In its 1990s TV and radio ads, personal-injury law firm Saiontz & Kirk, PA coined the catchy (and trademarked) phrase “if you have a phone, you have a lawyer.” For today’s plaintiffs’ lawyers, even those quarantined by COVID-19, an updated catch phrase might be “if I have a computer and wi-fi, you have a lawyer.” If two recently filed lawsuits against a hand-sanitizer maker are any indication, the public-health crisis won’t arrest the pace of consumer-fraud class-action filings.
In that regard, we share an encouraging development from a federal district court in New York. On March 16, Eastern District of New York Judge Carol Bagley Amon dismissed (with prejudice) a multi-count, nationwide class action against nutrition-bar maker ONE Brands (Melendez v. ONE Brands, LLC).
The lawsuit charges that the phrase “1 g sugar” on the front of ONE Brands bars is false, misleading consumers into thinking the bars have fewer calories and carbohydrates than they do. The complaint asserts that the “1 g sugar” statement is false because an “independent” test determined the bars contain 5.2 grams of sugar. The plaintiffs also argue that the company’s name is itself misleading because ONE Brands echoes the one gram of sugar touted on the package. The plaintiffs claim an economic injury (they paid more than the bars were worth) and allege violations of New York’s consumer-protection statute and several common-law duties.
The Court’s Reasoning
The court first pared down the nationwide class to one consisting of New York residents only, finding that the unnamed plaintiffs from the 49 other states lacked standing to sue. It then turned to whether federal law preempts the allegations that “1 g sugar” is false and that the brand name is false or misleading.
False Labeling Theory
ONE Brands argued that because the plaintiffs’ nutritional testing did not follow the method prescribed in FDA regulations, the false-labeling claim was preempted. The plaintiffs responded that, at the motion-to-dismiss stage, they need not establish compliance with FDA’s testing method.
With no controlling caselaw in the Second Circuit, the court looked to out-of-circuit cases which, surprisingly, reflected a split of authority. Even the Food Court (the Northern District of California) has issued dueling decisions on the issue. Here, Judge Amon sided with the courts that found preemption if a plaintiff failed to show at the pleading stage that it followed FDA testing procedure. Non-compliant tests, she reasoned, could lead to regulatory controls in conflict with federal law.
False/Misleading Brand Name
The plaintiffs argued that the company, in calling itself ONE Brands, implies nutrient content without FDA approval. The court disagreed. In tying the “one” in its brand name to the one gram of sugar in its bars, it explained, ONE Brands makes “an expressed nutrient-content statement, not an implied one” (emphasis added). And because FDA does not regulate express nutrient-content statements, the court concluded, the plaintiffs could not impose one through state consumer-protection law.
Misleading Front-Label Statement
To determine whether the “1 g sugar” information unlawfully misled buyers into thinking the bars had fewer carbs and calories, the court applied the reasonable-consumer test. Precedents in the Second Circuit dictate that a reasonable consumer who finds a front-label statement ambiguous would look to the mandatory Nutrition Facts for clarification. If the Nutrition Facts objectively clarify the consumer’s confusion, then plaintiffs cannot plead a violation of New York law.
Melendez didn’t have the law on his side in the Eastern District of New York. In similar lawsuits in other jurisdictions, if an “independent lab” dissects a food product to establish a false-labeling claim, some plaintiffs have withstood a motion-to-dismiss on preemption grounds—even if their testing didn’t follow FDA methods. And other district courts, especially those in the Ninth Circuit, would have refused to find as a matter of law that the plaintiff’s confusion was unreasonable. Ninth Circuit caselaw also rejects companies’ “look-at-the-nutrition-label” defense when plaintiffs allege misleading front-label statements. Judge Amon chose wisely when refusing to follow those courts’ reasoning.
We also applaud Judge Amon’s decision to dismiss Melendez’s complaint with prejudice. We’ve criticized other judges’ patience with plaintiffs’ lawyers who allege the bare minimum, knowing that they’ll get two or three more chances. That is a strategy that often keeps defendants on the hook for legal fees and increases settlement pressure.
Even in amidst the coronavirus pandemic, consumer-product makers will no doubt continue to face mislabeling class actions. After all, suing is what class-action lawyers do for a living. And no doubt, those lawyers will perceive that scared Americans’ stockpiling trips to grocery stores are filling food makers’ bank accounts with billions in profits. That perception will elevate food companies, above businesses in other struggling industries, as a prime deep-pocket target for litigation shakedowns. That’s why we’ll need more decisions like Melendez and more judges like Judge Amon willing to shut the courtroom doors, early in the process, to claims that lack merit.
Also published by Forbes.com on WLF’s contributor page.