In a somewhat surprising ruling, a judge in the Northern District of California last week dismissed with prejudice a false advertising case about certain MorningStar Farms products such as VEGGIE BURGERS, VEGGIE DOGS, AND VEGGIE CHIK’N. Kennard v. Kellogg Sales Co., No. 21-cv-07211 (N.D. Cal. Sept. 14, 2022), Dkt. No. 46.
The plaintiff alleged that naming the products “VEGGIE” leads reasonable consumers to believe that the products are made primarily of vegetables. Id. at 2. Because the products are actually composed primarily of non-vegetable ingredients like wheat gluten, oil, and corn syrup solids, the plaintiff alleged that the packaging is false or misleading in violation of, among other things, California’s False Advertising Law (“FAL”), Unfair Competition Law (“UCL”), and Consumer Legal Remedies Act (“CLRA”). Id. at 1-2. The FAL, UCL, and CLRA are very common vehicles utilized by California plaintiffs to bring lawsuits over statements they believe are false or misleading (a defendant can be liable even if its statements are technically true if they are misleading).
The defendant argued that the VEGGIE labels were not misleading because reasonable consumers understand the term VEGGIE to refer to vegetarian or meat substitute foods, not a reference to being made primarily of vegetables. Id. at 2, 5.
The Court previously dismissed the complaint once, agreeing with the defendant that reasonable consumers would not understand VEGGIE to mean made primarily from vegetables. He gave the plaintiff another chance to re-plead her case, however, to add facts showing why a significant portion of the public acting reasonably could be misled into thinking that the products were made from vegetables as opposed to grains, legumes, and oil. Id. at 2-3.
In the Amended Complaint, the plaintiff bolstered her allegations about consumer understanding with a survey that the she said demonstrated that consumers are misled by VEGGIE labeling, thinking that the products are made primarily from vegetables rather than non-vegetable plant-based ingredients. Id. at 3. The Court was not swayed, finding that the claims in the Amended Complaint were “implausible and do not support a reasonable inference that some significant portion of consumers would be misled into thinking the VEGGIE products are made primarily from vegetables as opposed to being vegetarian meat substitutes made from grains, oils, legumes, or other ingredients,” and dismissed the complaint again, this time with prejudice. Id. at 6, 14-15.
What makes this decision surprising is that the Court ruled definitively for the defendant at the motion to dismiss stage. At that stage, which usually happens early in a case before the actual facts are known, the Court is required to assume the truth of all well-pleaded factual allegations. How reasonable consumers interpret a label usually is a factual issue, not a legal one. Here, however, the plaintiff commissioned a survey prior to amending her complaint and even incorporated the survey findings into her complaint (which the Court had to accept as true when ruling on the motion to dismiss). One might have thought this would make the case particularly difficult to dispose of on a motion to dismiss.
So how did it happen? First, the Court said the label “VEGGIE” was not misleading because consumers could look for context clues. Even if the term VEGGIE was ambiguous, said the Court, consumers could look at the ingredient list on the packaging and therefore would not be misled. Id. at 6-7, 10. Second, the Court found that the plaintiff’s survey did not ask the right question. Id. at 10. The survey asked what plant-based ingredients consumers believed were primarily in the product, when it should have asked whether the term VEGGIE, taking into account the product packaging, “conveyed that the Veggie Products were meat-alternative or … were made with vegetables as opposed to other ingredients.” Id. at 10. The Court bolstered that opinion by citing to other cases where courts had determined that surveys cannot save “otherwise facially implausible consumer deception claims.” Id. at 9.
What can we take from this decision? First, both the defendant and the Court noted that it is rare for courts to decide as a matter of law that a reasonable consumer would not be deceived by a defendant’s packaging or marketing. Id. at 2, 5. Second, while it may be rare, it is not unprecedented. This decision made sure to cite as support for its position other cases holding that advertising was not misleading as a matter of law, many of which are very recent. Cases like these might be indicators that California federal courts are pushing back a bit against the wave of non-meritorious false/misleading advertising cases brought by plaintiffs under the UCL/CLRA/FAL. Look for these cases to be cited by future defendants when moving to dismiss false advertising-type cases.