Class Action and Product Insights for Your Business
June 14, 2016 - False Advertising, Food Misbranding

The Devil’s in the Details: Court Dismisses “Made in the U.S.A.” Fraud Claims against Heinz Because Plaintiff Failed to Allege Specific Facts and Lacked Standing to Sue for Products She Did Not Purchase

On April 22, 2016, in Alaei v. Kraft Heinz Food Co. (“Heinz”), No. 3:15-cv-02961, Southern District of California Judge Michael M. Anello granted defendant Heinz’s motion to dismiss without prejudice plaintiff Suzanne Alaei’s “Made in the U.S.A.” false advertising claims.  The court held that plaintiff failed to plead facts with the particularity required for fraud-based claims under Federal Rule of Civil Procedure 9(b), and lacked standing regarding products she did not purchase.

Background.  Plaintiff’s First Amended Complaint, filed on January 19, 2016, alleged that defendant’s “Made in the U.S.A.” advertisements violated California’s Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA). Plaintiff alleged that she purchased a bottle of defendant’s Heinz 57 sauce that included the claim “MFD. In U.S.A.” on the product label, but that the sauce was made, or contained ingredients made, outside the United States. Plaintiff claimed that had she known this, she would not have purchased Heinz’s product.

The “Who, What, When, Where, and How.”  The court began its analysis by noting that, under Rule 9(b), a fraud allegation must include the “who, what, when, where, and how” of the circumstances giving rise to a claim.  While plaintiff alleged the basic factual premise underlying her claims — that Heinz falsely labeled its products as “Made in the U.S.A.” even though certain ingredients used in its products were manufactured outside the United States — she offered little detail beyond this. Her complaint did not allege that the bottle of Heinz 57 sauce plaintiff purchased was manufactured outside the United States or contained any ingredients that originated outside of the United States. And, while plaintiff challenged the origin of certain ingredients, her complaint contained no allegations regarding where any of Heinz’s products or their ingredients were actually manufactured.

No Standing For Products Not Purchased. Although plaintiff alleged that she purchased a single bottle of Heinz 57 sauce, she sought to represent a class of all Californians who purchased any Heinz product advertised as “Made in the U.S.A.,” but which was foreign-made or contained foreign-made ingredients. The court held that plaintiff lacked standing to make claims as to products she never purchased and whose advertising she did not see unless those products and alleged misrepresentations were “substantially similar” to those she bought.  Because plaintiff failed even to identify other offending products in her complaint, the court could not assess the similarity of such products to the product plaintiff purchased. The court held that plaintiff lacked standing to sue as to products she did not purchase and dismissed her class claims as to those products under Rule 12(b)(1).

Takeaway. Alaei joins the list of California federal district court cases we have highlighted that reject plaintiffs’ false advertising or misbranding claims at the pleading stage for failure to meet Rule 9(b)’s particularity requirement. See, e.g., Davidson v. Kimberly-Clark Corp., No. C 14-1783 PJH (N.D. Cal. Dec. 19, 2014) (see our Kimberly-Clark post); Figy v. Frito-Lay N. Am., Inc., No. 13-3988-SC (N.D. Cal. Aug. 12, 2014) (see our Frito-Lay post). Alaei also supports the majority trend in the Ninth Circuit holding that plaintiffs lacks standing to challenge products they did not purchase unless they at least demonstrate substantial similarity to purchased products. See, e.g., Gallagher v. Chipotle Mexican Grill Inc., No. 15-cv-03952-HSG (N.D. Cal. Feb. 5, 2016); Maxwell v. Unilever United States Inc., No. 12-cv-01736-EJD (N.D. Cal. Aug. 28, 2014); Bruton v. Gerber Prods. Co., No. 12-cv-02412-LHK (N.D. Cal. Sept. 6, 2013) (see our Gerber post). These decisions are a win for companies fighting vague, conclusory allegations of false advertising that challenge a host of products.