On January 5, 2015 Judge Kimberly Mueller of the Eastern District of California denied Honest Tea's motion to dismiss a case involving accusations that the company misled consumers about the antioxidant content of one of its teas. Salazar v. Honest Tea, No. 2:13-CV-02318 (E.D. Cal. Jan. 5, 2015). The plaintiff claimed that Honest Tea has made deceptive "antioxidant nutrient content claims" on Honey Green Tea's label since 2008. At different points in time, the label stated that the antioxidant, epigallocatechin gallate (EGCG), "is our favorite flavonoid, one of many tea antioxidants"; "EGCG is a key green tea antioxidant"; and "EGCG is the most potent antioxidant around, and our organic green tea is packed with it."
This setback for Honest Tea comes only six months after it won dismissal of the plaintiff's first complaint on preemption grounds. This time around, the Court rejected Honest Tea's arguments, finding that the plaintiff stated a plausible claim of FDA regulatory violations, properly pled reliance and deception even though the label statements were true, and could sue over unpurchased products with different labels and different amounts of the ingredient at issue.
Plausible Claim for Violation of FDA Regulations
In its motion to dismiss, Honest Tea argued that its labeling statements did not violate the FDA regulation at issue (21 C.F.R. § 101.54(g)) because those statements do not characterize the level of antioxidants in Honey Green Tea and instead simply inform consumers that EGCG is present in the tea. The court disagreed, finding that the statements "[ECGC] is our favorite flavonoid, one of many tea antioxidants," and "EGCG is a key green tea antioxidant" suggest a certain level of the nutrient despite the plain meaning of the phrases.
Plaintiff Properly Pled Reliance and Deception
Honest Tea also argued that the plaintiff did not plead reliance or deception because she did not dispute the truthfulness of Honest Tea's EGCG statements. Without establishing that she believed the label statements to be false, Honest Tea argued, the plaintiff could not claim to have been deceived and injured by them. The court disagreed once again. What mattered, the court ruled, was that:
"Ms. Salazar would not have purchased Honey Green Tea had she known that the label did not contain only truthful information, or that the antioxidant nutrient content claims on the labels were unauthorized and inaccurate. These allegations are sufficient to establish an economic injury-in-fact."
Therefore, it was immaterial whether the plaintiff thought the label statements were false. It was enough that the plaintiff did not know the label was unlawful. Reliance could be based on the legality of the statement, rather than its content.
Article III Standing Met
Finally, Honest Tea argued that the plaintiff lacked standing because she did not purchase the 2008 version of the product with a different label. The court found that the various products were "substantially similar" since the plaintiff was challenging the same Honey Green Tea that was in circulation from 2008 through 2013, and all of the variations on the label related to the antioxidant content in the product. Thus, differences between the labels, and even differences between the amounts of antioxidants in the products, were not of concern to the court.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Morrison & Foerster LLP. All rights reserved
