealing with a “preferred,
non-primary ingredient”:

A chocolate chip cookie may not
necessarily be comprised predominantly of chocolate (one can only dream), but
it would still likely be misleading to label it as “Made With Natural Chocolate”
if the cookie’s chocolate’s content is 99.999% artificial and synthetic. Likewise,
a frozen pizza manufacturer that labels its products as “Made with Real
Pepperoni” likely cannot prevail at the motion to dismiss stage under Mantikas
by unabashedly using 99.999% artificial or synthetic meat fillers and simply
arguing a pizza’s main ingredient is dough.

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