In a somewhat surprising ruling in Kennard v. Kellogg Sales Co. on Sept. 14, a judge in the U.S. District Court for the Northern District of California dismissed with prejudice a false advertising case about certain MorningStar Farms products labeled as "veggie burgers," "veggie dogs" and "veggie chick'n."[1]

The court held that, as a matter of law, the term "veggie" does not mislead reasonable consumers into believing that the product is made primarily from vegetables.

Case Background

The plaintiff alleged that naming the products "veggie" was misleading because it makes consumers believe that the products are made primarily of vegetables.[2]

Because the products are actually composed primarily of nonvegetable ingredients like wheat gluten, oil and corn syrup solids, the plaintiff alleged that the packaging is false or misleading in violation of, among other things, the California's False Advertising Law, the Unfair Competition Law and the Consumer Legal Remedies Act.[3]

The FAL, UCL and CLRA are very common vehicles California plaintiffs utilize to bring lawsuits over statements they believe are false or misleading — a defendant can be liable even if its statements are technically true if they are misleading.[4]

The defendant argued that the "veggie" labels were not misleading because reasonable consumers understand the term "veggie" to refer to vegetarian or meat substitute foods, not as a reference to being made primarily of vegetables.[5]

The court previously dismissed the complaint once, agreeing with the defendant that reasonable consumers would not understand "veggie" to mean made primarily from vegetables.

He gave the plaintiff another chance to replead her case, however, to add facts showing why a significant portion of the public acting reasonably could be misled into thinking that the products were made from vegetables as opposed to grains, legumes and oil.[6]

In the amended complaint, the plaintiff bolstered her allegations about consumer understanding with a survey that she said demonstrated that consumers are misled by the "veggie" labeling, thinking that the products are made primarily from vegetables rather than nonvegetable, plant-based ingredients.[7]

The Court's Decision

The court was not swayed, finding that the plaintiff's claims in the amended complaint were implausible and do not support a reasonable inference that some significant portion of consumers would be misled into thinking the VEGGIE products are made primarily from vegetables as opposed to being vegetarian meat substitutes made from grains, oils, legumes, or other ingredients.[8]

The court supported this conclusion in two ways. First, the court pointed to context clues. Even if the term "veggie" was ambiguous, said the court, consumers could look at the rest of the packaging and the ingredient list and would not be misled.[9]

The court noted that the pictures on the products' packaging do not indicate "that any particular vegetable or class of vegetables is present in the Products" and instead "show the Products clearly mimicking meat as vegetarian meat substitutes."[10]

Thus, this case is different from others in which the product packaging featured pictures of ingredients not actually in the products, which in conjunction with an ambiguous product name, contributed to the misleading nature of the overall product packaging.[11]

Second, the court was able to disregard the plaintiff's consumer survey by determining that it did not ask the right question.[12]

The survey asked what plant-based ingredients consumers believed were primarily in the products, when according to the court it should have asked whether the term "veggie," taking into account the product packaging, conveyed that the Veggie Products were meat-alternative or whether those sources conveyed the challenged Products were made with vegetables as opposed to other ingredients.[13]

The court dismissed the amended complaint with prejudice, meaning that the case is over, the defendant won, and the plaintiff does not have another chance to replead.

Key Takeaways

Recent precedent suggests that consumer surveys do not necessarily save complaints from motions to dismiss.

It is notable that the court ruled definitively for the defendant at the motion to dismiss stage, even when the plaintiff had already commissioned a consumer survey and incorporated its findings into her amended complaint.

Normally a plaintiff will not even commission a consumer survey until after the motion to dismiss stage, because how reasonable consumers interpret a label usually is a factual issue, not a legal one.[14] Here, however, the plaintiff commissioned a survey prior to amending her complaint and even incorporated the survey findings into her complaint.

Even though courts are required to assume the truth of allegations in the complaint, the court in this case was able to side step the plaintiff's consumer survey in two ways.

First, by finding that the survey asked the wrong question. By making this determination, the court was able to assume the truth of the survey's results — as is required at the motion to dismiss stage — while at the same time disregarding them.

Second, by citing to other cases where courts have determined that surveys cannot save "otherwise facially implausible consumer deception claims."[15]

By doing so, the court messages that its decision is not necessarily an outlier, but is following in the footsteps of other courts who have similarly made such determinations. Notably, these cases are all very recent, with the oldest from 2019.

Recent precedent finding that labels are not misleading as a matter of law.

Aside from the question of the survey, the court also bolstered its determination that the veggie labeling is not misleading as a matter of law by citing to other cases that also decided that labeling was not misleading as a matter of law — i.e., at the motion to dismiss stage.[16]

For example, the court cited the U.S. Court of Appeals for the Ninth Circuit's Becerra v. Dr Pepper/Seven Up Inc. decision from 2019, holding that no reasonable consumer would assume that Diet Dr Pepper's use of the term "diet" promises weight loss or management, and affirming the district court's grant of the defendant's motion to dismiss.[17]

Perhaps not surprisingly, the district court in that case is the same as the court in the MorningStar Farms case.

The court also cited to the opinion of another Northern District of California judge finding that, as a matter of law, a reasonable consumer — and even the least sophisticated consumer — would not be misled into believing that soymilk is actual milk from a cow.[18] All of the cited cases are from the last 10 years.

The odds of the FAL, UCL and CLRA claims surviving motions to dismiss could be shifting.

The MorningStar Farms decision and the recent federal court cases it relies upon could be indicators that California federal courts are pushing back a bit against the wave of nonmeritorious, false or misleading advertising cases brought by plaintiffs under the UCL, the CLRA and the FAL.

This could message to future plaintiffs that they cannot assume that they will survive a motion to dismiss, even if they have commissioned a friendly survey, if their interpretation of what the product messages to the public is not believable on its face. This could also encourage future defendants that are on the fence about whether to file a motion to dismiss to do so.

Motions to dismiss are generally very expensive and historically have had a low likelihood of success for defendants given the lenient standard enjoyed by plaintiffs.

Court decisions like these indicate a potentially higher likelihood of success, which might make the investment in filing the motion worth it, especially because winning on a motion to dismiss cuts off extremely expensive and time-consuming discovery.

It would not be surprising if these types of decisions result in more defendants deciding to file motions to dismiss in the FAL, UCL and CLRA cases, and more courts granting such motions.

Rebecca E. Bazan is a partner at Duane Morris LLP.

Notes

[1] Kennard v. Kellogg Sales Co ., No. 21-cv-07211 (N.D. Cal. Sept. 14, 2022), Dkt. No. 46 ("Kennard Motion to Dismiss Decision").

[2] Id. at 2.

[3] Id. at 1-2.

[4] See, e.g., Kasky v. Nike , 27 Cal. 4th 939, 951 (2002) (California law prohibits "not only advertising which is false, but also advertising which[,] although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.") (quoting Leoni v. State Bar , 39 Cal.3d 609, 626 (1985)).

[5] Kennard Motion to Dismiss Decision at 2, 5.

[6] Id. at 2-3.

[7] Id. at 3.

[8] Id. at 6.

[9] Id. at 6-7, 10.

[10] Id. at 7.

[11] Id. at 8 (distinguishing Williams v. Gerber Products Co. , 552 F.3d 934 (9th Cir. 2008), in which case "the packaging showed whole fruits that were not included in the product in any amount.").

[12] Id. at 10.

[13] Id. at 14-15.

[14] See, e.g., Fitzhenry-Russell v. Keurig Dr Pepper Inc. , 345 F. Supp. 3d 1111, 1116-18 (N.D. Cal. 2018) (finding that consumer survey submitted by plaintiff at summary judgment stage created genuine issue of fact regarding how reasonable consumers could interpret a product label, and denying defendant's motion for summary judgment on the claim).

[15] Kennard Motion to Dismiss Decision at 9 (citing Becerra v. Dr Pepper/Seven Up, Inc ., 945 F.3d 1225 (9th Cir. 2019); Puri v. Costco Wholesale Corp. , No. 21-cv-0102, 2021 WL 6000078 (N.D. Cal. Dec. 20, 2021); Tucker v. Post Consumer Brands, LLC , No. 19-cv-03993, 2020 WL 1929368 (N.D. Cal. Apr. 21, 2022); Yu v. Dr Pepper Snapple Group, Inc. , No. 18-cv-06664, 2020 WL 5910071 (N.D. Cal. Oct. 6, 2020).

[16] Id. at 6 (citing Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019); Sensible Foods, LLC v. World Gourmet, Inc. , No. 11-2819, 2012 WL 566304 (N.D. Cal. Feb. 21, 2012); Gitson v. Trader Joe's Co. , No. 13-cv-01333, 2015 WL 9121232 (N.D. Cal. Dec. 1, 2015); Weiss v. Trader Joe's , 838 F. App'x 302 (9th Cir. 2021)).

[17] Id. (citing Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 1225 (9th Cir. 2019)).

[18] Id. (citing Gitson v. Trader Joe's Co., No. 13-cv-01333, 2015 WL 9121232 (N.D. Cal. Dec. 1, 2015)).

Reprinted with permission of Law360.