Judge Koh Issues First Blow to “Added Sugars” Plaintiffs

CerealThe Big Picture:  On Tuesday, Judge Koh granted Kellogg’s Motion to Dismiss in its entirety in Hadley v. Kellogg Sales Company, No. 5:16-cv-04955-LHK (N.D. Cal.).  Hadley is one of three cases[1] against well-known cereal makers pending in the Northern District of California.  All three actions challenge various factually true “health” representations on the cereal packaging as misleading due to the amount of “added sugars” in the products.  FDA requires the total amount of sugars to be included on the Nutrition Facts Panel but does not yet require the amount of “added sugars” be broken out of the sugar category.[2]

While Judge Koh granted the motion in its entirety, she did not address several key arguments (e.g. preemption) and gave plaintiff leave to amend on several causes of action.  Thus, before we can play the funeral march for these “added sugars” cases, we need to see how one more round of pleadings shakes out and whether Judges Orrick and White follow Judge Koh’s lead.

Key Holdings:

  • “Added Sugars”—Plaintiff’s claims as to the amount of “added sugars” were dismissed with leave to amend for failing to satisfy 9(b).  Plaintiff did not plausibly allege that the various health claims were misleading because he failed to allege the amount of added sugar versus the total amount of sugar in each product and whether the amount of added sugar exceeded plaintiff’s own alleged “healthy” threshold.
  • Trans Fats—Plaintiff’s label challenges based on the fact that some products contained trans fats were dismissed with prejudice.  It was simply not plausible that the inclusion of trans fats made the factually true (and seemly unrelated) phrase “MADE WITH Real Fruit” misleading.
  • Miscellaneous Violations of FDA Regulations[3]—Plaintiff’s claims based on alleged violations of FDA regulations were dismissed because plaintiff failed to plausibly plead that consumers would have been misled by the violations.  While the court generally granted leave to amend on these claims, a few were dismissed with prejudice based on futility or waiver.
  • Warranty Claims—Plaintiff’s express and implied warranty claims were dismissed with leave to amend because plaintiff provided a litany of statements but did not match them to the respective products.
  • Injunctive relief—The court found that while a willingness to consider repurchasing the product was likely sufficient to establish standing, here plaintiff’s willingness to repurchase was dependent on the products being “appropriately” priced.  Since any injunctive relief would not affect the price of the product, plaintiff lacked standing to seek such relief.

[1] The other two cases are Krommenhock v. Post Foods, LLC, No. 3:16-cv-04958 (N.D. Cal. Filed Aug. 29, 2016); Truxel v. Gen. Mills Sales, Inc., No. 4:16-cv-04957 (N.D. Cal. Filed Aug. 29, 2016).

[2] On May 27, 2016, FDA issued a final rule on how “added sugars” should be listed on the Nutrition Facts Panel (“NFP Final Rule”).   Food Labeling: Revision of the Nutrition and Supplement Facts Panel, 81 Fed. Reg. 33,741 (May 27, 2016).  The NFP Final Rule revises the Nutrition Facts label by, among other things, “requiring the declaration of the gram amount of ‘added sugars’ in a serving of a product, establishing a Daily Reference Value (DRV), and requiring the percent Daily Value (DV) declaration for added sugars.”  Id. at 33,744.  The NFP Rule, which went into effect on July 26, 2016, does not require manufacturer compliance with the new labeling requirements until July 26, 2018.

[3] 21 C.F.R. §§ 101.13(e) (prohibition on the use of “free” or “low” unless product contains an altered amount of nutrient), (f) (type size of nutrient content claim), (i) (misleading nutrient content claim), 101.14(d) (limits on intervening material between health claims and required disclosures), 101.60 (calorie content claims), and 1.21 (material omissions)