technical regulatory violations could plausibly deceive consumers

Gustavson v. Wrigley Sales Company, 2013 WL 5201190, No. 12–CV–01861 (N.D. Cal. Sept. 16, 2013)

Gustavson alleged that she’d bought various Wrigley and Mars products after reading and relying on their labels, which were allegedly misbranded.  The court first rejected the general preemption arguments: she alleged that defendants’ conduct violated the FDCA, avoiding express preemption.  But she wasn’t suing to enforce the FDCA, but California law; she had a cause of action because California could’ve imposed the exact same regulations even if the FDCA didn’t exist.

However, a few of her claims were preempted for being not identical to federal requirements.  Of more general interest: the court used FDA warning letters to show that, at least for purposes of surviving a motion to dismiss, the claims were consistent with the FDA’s own interpretations of its regulations.  (The issues were (1) whether the terms “source” and “found” characterized the level of nutrients within the FDA’s meaning of characterizing a nutrient, and the warning letters said yes, and (2) whether the use of the term “flavanol” was unregulated when flavanol is an antioxidant and “antioxidant” is regulated; the court found it plausible that the regulation would still govern when “a food product’s label refers to the antioxidant by its precise name, rather than by a generic umbrella term.”)

The court also dismissed claims based on statements on Wrigley’s website that its sugar-free gums are “low calorie.” Though Gustavson argued that websites are part of a product’s labeling, based on another warning letter, that warning letter was based on the fact that the accused label included a URL for consumers to visit.  No such allegations were present here.

The court also applied the primary jurisdiction doctrine to one set of claims: that Wrigley misstated the serving size for sugar free breath mints.  Given longstanding FDA analysis indicating that the serving size for such mints was in need of changing, and actual proposals to change it on the regulatory agenda for 2013, the court thought it better to wait, though the current standard was clear (and thus there was no express preemption; Gustavson alleged that Wrigley was in violation of the current standard and Wrigley didn’t really dispute that).  Even this was a “close question,” and the court didn’t bar any other claims.  The other issues in the case weren’t novel or especially complex, and they were really about false advertising rather than science.

On to standing (of course): Defendants argued that Gustavson didn’t plead injury or plausible reliance, and the court disagreed.  Defendants contended that regulatory violations alone can’t cause economic injury, and that it wasn’t plausible that Gustavson was deceived into buying the products as a result of any misstatements; the alleged violations were simply too “arcane” to mislead a reasonable consumer.

At this stage, however, the court found Gustavson’s allegations sufficient for standing.  She specifically alleged reliance on the statements to buy the products, which meant she alleged a loss of money.  Whether a practice is actually deceptive is usually a question of fact that can’t be resolved on the pleadings.  She might or might not be able to prove that reasonable consumers would have been misled, but “neither Rule 8(a), nor the Supreme Court’s decisions in Twombly and Iqbal require a plaintiff to prove her case the moment she files her complaint.”  Plausibility isn’t probability, and her allegations weren’t so improbable as to be implausible.  “While Defendants seem to believe that what is or is not misleading to a reasonable consumer is a matter of self-evident common sense, that question is actually all but impossible to answer in the abstract.”

However, her allegations that defendants made unlawful “health” claims on various websites were too vague to survive.  The warranty claims were also dismissed, as were allegations against Mars based on Wrigley’s products and allegations against Wrigley based on Mars products; the allegations that defendants were engaged in a common scheme were too vague and conclusory, and the parent-subsidiary relationship between Mars, Inc. and Wrigley was insufficient, standing alone, for liability.