The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a class-action lawsuit against Gerber Products Company (Gerber) for deceptive advertising on labels of its "Graduates for Toddlers" food line. The court found that demurrer is inappropriate in most such cases because of their fact-specific nature and held that compliance with Food and Drug Administration (FDA) regulations does not shield a manufacturer from California tort liability. Williams v. Gerber Products Co., Case No. 06-55921 (9th Cir., April 21, 2008).
The class members are parents of small children who bought Gerber's Fruit Juice Snacks because they believed they were healthy snacks for their toddlers. The lawsuit includes statutory claims, under California's Unfair Competition Law and Consumer Legal Remedies Act, alleging that the Gerber packaging is misleading and deceptive. It also includes fraud and warranty claims.
In their unfair competition claim, the plaintiffs challenge five features of Gerber's packaging. These include, for example, the juxtaposition of the words "fruit juice" with images of oranges, peaches, strawberries and cherries, none of which represents the source of any juice that is actually in the snack; and a statement that the product is made "with real fruit juice and other all natural ingredients," even though the two most prominent ingredients are corn syrup and sugar. The plaintiffs argued that these statements, and other features of the packaging, are misleading and deceptive. The fraud and warranty claims challenge statements on the packaging that the product is "nutritious."
Initially, the district court granted Gerber's motion to dismiss under Rule 12(b)(6) for failure to state a claim. The district court found that Gerber's statements "were not likely to deceive a reasonable consumer, particularly given that the ingredient list was printed on the side of the box." The district court also found that "the 'nutritious' claim was non-actionable puffery." In addition, the district court stated that it believed that "the FDA authorizes the way in which Gerber labels snacks."
The 9th Circuit reversed on appeal, finding that the district court made its decision to dismiss "based solely on its own review of an example of the packaging." Recognizing that demurrer is rarely appropriate in cases of deceptive advertising or practices, the court found that the facts of this case did not represent such an instance. The court stated, "[w]e 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." It also held that while Gerber's claim that the snack is "nutritious" could arguably constitute puffery "were it standing on its own," the statement "must be read in the context of the packaging as a whole." The court therefore "decline[d] to give Gerber the benefit of the doubt by dismissing the statement as puffery."
The court went on to reject Gerber's argument that the district court's recognition of Gerber's compliance with FDA regulations on packaging labels somehow shielded it from tort liability. Here, the court opined that the FDA requirement to list ingredients does not confer carte blanche upon manufacturers to mislead consumers and then rely on the ingredient list to correct those misinterpretations and shield them from liability for the deception. The case was been remanded to the district court for fact-finding and adjudication of the claims on their merits.
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