'All Natural' False Advertising Claims' Legal Evolution — Part 3

As noted in my most recent blogs, with the slew of recent false advertising claims filed in California federal court challenging the use of “All Natural” on food labeling, it was time for judges to start deciding related legal issues and providing guidance on dos, don’ts and maybes.

I first reviewed Hairston v. South Beach Beverage Co., in which the court dismissed the plaintiff’s challenge to the use of “All Natural” on SoBe’s Lifewater product, a no-calorie, vitamin-enhanced flavored water drink. I then reviewed Astiana v. Dreyer’s Grand Ice Cream, Inc., which also involved “All Natural” claims, but in which the plaintiffs’ false advertising claims were upheld. Here, I compare the courts’ rulings in the South Beach and Dreyer’s cases, explain how the two courts came to the opposite conclusions, and discuss those and other decisions’ implications for food and beverage manufacturers facing “All Natural” false advertising class actions in federal court.

The takeaways from the South Beach case were that (1) “All Natural” claims are vulnerable to dismissal where product flavoring-related label statements relied upon to bolster the plaintiff’s claim were permitted and therefore preempted by federal regulations; (2) the challenged “all natural” language must be viewed in context where it is immediately followed by the additional statement “with vitamins” or “with B vitamins;” and, (3) the product’s ingredient list clarifies any ambiguity and is consistent with the label statements “all natural with vitamins,” “nutrient enhanced hydration beverage,” the product name “0 Calorie Lifewater,” and with the fact that Lifewater is a flavored water beverage and not a juice.

The takeaways from Dreyer’s included the following: (1) California’s section 17200, which permits plaintiffs to “borrow” violations of federal regulations and state a claim under California law, remains a viable method turning alleged failures to comply with federal regulations into false advertising claims — seeking restitution of all or part of a purchase price of a product — by class members; and (2) the FDA’s advisory policy regarding natural claims that suggests that if an artificial or synthetic ingredient “would normally expected to be in the food,” then use of “natural” is okay, must be viewed from the perspective of consumers; that is, unless a reasonable consumer “would normally expect” the artificial or synthetic ingredient to be in the food product, then a false advertising claim remains plausible under the law.

Can the South Beach and Dreyer’s cases be reconciled? The defendants’ products in both cases used “all natural” on the label and each product contained artificial and synthetic ingredients. Notably, the court in South Beach permitted the defendant to rely on the detailed ingredient list to defeat the false advertising claims, while the court Dreyer’s did not. Also, the court in South Beach arguably permitted the defendant to cite and rely on its “all natural” base product — water — as distinguished from the added synthetic vitamins; while the court in Dreyer’s did not permit the defendant to rely on its “all natural” base product — ice cream — and distinguish it from the artificial or synthetic ingredients used in the mix-ins.

These seemingly irreconcilable differences appear to come down to these basic case distinctions: South Beach was able to cite specific FDA regulations that permitted its use of the flavoring-related label statements upon which the plaintiff relied, while Dreyer’s was not able to do so; and, South Beach added language to its “all natural” reference (“with vitamins”) that qualified the “all natural” claim, while Dreyer’s did not.  Had South Beach used only “All Natural Beverage” on its labeling without qualifiers, the cases may have had very similar results.

The Ninth Circuit Court of Appeals — the decisions of which bind California federal trial courts — has not made it easy to obtain dismissals of “All Natural” false advertising class actions at the outset of the case.  In the 2008 decision of Williams v. Gerber Products Company, the Ninth Circuit stated that “whether a business practice is deceptive will usually be a question of fact” and that it will be a “rare situation in which granting a motion to dismiss is appropriate.”  Gerber had advertised that its “fruit juice snacks” were made “with fruit juice and other all natural ingredients.”  The plaintiffs alleged this statement was false because the product contained no juice from the fruit products shown on the label, and the two most prominent ingredients were sugar and corn syrup. The trial court dismissed the case and the Ninth Circuit reversed, noting the rarity of such dismissals and holding that “the statement that Fruit Juice Snacks was made with ‘fruit juice and other all natural ingredients’ could easily be interpreted by consumers as a claim that all the ingredients in the product were natural, which appears to be false.” The court in Dreyer’s relied upon the Williams case in upholding the plaintiffs’ claims.

Since that decision, other courts similarly have refused to dismiss challenges to “All Natural” claims at the outset of a case, including the 2010 decision in Von Koenig v. Snapple Beverage Corp., in which the “plaintiffs allege[d] that they were deceived by the labeling of defendant’s drink products as ‘All Natural’ because they did not believe that the products would contain [high fructose corn syrup].” The Court found that “plaintiffs have stated a plausible claim that a reasonable consumer would be deceived by defendant’s labeling.” 

As the court cases discussed above show, there is a high bar set for food and beverage companies seeking to dispose of “All Natural” false advertising class actions at the outset of the case. But the South Beach case demonstrates that dismissal motions may succeed where some of the label or advertising representations challenged by the plaintiff are permitted and therefore preempted by federal regulations (and as a result the plaintiff cannot rely on those statements to bolster a claim); and, where the “All Natural” language — when qualified or otherwise viewed in context — does not imply that the entire product is free of anything synthetic or artificial. Food and beverage companies designing labels and/or defending false advertising cases should keep these points in mind.