When you walk through a grocery store, you will likely see certain food labeling claims such as “healthy”, “low in sugar”, and “humanely sourced”. A “labeling claim” refers to a term on a label that is not required, but the manufacturer has chosen to include it—usually for marketing purposes. Food manufacturers also tend to include similar claims in their off-label advertisements. Although food labeling claims and advertisements can help consumers who are seeking certain qualities in the food they buy, labeling claims and advertisements can sometimes mislead consumers. To prevent this deception on food labels, both the Food and Drug Administration (FDA) and the Food Safety and Inspection Service (FSIS) have promulgated regulations and guidance documents governing food labeling claims. To prevent deception in food advertisements, the Federal Trade Administration (FTC) has promulgated regulations and enforced legislation.

However, under these agencies’ regulations and authorizing legislation, only the agency can bring legal action against a company violating the regulations or statutes. Competitors and consumers who are affected by false and misleading labeling and advertising must find alternative legal actions to bring their cases. This is the fifth post in a series that explains the regulations governing food labeling claims and the potential legal actions brought against companies who have allegedly violated the regulations and statutes. This post explains the legal actions competitors can bring against each other and the common claims consumers bring against food companies.

Competitor v. Competitor: The Lanham Act

Congress passed the Lanham Act in 1946 with the intent, in part, “to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce” and “to protect persons engaged in such commerce against unfair competition”. 15 U.S.C. § 1127. To achieve this intent, the Lanham Act provides companies a private right of action against competitors whose advertising or labeling is false and misleading. Companies may bring a Lanham Act action if they suffer “injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 140 (2014).

The Lanham Act grants companies this right of action in section 43(a) of the act. Section 43(a) states:

  1. Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. 1125(a).

Although the Lanham Act grants companies a private right of action against competitors who allegedly have false or misleading advertising, in 2013 the Supreme Court of the United States was faced with the question of whether this right of action extends to labels under FDA’s jurisdiction. The Court answered this question in POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014).

In this case, POM Wonderful brought a Lanham Act case against Coca-Cola claiming that Coca-Cola’s pomegranate-blueberry juice label “mislead consumers into believing the product consists predominantly of pomegranate and blueberry juice when it in fact consist predominately of less expensive apple and grape juice.” POM Wonderful LLC, 573 U.S. at 110. POM claimed that Coca-Cola’s labeling caused it to lose sales of its own pomegranate-blueberry juice. Coca-Cola argued that since it’s label complied with all relevant Federal Food, Drug, and Cosmetic Act (FFDCA) provisions and FDA regulations, that POM was precluded from bringing a Lanham Act claim. The Supreme Court held that the FFDCA does not preclude a company from bringing a Lanham Act claim challenging a competitor’s food labeling. Therefore, POM was able to move forward in its case against Coca-Cola.

Consumer v. Company

Although consumers may benefit from the claims brought under the Lanham Act, they do not have a cause of action under the act. As the Supreme Court of the United States put it, a “consumer who is hoodwinked into purchasing a disappointing product may well have an injury-in-fact cognizable under Article III, but he cannot invoke the protection of the Lanham Act.” Lexmark, 572 U.S., at 132. Consumers also do not have a private right of action under the FFDCA, the Federal Meat Inspection Act, the Poultry Products Inspection Act, or the Egg Products Inspection Act. Without a private right of action under these federal statutes, consumers have turned to state law and common law remedies to recover losses after purchasing products which allegedly mislead them.

Most of these cases are brought in federal court under diversity jurisdiction. Diversity jurisdiction is achieved when the plaintiff and the defendant reside in different states and the “amount in controversy” exceeds a certain threshold, usually $75,000, but $5,000,000 for class actions. Diversity jurisdiction allows plaintiffs to bring state law claims in federal court. In food labeling cases, diversity jurisdiction is usually achieved through class actions, which allow the claims of many people to combine in order to reach the threshold.

State Consumer Protection Laws

Many states have consumer protection laws which generally prohibit unfair business practices and give consumers a private right of action against companies under state law. However, some are more plaintiff friendly than others. Those states with more plaintiff friendly consumer protection laws, or at least with judges that have interpreted the consumer protection laws to be consumer friendly, have attracted a lot of food labeling cases brought by consumers. The three most popular states for consumers bringing food labeling claims are California, New York, and Illinois.

Magnuson-Moss Warranty Act & Warranties

Warranty actions, such as breach of express warranty and breach of an implied warranty of merchantability, are state law contracts claims. However, in 1975 Congress passed the Magnuson-Moss Warranties Act (MMWA) which governs warranties on consumer products at the federal level. The MMWA only applies to written warranties, and not spoken warranties. The MMWA defines written warranties as “any written affirmation of fact or written promise made in connection with the sale or a consumer product … which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time”. 15 U.S.C. § 2301(6)(A).

When it comes to MMWA claims against food labels, consumers have argued that statements such as “all natural” and “smoked” are warranties which violated the MMWA. In a recent case, the plaintiff filed a lawsuit against Family Dollar after she bought “smoked” almonds that were flavored using liquid smoke, and not smoked by an open fire as she had thought after reading the label. The plaintiff argued that “liquid smoke flavor does not impart the same taste as smoke from an open fire; accordingly, the Product is not ‘defect free’ because it lacks ‘the delicate balance of phenolic compounds.’” Rudy v. Family Dollar Stores, Inc., 21-cv-03575 (N.D. Ill. 2022). The court disagreed with the plaintiff’s argument and held that the phrase “smoked almonds” is a product description and not a warranty. Although MMWA actions against food labeling claims have not seen great success, plaintiffs continue to bring MMWA actions.

Similar to MMWA claims, plaintiffs also bring breach of warranty claims. Although each state has its own definition of an express warranty, generally there is an express warranty if the seller (1) made a promise or stated an affirmative fact related to the good and (2) the buyer relied on that statement when making their purchasing decision. See U.C.C. § 2-313. Under case law precedent, statements such as “all natural” and “organic” are usually express warranties. See Brown v. Hain Celestial Group, Inc., 913 F.Supp.2d 881, 900 (N.D. Cal. 2012). However, most states require plaintiffs to notify the manufacturer/defendant that the product did not live up to the express warranty before filing a lawsuit with an express warranty claim. Many plaintiffs fail to give such notice.

Another type of warranty that plaintiffs bring in food labeling lawsuits is a breach of implied warranty of merchantability. The implied warranty of merchantability applies unless it is expressly excluded, and warrants that the seller “promises that the good is fit for the ordinary purposes for which it is originally intended to be used.” The implied warranty of merchantability is generally breached in a food labeling case when the food is not adequately labeled or does not conform to promises or affirmations of fact made on the label. See U.C.C. § 2-314. For a plaintiff to successfully bring an implied warranty claim, they must prove they were in privity with the defendant. For many plaintiffs this is difficult to prove.

Honorable Mentions  

In addition to state consumer protection laws and warranty actions, plaintiffs will bring other claims such as negligent misrepresentation, unjust enrichment, and fraud. Although the requirements plaintiffs must meet to bring a successful claim under these actions is similar from state to state, not all states apply these doctrines identically. For example, many states apply the economic loss doctrine to tort claims such as negligent misrepresentation, but not all states apply the doctrine the same.

Conclusion

Without a private right of action under federal statutes such as the FFDCA, the FTCA, and the other food labeling laws, competing companies and consumers have found other avenues to bring lawsuits against false and misleading labels and advertisements. For competing companies, the Lanham Act offers an avenue to challenge a competitor’s labeling or advertisements. Consumers have utilized various state laws and the MMWA. Because there are various claims that consumers can bring, it is up to the consumer’s lawyer to determine which claims will be most successful given the facts of the particular case and the state law which will be applied.

 

To read the other posts in this blog series, click here, here, here, and here.

To learn more about food labeling generally, click here to view the NALC Food Labeling Reading Room.

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