MEMO TO:
Alexsei Demo US
RESEARCH ID:
#400012545536d65
JURISDICTION:
State
STATE/FORUM:
California, United States of America
ANSWERED ON:
June 7, 2023
CLASSIFICATION:
Commercial law

Issue:

Do clearly false statements on food packaging about the energy content and/or diet compatibility of the food constitute false advertising?

Research Description:

Judah “the Maccabee” Stern decided to temporarily use his commercial bakery to produce traditional Hannukah foods during the holiday season. It is common knowledge that traditional Hannukah foods are made with and/or fried in large quantities of oil. Judah, going for a lighthearted theme, printed jokes and comical images on his bakery’s Hannukah packaging. He properly labeled the nutritional information on the side of the package, but, in jest, on the front of his packaging, stated that his latkes (deep fried potato pancakes) were “low-fat,” and sufganiyot (jelly-filled donuts) were “keto-diet approved."

Conclusion:

Per Cal. Bus. & Prof. Code § 17500, it is unlawful to make or disseminate any advertising device that is untrue or misleading. (Cal. Bus. & Prof. Code § 17500 (2023))

California's false advertising law prohibits any unfair, deceptive, untrue, or misleading advertising. Any violation of the false advertising law necessarily violates the Unfair Competition Law. (Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008))

To prevail on a false advertising claim, a plaintiff need only show that members of the public are likely to be deceived. A "reasonable consumer" standard applies when determining whether a given claim is misleading or deceptive. A "reasonable consumer" is the ordinary consumer acting reasonably under the circumstances and is not versed in the art of inspecting and judging a product or in the process of its preparation or manufacture. (Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663, 38 Cal.Rptr.3d 36 (Cal. App. 2006))

Reasonable consumers should not be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box. Reasonable consumers expect that the ingredient list contains more detailed information about the product that confirms other representations on the packaging. (Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008))

Mere puffery is described as generalized, vague, and unspecified assertions upon which a reasonable consumer could not rely. Claims of product superiority and vague descriptions of product quality or features are non-actionable puffery. Conversely, misdescriptions of specific or absolute characteristics of a product are actionable. (Stewart v. Kodiak Cakes, LLC, 568 F.Supp.3d 1056 (S.D. Cal. 2021))

If a claim of misleading labeling runs counter to ordinary common sense or the obvious nature of the product, the claim is fit for disposition at the demurrer stage of the litigation. (Brady v. Bayer Corp., 237 Cal.Rptr.3d 683, 26 Cal.App.5th 1156 (Cal. App. 2018))

In the unreported decision of Davis v. Rebel Creamery LLC, 22-cv-04111-TSH (N.D. Cal. 2023), the United States District Court for the Northern District of California denied the defendant's motion dismiss the plaintiffs' False Advertising Law, Consumer Legal Remedies Act, and common law claims. In purchasing the defendant's product, an ice cream, the plaintiffs relied on the defendant's representations on the product that it was "healthy," "low carb," contained "healthy fats," and that it assisted with "weight loss, increased energy, suppressed appetite, and mental clarity." The Court found it plausible that a reasonable consumer could be misled to believe that the defendant's products were healthy and contained “healthy fats,” when, according to the complaint, they actually contained dangerously high levels of saturated and trans fats. The defendant argued that a consumer would reasonably look to the nutrition facts panel to assess whether the ice cream's fat and carbohydrate contents met their dietary goals. However, the Court found that the caselaw was clear that disclosure in the nutrition facts panel will not remedy a misleading statement elsewhere on the product. The defendant also argued that the label statements were not made about the products themselves, but rather about the keto diet generally. The Court did not agree that the statements clearly referred solely to the keto diet and not to the product upon which they were affixed. The idea that the defendant put a statement about the benefits of healthy fats on its products, but did not intend, nor find reasonable, that a consumer would interpret the statement to imply that the product contained healthy fats, was not compelling. The same analysis applied to the defendant's argument that the “healthy fats” statement on the product was not a nutrient content claim and thus could not be misleading.

Law:

Under Cal. Bus. & Prof. Code § 17500 (2022), it is unlawful to make or disseminate any advertising device that is untrue or misleading:

17500. Untrue or misleading advertising

It is unlawful for any person, firm, corporation or association, or any employee thereof with intent directly or indirectly to dispose of real or personal property or to perform services, professional or otherwise, or anything of any nature whatsoever or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state, or to make or disseminate or cause to be made or disseminated from this state before the public in any state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, including over the Internet, any statement, concerning that real or personal property or those services, professional or otherwise, or concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, or for any person, firm, or corporation to so make or disseminate or cause to be so made or disseminated any such statement as part of a plan or scheme with the intent not to sell that personal property or those services, professional or otherwise, so advertised at the price stated therein, or as so advertised. Any violation of the provisions of this section is a misdemeanor punishable by imprisonment in the county jail not exceeding six months, or by a fine not exceeding two thousand five hundred dollars ($2,500), or by both that imprisonment and fine.

In Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663, 38 Cal.Rptr.3d 36 (Cal. App. 2006), the California Second District Court of Appeal explained that to prevail on a false advertising claim, a plaintiff need only show that members of the public are likely to be deceived. A "reasonable consumer" standard applies when determining whether a given claim is misleading or deceptive. A "reasonable consumer" is the ordinary consumer acting reasonably under the circumstances, and is not versed in the art of inspecting and judging a product or in the process of its preparation or manufacture (at 682):

A private plaintiff bears the burden of producing evidence and the burden of proof on a false advertising claim under the False Advertising Law and the Unfair Competition Law. (National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc. (2003) 107 Cal.App.4th 1336, 1346, 133 Cal.Rptr.2d 207.) To prevail on a false advertising claim, a plaintiff need only show that members of the public are likely to be deceived. (Freeman v. Time, Inc. (9th Cir.1995) 68 F.3d 285, 289;) see Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267, 10 Cal.Rptr.2d 538, 833 P.2d 545 ["`members of the public are likely to be deceived'" under section 17200]. A "reasonable consumer" standard applies when determining whether a given claim is misleading or deceptive. (Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 512-513, 129 Cal.Rptr.2d 486 (Lavie).) A "reasonable consumer" is "the ordinary consumer acting reasonably under the circumstances" (ibid.), and "is not versed in the art of inspecting and judging a product, in the process of its preparation or manufacture. . . ." (1A Callmann on Unfair Competition, Trademarks and Monopolies (4th ed.2004), § 5:17, p. 5-103; see Lavie, supra, at pp. 504-512, 129 Cal.Rptr.2d 486.)

In Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008), the Ninth Circuit Court of Appeal explained that California's false advertising law prohibits any unfair, deceptive, untrue, or misleading advertising. Any violation of the false advertising law necessarily violates the Unfair Competition Law (at 937-938):

The district court granted Gerber's motion to dismiss all of Appellants' claims.

[552 F.3d 938]

On Appellants' statutory claims (under California's Unfair Competition Law and Consumer Legal Remedies Act), the district court found that the Snacks' packaging was "not likely to deceive a reasonable consumer as a matter of law." Williams v. Gerber Products Co., 439 F.Supp.2d 1112, 1117 (S.D.Cal.2006). It similarly dismissed the fraud and warranty claims, holding that "the challenged statements and images, viewed in context, are truthful or constitute non-actionable puffery." Id. at 1118.

California's Unfair Competition Law ("UCL") prohibits any "unlawful, unfair or fraudulent business act or practice." Cal. Bus. and Prof. Code § 17200. The false advertising law prohibits any "unfair, deceptive, untrue, or misleading advertising." Cal. Bus. and Prof. Code § 17500. "`[A]ny violation of the false advertising law ... necessarily violates' the DUCL." Kasky v. Nike, Inc. 27 Cal.4th 939, 950, 119 Cal. Rptr.2d 296, 45 P.3d 243 (2002) (quoting Comm. on Children's Television, Inc. v. General Foods Corp., 35 Cal.3d 197, 210, 197 Cal.Rptr. 783, 673 P.2d 660 (1983)). California's Consumer Legal Remedies Act ("CLRA") prohibits "unfair methods of competition and unfair or deceptive acts or practices." Cal. Civ. Code § 1770.

The Court found there were a number of features of the packaging the defendant used for its Fruit Juice Snacks product that could likely deceive a reasonable consumer. The product was called "fruit juice snacks" and the packaging pictured a number of different fruits, potentially suggesting (falsely) that those fruits or their juices were contained in the product. Further, the statement that Fruit Juice Snacks were made with "fruit juice and other all natural ingredients" could easily be interpreted by consumers as a claim that all the ingredients in the product were natural, which appeared to be false. And finally, the claim that Fruit Juice Snacks was "just one of a variety of nutritious Gerber Graduates foods and juices that have been specifically designed to help toddlers grow up strong and healthy" added to the potential deception. The Court disagreed with the the district court that reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box. The Court stated that it did not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception. Instead, reasonable consumers expect that the ingredient list contains more detailed information about the product that confirms other representations on the packaging. Therefore, the Court held that the district court erred in determining as a matter of law that the Snacks packaging was not deceptive and reversed the decision of the district court (at 939-940):

The facts of this case, on the other hand, do not amount to the rare situation in which granting a motion to dismiss is appropriate. Here, there are a number of features of the packaging Gerber used for its Fruit Juice Snacks product which could likely deceive a reasonable consumer. The product is called "fruit juice snacks" and the packaging pictures a number of different fruits, potentially suggesting (falsely) that those fruits or their juices are contained in the product. Further, the statement that Fruit Juice Snacks was made with "fruit juice and other all natural ingredients" could easily be interpreted by consumers as a claim that all the ingredients in the product were natural, which appears to be false. And finally, the claim that Snacks is "just one of a variety of nutritious Gerber Graduates foods and juices that have been specifically designed to help toddlers grow up strong and healthy" adds to the potential deception.3

The district court suggests that "no reasonable consumer upon review of the package as a whole would conclude that Snacks contains juice from the actual and fruit-like substances displayed on the packaging particularly where the ingredients are specifically identified." Williams, 439 F.Supp.2d at 1116. We disagree with the district court that reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box. The ingredient list on the side of the box appears to comply with FDA regulations and certainly serves some purpose. We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception. Instead, reasonable consumers expect that the ingredient list contains more detailed information about

[552 F.3d 940]

the product that confirms other representations on the packaging.

We reject Gerber's assertion that the district court concluded as an "alternate holding" that the product complied with FDA guidelines. The district court did note that it believed that "the FDA authorizes the way in which Gerber labels snacks." Williams, 439 F.Supp.2d at 1112. Contrary to Gerber's assertion, however, this was not an alternate holding but simply support for the conclusion that the product was not deceptive. Further, Gerber makes no argument as to how compliance with certain FDA regulations would automatically shield it from liability under these California statutes or tort claims.4

In conclusion, we find that, given the opportunity, Appellants have stated a claim and could plausibly prove that a reasonable consumer would be deceived by the Snacks packaging. As such, the district court erred in concluding, without considering any evidence beyond the packaging itself, that Appellants' complaint failed to state a viable claim.5

IV. CONCLUSION

The district court erred in determining as a matter of law that the Snacks packaging was not deceptive. The decision of the district court is therefore REVERSED.

In Stewart v. Kodiak Cakes, LLC, 568 F.Supp.3d 1056 (S.D. Cal. 2021), the plaintiffs alleged violations of the Consumer Legal Remedies Act, Unfair Competition Law, False Advertising Law, and breach of express warranty. In essence, the plaintiffs asserted that some of the defendant's products were misleadingly labeled and advertised as "nourishing" and "healthy."

The defendants argued that statements asserting its products were "nourishing" constituted "mere puffery." The United States District Court for the Southern District of California agreed and found that the context in which the defendant's "nourishing" statements were presented made it implausible for a reasonable consumer to find that "nourishing" was synonymous with "healthy." The Court explained that mere puffery is described as generalized, vague, and unspecified assertions upon which a reasonable consumer could not rely. Claims of product superiority and vague descriptions of product quality or features are non-actionable puffery. Conversely, misdescriptions of specific or absolute characteristics of a product are actionable. Because the Court found that the "nourishing" statements constituted nonactionable puffery, the Court granted the defendant's motion and dismissed the plaintiffs’ claims to the extent they were premised on the "nourishing" allegations (at 1067-1068):

Defendant argues that statements asserting its products are "nourishing" constitute "mere puffery." See Doc. No. 91-1 at 22, 26. One "nourishing" statement is Defendant's slogan: "Nourishment for Today's Frontier." SAC ¶ 127. Other "nourishing" statements include "the nutritional benefits early pioneers relied on to get through each day," in relation to the Oatmeal Dark Chocolate Cookie Mix and the Double Chocolate Chunk Brownie Mix, and "a nourishing treat you can feel good about indulging in" in relation to the Double Dark Chocolate Muffin Mix. Id. ¶ 19, 139. The question is whether these "nourishing" statements constitute nonactionable puffery.

Mere puffery is described as "[g]eneralized, vague, and unspecified assertions ... upon which a reasonable consumer could not rely." Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 973 (N.D. Cal. 2008) (citation omitted). Claims of product superiority and vague descriptions of product quality or features are non-actionable puffery. For example, statements such as: "superb, uncompromising quality," "higher performance," "longer battery life," "richer multimedia experience," "faster access to data," and "faster, more powerful, and more innovative than competing machines" are not actionable. Id. (citing Brothers v. Hewlett-Packard Co., No. C-06-02254 RMW, 2006 WL 3093685, at *4–5 (N.D. Cal. Oct. 31, 2006) (rejecting "high-performance" and "top of the line" as mere puffery)); Long v. Hewlett-Packard Co., No. C 06-02816 JW, 2007 WL 2994812, at *7 (N.D. Cal. July 27, 2007), aff'd, 316 F. App'x 585 (9th Cir. 2009) (rejecting "reliable mobile computing solution" and "do more on the move" as puffery). Conversely, "misdescriptions of specific or absolute characteristics of a product are actionable." Id. (citation omitted).

Defendant asserts "there is no dispute Kodiak's product provide ‘nutritional benefits’ as all food has some nutritional benefit." Doc. No. 91-1 at 26. In opposition, Plaintiffs argue that a reasonable consumer could find that "nourishing" is synonymous with "healthy." SAC ¶ 127; Doc. No. 92 at 24. Plaintiffs cite to Hadley v. Kellogg Sales Company, in which the court found that comparable health-related terms such as "nutritious," "essential nutrients," and "wholesome" could lead "a reasonable consumer to think that a product is healthy." Hadley v. Kellogg Sales Co., 273 F. Supp. 3d 1052, 1083 (N.D. Cal. 2017) (citing Chacanaca v. Quaker Oats Co. , 752 F. Supp. 2d 1111, 1126 (N.D. Cal. 2010) ). While the Court agrees with the reasoning in Hadley and Chacanaca, the context in which Defendant's "nourishing" statements are presented here make it implausible for a reasonable consumer to find that "nourishing" is synonymous with "healthy."

The crux of Plaintiffs’ "healthy" theory is that Defendant has "deceive[d] consumers into believing that several of its baking mixes create a ‘healthy’ food, which is misleading." SAC ¶ 139. Specifically, Plaintiffs allege Defendant's products that include "healthy" claims are unhealthy for the following reasons:

they actually contain unhealthy levels of (1) fat and saturated fat, the consumption of which has been shown to cause heart disease and other serious health problems, (2) cholesterol, which has

[568 F.Supp.3d 1068]

been shown to increase the risk of heart attack, stroke, and narrowed arteries (atherosclerosis ), among other serious health problems; (3) contains high levels of sugar that can lead to heart disease, type 2 diabetes, and cancer, among other serious health conditions and (4) fails to meet at least 10% of the DV of Vitamin A, Vitamin C, calcium, iron, protein or fiber.

Id. ¶ 130. The Court can infer that a reasonable consumer could conclude the term "healthy" refers to foods that: are low-fat; can lower cholesterol; contain low sugar; or meet recommended daily values of vitamins, minerals, and proteins. "Nourishment," on the other hand, is defined by Merriam-Webster's Dictionary as simply "food, nutriment" or "sustenance."8 Based on Plaintiffs’ pleading of "healthy," it is implausible for a reasonable consumer to infer from the statements "Nourishment for Today's Frontier" and "the nutritional benefits early pioneers relied on to get through each day" that Defendant's products are healthy as that term is defined by Plaintiffs, i.e., that the products are low-fat; can lower cholesterol; contain low sugar; or meet the recommended daily values of vitamins, minerals, and proteins. Instead, the Court concludes that the "nourishing" statements in this context constitute mere puffery and that no reasonable consumer could be misled by Defendant's "nourishing" marketing statements. Because these "nourishing" statements constitute nonactionable puffery, the Court GRANTS the motion and DISMISSES Plaintiffs’ claims to the extent they are premised on the "nourishing" allegations.

The Court granted the defendant's motion to dismiss the plaintiffs’ "healthy" theory as it pertained to the "Made with 100% whole grains for a healthy end to your day" statement that appeared on the Kodiak Cakes Oatmeal Dark Chocolate Cookie Mix and the Triple Chocolate Brownie Mix. The Court found that this statement in full referred to the health benefit derived from whole grains, thus it was implausible for the reasonable consumer to be deceived by this statement. However, the Court denied the defendant's motion as to the "healthy" statements on the Double Chocolate Chunk Brownie Mix and Chocolate Fudge Brownie Mix, as well as the "healthy" description in the Shark Tank episode. The Court found that the "healthy" statements on the Double Chocolate Chunk Brownie Mix and Chocolate Fudge Brownie Mix could lead a reasonable consumer to believe the products were low in fat, cholesterol, sugar and provided the recommended daily values of vitamins, minerals, and proteins. Furthermore, the "healthy" description in the Shark Tank episode could lead a reasonable consumer to believe that the defendant's products were healthy (at 1069-1070):

Finally, Defendant challenges four statements that support Plaintiffs’ "healthy" theory on the ground that Plaintiffs "fail to plausibly allege any facts showing the abovementioned new terms are misleading." Doc. No. 91-1 at 27, 29. The four new "healthy" statements include: (1) "healthy end to your day," which appears on the Defendant's Oatmeal Dark Chocolate Cookie Mix and the Triple Chocolate Brownie Mix; (2) "healthy end to your meal" with respect to the Double Chocolate Chunk Brownie Mix; and (3) "healthier end to your day" in relation to the Chocolate Fudge Brownie Mix. SAC ¶¶ 19, 25, 26, 27. Plaintiffs also point to (4) Defendant's representations on the television show Shark Tank in which Defendant highlighted customers "can't believe [pancakes made from Defendant's products] are so healthy." Id. ¶ 138. The Court now turns to whether a reasonable consumer would be deceived by each new "healthy" statement.

Defendant argues that the first "healthy" statement should be understood in context. See Doc. No. 91-1 at 11, 12. The "healthy" statement, in full, is: "Made with 100% whole grains for a healthy end to your day." Id. (citing SAC ¶ 66, Figure 4) (emphasis added). Defendant argues that the advertisement is focused on the health benefit derived from whole grains, generally. Doc. No. 91-1 at 27. But as noted above, Plaintiffs allege that Defendant's products are unhealthy because they include high levels of fat, cholesterol, sugar and fall below the recommended daily values of vitamins, minerals, and proteins. See SAC ¶ 130. Thus, the Court finds that this first statement does not speak to any of these unhealthy attributes. Because the advertisement in full refers to the health benefit derived from whole grains, the Court finds that it is implausible for the reasonable consumer to be deceived by this statement.

The second and third new "healthy" statements are: "healthy end to your meal" in relation to the Double Chocolate Chunk Brownie Mix and "healthier end to your day" in relation to the Chocolate Fudge Brownie Mix. SAC ¶ 25. Defendant's assumption that these statements must be read in connection to whole grains is improper. See Doc. No. 91-1 at 28. "[U]nwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto , 139 F.3d at 699. Unlike the first "healthy" statement, these—according to the SAC and documents duly incorporated by reference—are not made in the whole grain context. Thus, the Court can plausibly infer that the reasonable consumer could read these statements and believe the products are low in fat, cholesterol, sugar and provide the recommended daily values of vitamins, minerals, and proteins.

Finally, Plaintiffs’ "healthy" theory is premised on a Shark Tank episode in which Defendant "highlight[s] how consumers

[568 F.Supp.3d 1070]

‘can't believe they are so healthy.’ " SAC ¶ 138. Defendant argues that such statements are "just other consumers’ opinions." Doc. No. 91-1 at 29. At this stage, the Court must accept Plaintiffs’ factual allegations as true and construe them in Plaintiffs’ favor. See Erickson v. Pardus , 551 U.S. 89, 93–94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atl. Corp. , 550 U.S. at 555–56, 127 S.Ct. 1955 ). The Court finds that a reasonable consumer could be misled by consumer opinions about a product when those opinions are used to advertise and market the product in question. The Court thus finds that this particular TV advertisement could lead a reasonable consumer to believe that Defendant's products are healthy.

Accordingly, the Court GRANTS Defendant's motion and DISMISSES Plaintiffs’ "healthy" theory as it pertains to the "Made with 100% whole grains for a healthy end to your day" statement which appears on the Kodiak Cakes Oatmeal Dark Chocolate Cookie Mix and the Triple Chocolate Brownie Mix. The Court DENIES the motion as to the "healthy" statements on the Double Chocolate Chunk Brownie Mix and Chocolate Fudge Brownie Mix, as well as the "healthy" description in the Shark Tank episode.

In the unreported decision of Davis v. Rebel Creamery LLC, 22-cv-04111-TSH (N.D. Cal. 2023), the plaintiffs alleged that in purchasing the defendant's product, an ice cream, they relied on the defendant's representations on the product that it was "healthy," "low carb," contained "healthy fats," and that it assisted with "weight loss, increased energy, suppressed appetite, and mental clarity." The plaintiffs brought the following causes of action: (1) violation of California's Unfair Competition Law; (2) violation of California's False Advertising Law; (3) violation of California's Consumer Legal Remedies Act; (4) breach of express warranties; (5) breach of the implied warranty of merchantability; and, (6) unjust enrichment.

The defendant argued that the targeted consumers of their products, specifically “those consumers who adhere to the Keto Diet,” would not be misled by the defendant's claim of “healthy fats” and thus the plaintiffs' FAL, CLRA, and common law causes of action should be dismissed. Additionally, the defendant argued that its products did not claim to contain “healthy fats.” The United States District Court for the Northern District of California rejected these arguments. The Court explained that under the FAL, the CLRA, and the fraudulent prong of the UCL, conduct is considered deceptive or misleading if the conduct is likely to deceive a reasonable consumer. The Court disagreed that the reasonable consumer analysis was limited in this case to consumers of the keto diet. The Court noted that some courts have limited the “reasonable consumer” assessment to the targeted consumer of the product. However, the complaint alleged that the defendant marketed and distributed its ice cream products in retail stores across the United States, with common ice cream flavors such as vanilla, chocolate, strawberry, salted caramel, and so on, and that the products' competitors include the widely distributed Breyers ice cream brand. Therefore, the complaint did not allege facts supporting that the product advertising was so directly focused on keto diet consumers and the Court declined to adopt such a narrow framing at this stage (9-12):

Rebel Creamery argues that the targeted consumers of Rebel Creamery's products, specifically “those consumers who adhere to the Keto Diet,” would not be misled by Rebel Creamery's claim of “healthy fats” and thus Plaintiffs' FAL, CLRA, and common law causes of

10

action should be dismissed. ECF No. 20 at 9, 14-16. Additionally, Rebel Creamery argues that its Products do not claim to contain “healthy fats.” Id. at 15. Plaintiffs respond that the analysis is based on the reasonable consumer, not the reasonable consumer of Keto products, and that the advertising is deceptive because the healthy fats statement, the nutrient content claims, and the omission of a disclosure statement as to the amount of saturated fats all mislead the reasonable consumer as to the healthiness of the Products in light of the saturated fat content. ECF No. 27 at 16-22.

Pursuant to California law, the CLRA prohibits statutorily specified “unfair methods of competition and unfair or deceptive acts or practices” which result “in the sale or lease of goods or services to any consumer” and the FAL makes unlawful “untrue or misleading” advertising. Cal. Civ. Code § 1770(a); Cal. Bus. & Prof. Code § 17500.

“Under the FAL, the CLRA, and the fraudulent prong of the UCL, conduct is considered deceptive or misleading if the conduct is ‘likely to deceive' a ‘reasonable consumer.'” Hadley v. Kellogg Sales Co., 273 F.Supp.3d 1052, 1063 (N.D. Cal. 2017) (quoting Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). Plaintiffs do not dispute that these particular claims are assessed under the reasonable consumer test. “‘Likely to deceive' implies more than a mere possibility that the advertisement might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.” Lavie v. Procter & Gamble Co., 105 Cal.App.4th 496, 508 (2003). “Rather, the phrase indicates that the ad is such that it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Id. “In determining whether a statement is misleading under the statute, ‘the primary evidence in a false advertising case is the advertising itself.'” Colgan v. Leatherman Tool Grp., Inc., 135 Cal.App.4th 663, 679 (2006), as modified on denial of reh 'g (Jan. 31, 2006) (quoting Brockey v. Moore, 107 Cal.App.4th 86, 110 (2003)).

Whether a business practice is deceptive is an issue of fact not generally appropriate for decision on a motion to dismiss. See, e.g., Williams, 552 F.3d at 938-39 (citing Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal.App.4th 115, 134-35 (2007)). The Ninth Circuit has emphasized that under the reasonable consumer test, it is a “rare situation in which granting a

11

motion to dismiss is appropriate,” Williams, 552 F.3d at 939, because “it raises questions of fact.” Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir. 2015). Thus, for purposes of this order, the Court need only decide whether it is plausible that “‘a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.'” Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016) (quoting Lavie, 105 Cal.App.4th at 508).

Rebel Creamery argues that the Court's analysis should be limited to the target audience of “consumers who adhere to the Keto Diet” and that such consumers would not reasonably be misled by the Product advertising. ECF No. 20 at 14-16. The Court disagrees that the reasonable consumer analysis is limited here to consumers of the Keto Diet. Some courts have limited the “reasonable consumer” assessment to the targeted consumer of the product. See Lavie, 105 Cal.App.4th at 512 (“Where the advertising or practice is targeted to a particular group or type of consumers, either more sophisticated or less sophisticated than the ordinary consumer, the question whether it is misleading to the public will be viewed from the vantage point of members of the targeted group, not others to whom it is not primarily directed.”). However, where courts apply a more limited inquiry, the targeted demographic generally is plainly apparent. See, e.g., People v. Johnson & Johnson, 77 Cal.App. 5th 295, 319 (2022), as modified on denial of reh'g (Apr. 27, 2022), review denied (July 13, 2022), cert. denied sub nom. Johnson & Johnson v. California, 143 S.Ct. 847 (2023) (focusing on doctors as the targeted consumers in case alleging defendant misleadingly advertised surgically-implantable transvaginal pelvic mesh products); Patricia A. Murray Dental Corp. v. Dentsply Int'l, Inc., 19 Cal.App. 5th 258, 272, 273-275 (2018) (analyzing whether the directions for an “ultrasonic scaler (Cavitron) for use during oral surgical procedures” were misleading to the target audience of dentist consumers). Here, the Complaint alleges that Rebel Creamery markets and distributes its ice cream Products in retail stores across the United States, with common ice cream flavors such as vanilla, chocolate, strawberry, salted caramel, and so on, and that the Products' competitors include the widely distributed Breyers ice cream brand. ECF No. 1, ¶¶ 22, 91 & Exhibit A. The Complaint therefore does not allege facts supporting that the Product advertising is so directly focused on Keto Diet

12

consumers. Compare Horti v. Nestle HealthCare Nutrition, Inc., No. 21-CV-09812-PJH, 2022 WL 2441560, at *7 (N.D. Cal. July 5, 2022) (referring to targeted consumer group of persons with diabetes where the complaint had particularly alleged the product misleadingly claimed to prevent and treat diabetes). The Court therefore declines to adopt such a narrow framing at this stage.

Applying the reasonable consumer standard, the Court found it plausible that a reasonable consumer could be misled to believe that the defendant's products were healthy and contained “healthy fats,” when, according to the complaint, they actually contained dangerously high levels of saturated and trans fats. The defendant argued that a consumer would reasonably look to the nutrition facts panel to assess whether the ice cream's fat and carbohydrate contents met their dietary goals. However, the Court found that the caselaw was clear that disclosure in the nutrition facts panel will not remedy a misleading statement elsewhere on the product. Reasonable consumers should not be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box. Thus, the Court found that the challenged statements could plausibly mislead a reasonable consumer, and the defendant could not rely on the nutrition facts panel to correct those potential misleading statements (at 12):

Applying the reasonable consumer standard, the Court finds it plausible that a reasonable consumer could be misled that the Rebel Creamery Products are healthy and contain “healthy fats,” when, according to the Complaint, they actually contain dangerously high levels of saturated and trans fats. ECF No. 1 ¶¶ 52-59. Rebel Creamery argues that a consumer would reasonably look to the nutrition facts panel to assess “whether the Ice Cream's fat and carbohydrate contents meet their dietary goals.” ECF No. 20 at 16. However, the case law is clear that disclosure in the nutrition facts panel will not remedy a misleading statement elsewhere on the product. “[R]easonable consumers should [not] be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box.” Williams, 552 F.3d at 939. See Ackerman v. Coca-Cola Co., No. CV-09-0395 (JG), 2010 WL 2925955, at *16 (E.D.N.Y. July 21, 2010) (“The fact that the actual sugar content of vitaminwater was accurately stated in an FDA-mandated label on the product does not eliminate the possibility that reasonable consumers may be misled.”). Here, the description of “healthy fats” suggests that the product is, in fact, providing healthy fats and the nutrition facts panel cannot provide a remedy by disclosing information about the fats if they are, instead, unhealthy saturated and trans fats. See Delacruz v. Cytosport, Inc., No. C 11-3532 CW, 2012 WL 1215243, at *6 (N.D. Cal. Apr. 11, 2012) (finding a reasonable consumer could be misled by advertising that a product contained “healthy fats” when instead it contained saturated fats and that the nutrient label cannot cure that misrepresentation); Williams, 552 F.3d at 939 (“We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception.”). The Court finds the challenged statements plausibly could mislead a reasonable consumer, and thus Defendant cannot rely on the Nutrition Facts Panel to correct those potential misleading statements.

The defendant also argued that the label statements were not not made about the products themselves, but rather about the keto diet generally. The Court did not agree that the statements clearly referred solely to the keto diet and not to the product upon which they were affixed. The idea that the defendant put a statement about the benefits of healthy fats on its products, but did not intend, nor find reasonable, that a consumer would interpret the statement to imply that the product contained healthy fats, was not compelling. The same analysis applied to the defendant's argument that the “healthy fats” statement on the product was not a nutrient content claim and thus could not be misleading (at 13):

Rebel Creamery seeks to distinguish the Product label statements by arguing they were not made about the Products themselves, but rather about the Keto diet generally. ECF No. 20 at 1316. Rebel Creamery specifically points to the statement that “[m]any have discovered that eating foods high in healthy fats and low in carbs/sugars trains your body to burn fat instead of sugar as an energy source. Common benefits people may experience on a low carb, high fat diet are weight loss, increased energy, suppressed appetite, and mental clarity.” Id. at 13; ECF No. 1 ¶ 32. The Court does not agree that the statements clearly refer solely to the Keto Diet and not to the Product upon which they are affixed. The idea that Rebel Creamery put a statement about the benefits of healthy fats on its Products, but did not intend, nor find reasonable, that a consumer would interpret the statement to imply that the product contains healthy fats, is not compelling. The language on the Products is not such that the Court can conclude that it would be unreasonable for a consumer to understand the statement to refer to the Product.

The same analysis applies to Rebel Creamery's argument that the “healthy fats” statement on Rebel Creamery's product is not a nutrient content claim and thus cannot be misleading. The Court understands Rebel Creamery's argument to be that the statement cannot be a nutrient content claim because “healthy fats” is not connected to the nutrient content of the Product, but rather is a statement about the Keto Diet generally. ECF No. 28 at 12. Again, the Court does not find appropriate to conclude as a matter of law that Rebel Creamery's “healthy fats” statement is solely in reference to the Keto Diet and not a reference to the Product. Thus, Rebel Creamery's argument fails in this regard.

Therefore, the Court denied the defendant's motion dismiss the plaintiffs' FAL, CLRA, and common law claims (at 14):

Accordingly, the Court DENIES Rebel Creamery's Motion to Dismiss Plaintiffs' FAL and CLRA claims. Rebel Creamery denotes Plaintiffs' common law causes of action as derivative of the FAL and CLRA claims and thus the Court DENIES Rebel Creamery's Motion to Dismiss on the same basis as to those claims. ECF No. 20 at 9.

Additionally, the California Fourth District Court of Appeal's discussion in Brady v. Bayer Corp., 237 Cal.Rptr.3d 683, 26 Cal.App.5th 1156 (Cal. App. 2018), may be instructive. In this case, the plaintiffs pursued claims under the Consumer Legal Remedies Act, Unfair Competition Law, and express warranty law.

In its decision, the Court explained that if a claim of misleading labeling runs counter to ordinary common sense or the obvious nature of the product, the claim is fit for disposition at the demurrer stage of the litigation. The Court cited cases involving breakfast cereal. In one case, the court held the idea that a picture of Captain Crunch holding a spoon full of berries on a cereal box promises real fruit in the cereal carton was nonsense. Likewise, the thought that Kellogg's Froot Loops contained any measurable amount of actual, nutritious fruit was held not to be an idea to be taken seriously. The Court also cited a case that found that putting a "green drop" on a bottle of Fuji Water did not convey the promise the water had been independently evaluated by an environmental watchdog group as somehow environmentally superior to other water. The idea the drop conveyed a promise of independently evaluated environmental superiority was just wishful thinking on the plaintiff's part (at 1165-1166):

This complicates our analysis, but does not change it. Our canvassing of the relevant case law involving CLRA and UCL claims focused on allegedly misleading labels (including allegedly misleading brand names) reveals four discrete themes which aid the analysis of any misleading label claim. None of them supports respondents.

1. Common Sense

We will begin with a theme that, almost by definition, favors defendant product makers: If a claim of misleading labeling runs counter to ordinary common sense or the obvious nature of the product, the claim is fit for disposition at the demurrer stage of the litigation.6 The breakfast

[237 Cal.Rptr.3d 691]

cereal cases are good examples of the triumph of common sense in this context. The idea that a picture of Captain Crunch holding a spoon full of berries on a cereal box promises real fruit in the cereal carton received a dismissive "Nonsense" in Werbel v. Pepsico, Inc. (N.D.Cal. 2010) 2010 WL 2673860, p. *3, 2010 U.S. Dist. Lexis 76289, p. 9 (Werbel).

[26 Cal.App.5th 1166]

Likewise, the thought that Kellogg's Froot Loops—note "froot," not even "fruit"—contains any measurable amount of actual, nutritious fruit is an idea not to be taken seriously. (See Videtto v. Kellogg USA (E.D. Cal. 2009) 2009 WL 1439086, 2009 U.S. Dist. 43114 ; McKinniss v. Kellogg USA (C.D.Cal. 2007) 2007 U.S. Dist. Lexis 96106 (McKinniss).) Similarly, the idea that crackers falsely promised a substantial amount of vegetables got the common sense boot in Red v. Kraft Foods, Inc. (C.D.Cal. 2012) 2012 WL 5504011, 2012 U.S. Dist. 164461 (Red). To be sure, those crackers were, in fact, "made" with "real vegetables"—well, some small amount of "real vegetables" at least. But it was still a box of crackers and, as the court noted, everyone knows crackers are not "composed of primarily fresh vegetables." (Id. at p. *3, 2012 U.S. Dist. Lexis 164461 at p. 10 (italics added).)

Common sense also carried the day in Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 128 Cal.Rptr.3d 109 (Hill). Putting a "green drop" on a bottle of Fuji Water did not convey the promise the water had been independently evaluated by an environmental watchdog group as somehow environmentally superior to other water. (Id. at p. 1307, 128 Cal.Rptr.3d 109.) The idea the drop conveyed a promise of independently evaluated environmental superiority was just wishful thinking on the plaintiff's part. (See id. at p. 1303-1304, 128 Cal.Rptr.3d 109.)7 Cases such as these are demurrable.

In contrast, the Court found that the defendant's One A Day gummies could not be said, as a simple application of common sense, to indicate that two gummies a day were required. Instead, the Court found that if the label prominently displays the words "One A Day" there is an implication that the daily intake should be one per day. Additionally, a reasonable consumer might very well think it possible, in the early 21st Century, to package a full day's supply of vitamins in one gummy. Most damaging to the defendant's argument was the fact that the front of the product made no attempt to warn the consumer that a one-a-day jar of gummies was in fact full of two-a-day products. One must look at the back of the jar, in small print in the upper right-hand corner, to receive the direction to "Chew: two gummies daily," making a "Serving Size" two gummies. The defendant argued that the reasonable consumer would be so motivated to ascertain the precise amounts of vitamins that of course they would scrutinize the back. However, the Court refused to reach such a conclusion as a matter of law at the pleading stage. The Court noted that to state a claim under either the UCL or the false advertising law, based on false advertising or promotional practices, it is necessary only to show that members of the public are likely to be deceived. The Court could not say there was no capacity, likelihood, or tendency to deceive or confuse the public in this case (at 1172-1173):

So where does all this lead us—other than to eyestrain and fatigue? It leads us to conclude that all four themes that emerge from the case law uniformly point to the same result in this case: allowing

[237 Cal.Rptr.3d 696]

Brady's claim to proceed beyond the pleading stage.

Here's how we break it down: 1. Common sense: Bayer's One A Day gummies cannot be said, as a simple application of common sense, to indicate that two gummies a day are required. Indeed, common sense flows in the other direction: If the label prominently displays the words "One A Day" there is an implication that the daily intake should be one per day.(2.) Literal truth : In the context of its gummie product, the One A Day brand name is literally false. A consumer seeking to get the "one a day" amount of vitamins associated with the brand's capsules will not take one a day. (3) Nature of the brand name: "One A Day," when it comes to gummies, is explicitly misleading. Even judges can do enough math to know two does not equal one.

But the most damaging of these themes to Bayer's position in our case is (4), the front-back problem. The front of the product makes no attempt to warn the consumer that a one-a-day jar of gummies is in fact full of two-a-day products. One must look at the back of the jar, in small print in the upper right hand corner, to receive the direction to "Chew: two gummies daily," making a "Serving Size" is indeed two gummies. And unlike the billboard, sunburst-backed brand name print, that information is printed in nano-type.

Bayer tries to turn the "serving size" fine print on the back into a virtue by asserting that of course the customer must look at the back because "The only place to learn about the serving size, the vitamins, or the amount of vitamins is on the back." We are unpersuaded. That might be the case if this product were called Gazorninplat Gummies or Every Day Gummies. But it is most decidedly not the case here. The front label fairly shouts that one per day will be sufficient.

Bayer feels the reasonable consumer will be so motivated to ascertain the precise amounts of vitamins that of course he or she will scrutinize the back. We don't think such a conclusion can be made as a matter of law at the pleading stage. Nothing in law or logic suggests consumers will take such a belt and suspenders approach, and Bayer's argument runs counter to an important insight from the Williams opinion: You cannot take away in the back fine print what you gave on the front in large conspicuous print. The ingredient list must confirm the expectations raised on the front, not contradict them.

[26 Cal.App.5th 1173]

The cases we have reviewed that favor marketers are inapposite here. Unlike those, there is nothing to suggest Bayer's brand name is not be taken seriously. The idea that a "One A Day" gummie can be packed with as much vitamin wallop as the traditional One A Day capsule, lacks the common-sense risibility that sank plaintiffs’ claims in the Captain Crunch, Froot Loops, or vegetable crackers cases. Nor is there the wishful thinking that characterized the plaintiff's claims in FreemanHill, or Shaker. A reasonable consumer might very well think it possible, in the early 21st Century, to package a full day's supply of vitamins in one gummie. Certainly this court—made up of reasonable consumers—has no sense of whether that is or is not possible.

Nor can Bayer claim the compliance with literal truth that protected the manufacturers in RedFreemanRooney, and Romero. It is simply specious to assert that One A Day carries any literal truth here, and no wishful recharacterization of the brand name as "one portion a day" or "one serving a day" can fix that. Indeed, the use of the procrustean concept of "serving size" to disguise the amount needed strikes us as similar to the use of the

[237 Cal.Rptr.3d 697]

word "natural" in Janney: stretched beyond what the rest of the product explicitly or impliedly offers.

Finally, the cases where an implied promise was qualified by additional language on the package, Simpson (butter) and Gitson (soy milk) involve prominent language on the front, or front and top of the product, not fine print on the back. The insightful Williams case is more similar to our facts than either of those.

In fine, "these laws prohibit ‘not only advertising which is false, but also advertising which[,] although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.’ (Leoni v. State Bar (1985) 39 Cal.3d 609, 626 [217 Cal.Rptr. 423, 704 P.2d 183].) Thus, to state a claim under either the UCL or the false advertising law, based on false advertising or promotional practices, ‘it is necessary only to show that "members of the public are likely to be deceived." ’ (Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at p. 211 [197 Cal.Rptr. 783, 673 P.2d 660] ; accord, Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1267 [10 Cal.Rptr.2d 538, 833 P.2d 545].)" (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 951, 119 Cal.Rptr.2d 296, 45 P.3d 243.) We cannot say there was no "capacity, likelihood or tendency to deceive or confuse the public" here.

Authorities:
Cal. Bus. & Prof. Code § 17500 (2023)
Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663, 38 Cal.Rptr.3d 36 (Cal. App. 2006)
Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008)
Stewart v. Kodiak Cakes, LLC, 568 F.Supp.3d 1056 (S.D. Cal. 2021)
Davis v. Rebel Creamery LLC, 22-cv-04111-TSH (N.D. Cal. 2023)
Brady v. Bayer Corp., 237 Cal.Rptr.3d 683, 26 Cal.App.5th 1156 (Cal. App. 2018)