slack fill and “healthy” claims unite in one case

Stewart
v. Kodiak Cakes, LLC, 2021 WL 1698695, No. 19-cv-2454-MMA (MSB) (S.D. Cal. Apr.
29, 2021)

Plaintiffs
alleged that Kodiak was liable for “(1) non-functional slack fill and (2)
deceptive marketing practices” for its pancake and waffle mixes.

Defendant
misleadingly labels and advertises its products as having “no preservatives” as
well as being “free of artificial additives,” “non-GMO,” “healthy,” and
“protein-packed.”

After
deciding that it would consider marketing material incorporated by reference
into the complaint and dismissing nationwide/out-of-state class claims, the
court turned to the request for injunctive relief. Here, plaintiffs mostly
lacked standing because they could tell from the box whether the slack fill
amount/quantity or box size had changed, so they wouldn’t be fooled again by
the inability to rely on the package. As for the allegedly deceptive marketing,
they could check the ingredients to see if the products still contain
preservatives; artificial additives; unhealthy levels of fat, cholesterol,
sugar, and vitamins; or insufficient protein. However, they did have a
continuing injury of being unable to rely upon “non-GMO” marketing statements
in deciding whether to buy the product in the future.

For
representations not made on the product packaging, most plaintiffs didn’t
sufficiently allege reliance, though one plaintiff did plausibly plead reliance
on the “healthy” statement on the online store.

The
parties argued over whether a reasonable consumer could rely on the size of a
box instead of weight, price per ounce, serving sizes, and final product output
listed on the box, especially if they were buying online. Plaintiffs pointed
out that Kodiak didn’t argue that its slack fill was functional and argued that
a baking mix that requires cooking is more susceptible to deception than other
things. The complaint included a picture comparing the opaque exterior box next
to a clear interior sealed bag containing the product mix—and using a ruler to
show the difference. The exterior box was roughly nine inches tall, the
interior bag was about eight-and-a-half inches tall, and the content of the bag
was under four inches tall. They alleged that competitors sell products with
“significantly more product” than Defendant, which “lead[s] consumers to the
reasonable assumption that [Defendant’s products] contain the same amount of
mix.” For example, one Kodiak package contains 12.7 ounces of product while a
similarly sized competing product contains 32 ounces of products.

Courts
have divided on similar slack fill claims. Though many have found that disclosure
of number of servings defeats deception, others have reasoned that, e.g.,

a
reasonable consumer is not necessarily aware of a product’s weight or volume
and how that weight or volume correlates to the product’s size. In other words,
the fact that the Products’ packaging accurately indicated that a consumer
would receive 141 grams or 5 ounces of candy does not, on its own, indicate to
a reasonable consumer that the Products’ box may not be full of candy and that,
instead, 35.7% of the box is empty. Rather, a reasonable consumer may believe
that 141 grams or five ounces of candy is equivalent to an amount approximately
the size of the Products’ box.

The
underlying question is something like: Do reasonable consumers know “how much”
five ounces really is, in the abstract, if they don’t have something like “X
Oreos” to compare it to?

The
court here concluded: “Substantial, nonfunctional empty space may be a factor
that could plausibly mislead a reasonable consumer.” Further:

The
reasonable consumer does not don Sherlock Holmes garb to scrutinize an entire
aisle filled with shelves of a various pancakes by comparing the exact weight
of each box’s content with the price across a dozen brands or shaking and
manipulating each box to detect the nature of the hidden culinary treasure.
Although consumers take into consideration certain labels and information
provided on the packaging, consumers plausibly do not perform intense
word-by-word detective work for each product they toss in their shopping cart.
To some degree, “consumers may reasonably rely on the size of the packaging and
believe that it accurately reflects the amount she is purchasing.”

Still,
reasonable consumers also consult serving size and product yield information.

So
what to do? Baking mix wasn’t part of a high-end market where large and weighty
packages are expected, and plaintiffs’ allegations suggested that empty space
in pancake packaging is not the market norm. And while some of the labels
stated the final product yield, “other labels only provide serving size in
cylindrical cups and list an approximate number of those servings per container.”
At this stage, it was plausible that “the reasonable consumer is unlikely to
convert cylindrical cups plus other ingredients into the approximate product
yield of the finished pancakes, waffles, or other baked goods.”

What
about online purchases? This argument failed because the slack fill allegedly
violated the California Fair Packaging and Labeling Act, and thus formed the
basis for unlawfulness UCL violations, and because, even online, consumers
could plausibly rely on the online product’s picture—without a measure of
reference—to assume that the container’s size bears some relation to amount of
its contents. As to online purchases, the CFPLA provides that there is no
nonfunctional slack fill where “[t]he mode of commerce does not allow the
consumer to view or handle the physical container or product.” But it also says
that, if it doesn’t impose the same requirements as the relevant section of the
FDCA/its regulations governing slack fill, then the federal requirements are
incorporated instead. The federal rules don’t distinguish between modes of
commerce, so the CFPLA doesn’t either.

The
court also rejected Kodiak’s argument that the CLRA claim had to be dismissed
as to the slack fill theory because the CLRA requires a representation and
slack fill is not a representation. “Construing the CLRA liberally as required
by statute, the Court finds that exaggerated box size and slack fill
allegations can form the basis for a CLRA claim.”

Thus,
the result was split: plaintiffs plausibly alleged deception where the
packaging didn’t provide information about final output, but didn’t plausibly
allege deception where it did.

Likewise,
various ingredient claims survived, though the court was skeptical “how
consumers of baking products would be misled by the presence of [allegedly
artificial additive or preservative] leavening agents.” However, plaintiffs
didn’t define “non-GMO” or provide further allegations to assess whether the
challenged ingredients were plausibly genetically modified or how a reasonable
consumer would be misled.

And,
in context, “healthy” wasn’t necessarily puffery used to describe a muffin mix,
but reasonable consumer wouldn’t be misled by the “Healthy Living on a Budget”
blog post that stated, “[b]ut now that the kids are back in school, it’s even
more important to have a healthy breakfast every morning.” “The paragraph
merely provides generalizations of breakfast and does not mention Defendant’s
products.” Likewise, a reasonable person would not find “protein-packed” to be
misleading. The grams of protein were listed clearly on the front of the box, and
if there were any remaining uncertainty, the nutrition facts label would dispel
it (as opposed to correcting a falsehood, which the nutrition facts can’t do).

Did Sonner
preclude all equitable claims? Not to the extent that plaintiffs showed future
harm; having standing to seek injunctive relief also meant lacking an adequate
remedy at law to at least some degree. And, unlike in Sonner, the
plaintiffs weren’t “pursuing equitable remedies to the exclusion of a remedy at
law,” so the court declined to dismiss the equitable claims at this time.

 

 

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