'Tis the season to bring together family and friends over food, and if you've cooked your own Thanksgiving dinner, you know the ingredients in your recipes.
But if you've gone with a store-bought "All Butter Loaf Cake," would it be reasonable for you to believe the only shortening ingredient was butter even if soybean oil was conspicuously listed in the ingredients?
In the Nov. 4 Boswell v. Bimbo Bakeries USA Inc. opinion, this was the issue.
After purchasing an Entenmann's "All Butter Loaf Cake" and paying the price for what New Yorker Monica Boswell allegedly thought would be a higher quality, butterfat-only treat, Boswell discovered soybean oil, in addition to butter, in the package's ingredients list.
Apparently feeling deceived by the packaging and claiming that she never would have purchased the product had she known it was made with vegetable oil and artificial flavors, Boswell sued Bimbo Bakeries, which owns Entenmann's-branded food products, on Oct. 25, 2020, in the U.S. District Court for the Southern District of New York.
In her complaint, Boswell alleged that the "All Butter" packaging was misleading because the cake contains not only butter, but also soybean oil and artificial flavors.1
To plausibly plead claims under Sections 349 and 350 of the New York General Business Laws, Boswell needed to substantiate a claim that Entenmann's packaging was deceptive, and falsely advertising, under Sections 349 and 350, respectively, both of which require a demonstration that Entenmann's packaging was "materially misleading," or in other words that it was "likely to mislead a reasonable customer acting reasonably under the circumstances."2
Entenmann's moved to dismiss for failure to state a claim,3 and the court granted the motion. Applying the 2017 In re: 100% Grated Parmesan Cheese Marketing and Sales Litigation4 decision of the U.S. District Court for the Northern District of Illinois, the court outlined a standard that distinguishes between two types of false or misleading packaging:
- Labels that are unambiguous and misleading in light of the ingredients and nutritional facts; and
- Labels that are ambiguous and misleading, but resolvable by referencing the ingredients and nutritional facts.
As an example of an unambiguous and misleading label, the court cited the 2018 Mantikas v. Kellogg Co. decision.
Essentially, Cheez-It crackers packages were labeled "whole grain" or "made with whole grain" and the U.S. Court of Appeals for the Second Circuit found that these labels "falsely imply that the grain content is entirely or at least predominately whole grain" when, in fact, the package's ingredients list revealed that the primary grain content was enriched white flour.5
Because the misleading statements were unambiguous, the ingredients disclosures did not cure the deception.6
As an example of an ambiguous label, the court referred to the 100% Grated Parmesan Cheese case.
There, the products contained not only parmesan cheese, but also the noncheese ingredient cellulose. The court found that "the description '100% Grated Parmesan Cheese' [was] ambiguous" because it might be that the product was 100% parmesan cheese or that the product was 100% grated, and the ambiguity was resolved "by the readily accessible ingredient panels on the products that disclose the presence of noncheese ingredients."7
Considering those previous decisions, the Southern District of New York concluded that Boswell's case more closely resembled the facts of 100% Grated Parmesan.
- First, the court stated that "[t]aken literally, the description could be understood to mean that the product is entirely butter," but quickly disposed of that argument stating "no reasonable consumer would adopt that reading because the product is obviously not a stick of butter and 'All Butter' modifies 'Loaf Cake'" and that "notwithstanding the label 'All Butter,' likely to contain other ingredients commonly found in cake, such as flour, sugar, milk, and eggs."8
- Next, the court found that Boswell created an ambiguity by
providing two different definitions for "All Butter":
- That "reasonable consumers will expect all of the shortening ingredient [sic] to be butter;" and
- That "no butter alternatives or substitutes will be used in the Product where butter is capable of being used."9
- Third, the court found that "'All Butter' could merely be a description of flavor."10 Because reasonable customers would not be "lulled into a false sense of security" by the packaging, the court determined that reasonable customers "would know exactly where to look to investigate — the ingredient list" and that doing so "would inform them that the product contained nonbutter ingredients."
Thus, the court denied the Sections 349 and 350 claims, several related claims and declined to grant Boswell leave to amend.
What makes the court's decision potentially unusual is its reliance on the Northern District of Illinois case, 100% Grated Parmesan, instead of binding precedent from its own circuit, Mantikas.
Moreover, in the December 2020 Bell v. Publix Super Markets Inc. decision, the U.S. Court of Appeals for Seventh Circuit reversed 100% Grated Parmesan, relying in part on the analysis in Mantikas.11
Specifically, the Seventh Circuit held that 100% Grated Parmesan plaintiffs' deceptive labeling claims should have survived the motions to dismiss for failure to state a claim.12
Analyzing the question of ambiguity, the Seventh Circuit stated that:
The district court's dismissal erred by departing from the Rule 12(b)(6) standard and attributing to ordinary supermarket shoppers a mode of interpretation more familiar to judges trying to interpret statutes in the quiet of their chambers.13
The court found that:
Under the district court's ambiguity rule, as a matter of law, a front label cannot be deceptive if there is any way to read it that accurately aligned with the back label. And this rule would be so even if the label actually deceived most consumers, and even if it had been carefully designed to deceive them. 14
The court continued:
Consumer-protection laws do not impose on average consumers an obligation to question the labels they see and to parse them as lawyers might for ambiguities, especially in the seconds usually spent picking a low-cost product.15
This requirement, the Seventh Circuit said, "conflicts with decisions of the First, Second and Ninth Circuits in very similar cases also involving food labels."16
In the 2019 Dumont v. Reily Foods Co. opinion in the U.S. Court of Appeals for the First Circuit referenced by the Seventh Circuit, Kathy Dumont purchased New England Coffee Company's "Hazelnut Crème" coffee only to find out the coffee contained no hazelnuts at all.
The district court dismissed the case and the First Circuit reversed, finding that whether "a reasonable consumer who, like Dumont, cared whether the coffee she intended to purchase contained real hazelnut would check the list of ingredients," or "find in the product name sufficient assurance so as to see no need to search the fine print on the back of the package," in either instance it was, "best that six jurors, rather than three judges, decide on a full record whether the challenged label 'has the capacity to mislead' reasonably acting, hazelnut-loving consumers."17
The First Circuit characterized the dissent as "envision[ing] a more erudite reader of labels, tipped off by the accent grave on the word 'crème,' and armed perhaps with several dictionaries, a bit like a federal judge reading a statute,"18 despite that "the package says 'Freshly Ground 100% Arabica Coffee.'"19
In the 2008 Williams v. Gerber Products Co. opinion from the U.S. Court of Appeals for the Ninth Circuit referenced by the Seventh Circuit, Nakia Williams purchased Gerber's Fruit Juice Snacks because she sought a healthy snack for her children.20
"Fruit Juice" was juxtaposed alongside images of oranges, peaches, strawberries and cherries, but the ingredients label indicated that the product contained only white grape juice from concentrate.21
Williams and a consumer class challenged a number of additional statements including "with real fruit juice and other natural ingredients," "one of a variety of nutritious Gerber Graduates foods and juices," "naturally flavored," and labeling as a "snack" rather than a candy, sweet or treat 22
The district court granted a motion to dismiss for failure to state a claim, but the Ninth Circuit reversed, stating "the district court based its decision to grant the motion to dismiss solely on its own review of an example of the packaging" and while "[i]t is true that 'the primary evidence in a false advertising case is the advertising itself," California courts "have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer."23
The Ninth Circuit disagreed with the district court that "reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box."24
The Seventh Circuit noted that in each of Dumont, Mantikas and Williams,
the reasonable customer standard does not presume, at least as a matter of law, that reasonable customers will test prominent front-label claims by examining the fine print on the back label.25
Siding with its sister circuits, the Seventh Circuit adopted the analysis in these cases and rejected the analysis in 100% Grated Parmesan, warning that "[t]he ambiguity rule for front-label claims would, we fear, encourage deceptive advertising and labeling."26
The application of Bell and Mantikas does not guarantee that Boswell would have prevailed. In fact, the Seventh Circuit stated that "deceptive advertising claims should take into account all the information available to customers and the context in which that information is provided and used" and "where the plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified."27
If the Southern District of New York relied on Bell, however, it is possible that Boswell's motion would have survived a motion to dismiss for failure to state a claim and proceeded to discovery to allow for the fact-intensive review and presentation of evidence to show whether customers would actually be misled by the "All Butter" labeling.28
It will be interesting to see whether Boswell appeals the dismissal and what results if the Second Circuit applies its own Mantikas decision. Mantikas does not map on perfectly.
Unlike in Mantikas where the court found that "whole grain" or "made with whole grain" falsely implied that the grain content is entirely or at least predominately whole grain because the primary grain content was actually enriched white flour, the primary and predominant shortening content in "All Butter Loaf Cake" was, in fact, butter.
The key question is likely to be whether and how "All" changes whether and how the court navigates the issues. The Second Circuit could depart from its sister circuits and adopt the ambiguity rule, find "All" renders the label ambiguous, and affirm the Southern District of New York opinion.
This conclusion would be consistent with the position that absolute statements — like "All" or like "100%" in "100% Grated Parmesan Cheese" — render labels ambiguous.
Alternatively, the Second Circuit could adhere to the reasonable customer standard outlined by the Seventh Circuit and could find that the question of whether the reasonable customer is misled is a question of fact and one that should survive a motion to dismiss.
In that case, the Second Circuit could either reverse the Southern District of New York opinion on the basis that Boswell's interpretation was reasonable or affirm the Southern District of New York by finding that her claims were "unreasonable or fanciful interpretations of labels."
The outcome of a final decision in Boswell could be important for other pending false advertising claims.
For example, the Southern District of New York has already dismissed a false advertising lawsuit without leave to amend by relying on Boswell. In the Nov. 9 Kamara v. Pepperidge Farm Inc. opinion, the Southern District of New York held that "Golden Butter" on a package of Pepperidge Farm crackers was not misleading because the product also used synthetic substitutes and vegetable oils.
Similarly, in the Oct. 19 Elizabeth Russett v. Kellogg Sales Co. class action filing, Russet claimed that some labeling elements of Kellogg Sales Co.'s "Whole Grain Frosted Strawberry Toaster Pastries" product, better known as Strawberry Pop-Tarts, are false, deceptive and misleading because "it contains mostly non-strawberry fruit ingredients."
Footnotes
1. See N.Y. Gen. Bus. L. Sections 349, 350.
2. See Boswell v. Bimbo Bakeries USA Inc ., No. 20-CV-8923 (JMF), 2021 WL 5144552, at *2 (S.D.N.Y. Nov. 4, 2021) (citing Mantikas v. Kellogg Co., 910 F.3d 633, 636 (2d Cir. 2018)).
3. See Fed. R. Civ. P. 12(b)(6).
4. In re: 100% Grated Parmesan Cheese Mktng. & Sales Pracs. Litig., 275 F. Supp. 3d 910, 923 (N.D. Ill. 2017).
5. Mantikas, 910 F.3d at 634-35, 637.
6. Id. at 637.
7. Id. at 923.
8. Boswell, 2021 WL 5144552, at *3.
9. Id.
10. Id.
11. See Bell v. Publix Super Markets Inc. , 982 F.3d 468, 473 (7th Cir. 2020).
12. Id.
13. Id. at 476.
14. Id.
15. Id.
16. Id.
17. Id. at 41.
18. See Id. at 40.
19. Id.
20. See Williams v. Gerber Prod. Co. , 552 F.3d 934, 936 (9th Cir. 2008).
21. Id.
22. Id.
23. Id at 938.
24. Id.
25. Id. at 477.
26. Id.
27. Id. at 477.
28. Id at 478.
29. See Kamara v. Pepperidge Farm Inc. , No. 20-CV-9012 (PKC), 2021 WL 5234882, at *4 (S.D.N.Y. Nov. 9, 2021).
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