United States: Nature's Way Can't Slide Out Of Coconut Oil Suit

On August 12, 2016, Southern District of California Judge William Q. Hayes denied most of a motion to dismiss and motion to strike in Hunter v. Nature's Way Products, LLC, Case No. 16cv532-WQH-BLM.1 The putative class action brings claims under the UCL, FAL, and CLRA, as well as claims for breach of warranty, alleging that Nature's Way falsely labeled and advertised its coconut oil as "healthy."

Plaintiffs claim that Nature's Way labeled and advertised its coconut oil products as "healthy," when in fact the products contain large amounts of fat, which is by definition not healthy. Plaintiffs allege that they believed Nature's Way's representations that its coconut oil products were healthy, and would not have purchased the products otherwise.

Misrepresentation Claims

Judge Hayes first found that plaintiffs' misrepresentation claims were sufficiently pled. Nature's Way argued that plaintiffs had not shown that the alleged representations suggested that the coconut oil products were inherently healthy, or were healthier than other oils, but the court rejected that argument. The court concluded that this was not the "rare" case in which it would be appropriate to dismiss deceptive advertising claims at this early stage. Judge Hayes concluded that the "healthy" representations could be misleading, even though it was not clear that they were false in light of the products' ingredients. He held that, at this stage, he could not conclude as a matter of law that Nature's Way's claims were not deceptive.

Violation of Food Labeling Regulations Claims

The Court next turned to plaintiffs' claim that the coconut oil product labels violated labeling regulations by using the nutrient claims "non-hydrogenated" and "no trans fat," in conjunction with the claim that the products had a variety of healthy uses. Nature's Way disputed that its labels used the word "healthy" in connection with any nutrient claims, but the court again ruled that, on a motion to dismiss, the allegations plausibly stated a claim.

UCL Claims

The court next turned to plaintiffs' claims under the UCL. The court held that plaintiffs had stated a claim under the UCL's fraudulent and unlawful prongs, but had failed to state a claim under the UCL's unfair prong.

  • The Fraudulent Prong

The court first looked at plaintiffs' claims under the fraudulent prong, and found that plaintiffs had sufficiently alleged facts to satisfy the reasonable consumer test. They had identified the allegedly false and misleading representations, and had cited studies that purported to contradict defendant's claims. At this stage in the litigation, Judge Hayes found that the allegations were sufficient.

  • The Unlawful Prong

The Court next turned to plaintiffs' unlawful claims, and again found that they were adequately alleged. Judge Hayes noted that unlawful claims under the UCL may be based on almost any state, federal, or local law. Because the Court permitted many of plaintiffs' other claims to proceed, it also permitted the UCL "unlawful" claim to go forward.

  • The Unfair Prong

The Court then addressed plaintiffs' claims under the UCL's unfair prong and found that their allegations were not pled with sufficient specificity to withstand a motion to dismiss. Plaintiffs' claims under the unfair prong were vague and conclusory, and the Court granted Nature's Way's motion as to this claim.

Injunctive Relief Claims

The Court also granted Nature's Way's motion with respect to plaintiffs' claim for injunctive relief. Judge Hayes noted that plaintiffs had alleged that they would not have purchased the products had they known of the alleged misbranding. The Court ruled that these allegations supported the inference that plaintiffs had no intention of purchasing Nature's Way's coconut oil products in the future. Without the immediate threat of repeated injury, plaintiffs lacked standing to seek injunctive relief.

Motion to Strike

Finally, Judge Hayes denied Nature's Way's motion to strike allegations regarding websites plaintiffs did not claim they had looked at, products they did not claim they had purchased, and defective class allegations. The Court held that these issues were better addressed at the class certification stage.

Conclusion

Although Judge Hayes allowed much of the complaint to survive Nature Way's motion to dismiss, plaintiffs' path is far from clear. Their allegations may have been sufficient to survive a pleading challenge, but courts tend to be far more stringent at the class certification stage, particularly with respect to issues such as those raised in Nature's Way's motion to strike.

Footnotes

1 The court's rulings on plaintiffs' misrepresentation, labeling, UCL, and injunctive relief claims are discussed above. In addition to these rulings, the court found that the complaint sufficiently alleged facts to show the application of the continuing violation doctrine, thus avoiding a statute of limitations challenge. The Court also permitted claims regarding unpurchased products, and claims based on breach of warranty, to move forward.

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

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