Ninth Circuit Precedent Limits Fraud-Based Label Claims
It is well-settled that fraud-based claims asserted in federal court need to satisfy not only Federal Rule of Civil Procedure 12(b)(6)’s plausibility pleading standard but also the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that a party plead fraud with particularity, which means that the complaint must identify the who, what, when, where, and how of the misconduct charged as well as what is false or misleading about the purportedly fraudulent statement and why it is false.
In Davidson v. Sprout Foods, the Ninth Circuit applied that standard to food labeling claims relating to nutrient content. 106 F.4th 842, 853 (9th Cir. 2024). The plaintiffs in Davidson alleged that nutrient content labels on defendant’s baby food pouches misled consumers into believing the products were good for babies when they were actually nutritionally and developmentally harmful. Id. at 844-45, 852. The nutrient content statement on an exemplar product stated “3g of Protein, 5g of Fiber and 300mg Omega-3 from Chia ALA.” Id. at 846. The Ninth Circuit held that plaintiffs failed to sufficiently allege why this implied message was false, i.e., that the products were in fact harmful. Id. at 854. In support of their contention that the defendant’s products are harmful, the plaintiffs offered two sets of allegations: (1) the “products contain high amounts of sugar and that sugars in pureed, pouch-based foods can lead to health issues such as tooth decay”; and (2) “articles and reports suggesting that pouch-based foods may lead to long-term health risks and hinder babies’ development.” Id.
The court held that plaintiffs’ allegations relating to harm were largely unspecific to defendant’s products and therefore did not satisfy Rule 9(b)’s pleading standard. Id. The court went on to observe that the only allegations specific to defendant’s products identified the amount of sugar in defendant’s products, but those allegations lack context. Id. Notably, plaintiffs did “not explain at what level sugars become harmful or why the level of sugar in these products, in particular, could cause harm.” Id. (emphasis added). Moreover, plaintiffs never actually alleged that defendant’s products cause any of the harms alleged. In other words, general allegations regarding harm are insufficient to pursue nutrition-based food label claims.
District courts within the Ninth Circuit have taken note. Just this month, a California federal judge considered a proposed class action accusing Gerber Products Co. of deceptively claiming health benefits on its labeling for pureed baby and toddler food pouch products. Howard v. Gerber Products Co., 3:22-cv-04779 (N.D. Cal.). During a hearing on defendant’s motion to dismiss, Judge Chhabria said that the Ninth Circuit’s decision in Davidson could doom plaintiffs’ claims. Specifically, Judge Chhabria noted that Davidson “stands for the proposition…just because you have a bunch of stuff on your label that makes it seem[] like a healthy product, that’s not enough to sue them for fraud.” Judge Chhabria compared the products to orange juice, observing that “We all know … you’re just drinking a bunch of sugar when you’re drinking orange juice from concentrate…But if I have a couple of glasses of orange juice on the weekend with my pancakes that’s just not a big deal.” He went on to state that if the products had a harmful substance in them, like fentanyl, that would be different, because you cannot really consume it occasionally or in moderation. In other words, Judge Chhabria’s interpretation of the Ninth Circuit precedent is that products that can be consumed occasionally without harm cannot be the basis for a fraud claim without more particularized allegations of fraud and more specific information of how the product might be harmful.
The recent Ninth Circuit precedent and district court’s application of it have meaningful implications for retailers and manufacturers’ class action litigation strategies in defending claims alleging that a consumer product’s label is false or misleading. The court’s application of Rule 9(b)’s particularity standard in the nutrition content context provides helpful guidance in considering whether to seek dismissal at the pleadings stage when the plaintiff fails to allege harm with particularity. Based on the Ninth Circuit precedent, courts will require that plaintiffs allege particular details regarding harm specific to defendants’ products. Pointing to general reports of harm untied to the products at-issue or hypothetical examples of harm is not enough.
