Since honoring the Ninth Circuit’s decision in Nexus Pharms., Inc. v. Cent. Admixture Pharm. Servs., Inc., 48 F.4th 1040 (9th Cir. 2022), as being our third best decision of 2022, we have been waiting for (and expecting) a court to apply it to a food labeling case. And now one has – Collyer v. Catalina Snacks Inc., 2024 U.S. Dist. LEXIS 9637 (N.D. Cal. Jan. 18, 2024).
Plaintiff’s fraud claims in Collyer allege that the packaging of four keto-friendly cereals was misleading because the cereals do not contain an ingredient pictured on the package. For example, the package for the Banana Chocolate cereal has real bananas pictured, but the banana taste comes from “natural flavors.” Similarly, while the Apple Cider Donut cereal depicts both an apple and a donut, the product itself contains neither apple or cider with the “taste” again coming from natural flavors. Id. at *2-3.
Before we get to the application of Nexus, the discussion of Collyer would be incomplete without acknowledging that these claims also failed the “reasonable consumer” standard under California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and the Consumer Legal Remedies Act (CLRA). The standard is whether a “reasonable consumer” would be misled by the product’s representations. While this is typically a question of fact, in “rare situations” a court can determine that the alleged violations of UCL, FAL, and CLRA “are simply not plausible.” Id. at *9. This is such a situation. First, plaintiff admitted that she did not believe the cereals contained whole bananas or apples. Second, next to the images of apples, bananas, and donuts were the words “serving suggestion.” Reasonable consumers understand that they are not getting whole fresh fruit in their box of cereal. Third, no where on the packaging is there any misrepresentation of the ingredients or any assertion that the products are “made with” the “characterizing flavors.” Finally, the court could not overlook that the cereals are described as “keto-friendly” and contain “0g sugar.” A reasonable consumer, especially one shopping for a specialty product, would understand that the cereals do not contain apples, bananas or cider – all of which contain sugar. Id. at *10-13. Plaintiff is getting a chance to replead these claims to see if she can satisfy her pleading obligations, but given the heightened pleading standard for fraud claims, we are dubious.
That brings us to Nexus and preemption. Plaintiff brought her UCL claim under all three of its prongs – that the labeling was unfair, fraudulent, and unlawful. The unlawful claim is based on alleged violations of the Food, Drug, and Cosmetic Act (FDCA) as incorporated in California’s Sherman Law. Id. at *14. But claims based on violations of the FDCA are preempted by Buckman Co. v. Plaintiffs’ Legal Comm, 531 U.S. 341 (2001). So, traditionally plaintiffs try to flip the equation. They allege that their claims are for violations of the Sherman Law which incorporates the FDCA and therefore, they are bringing parallel state law claims. That’s where Nexus comes in. The Ninth Circuit held that false advertising claims that “would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA had not itself concluded there was a violation” are preempted. Id. at *16 (citing Nexus, 48 F.4th at 1048). Collyer also throws in a little language from Stengel v. Medtronic, Inc., 704 F.3d 1224, 1228, 1235 (9th Cir. 2013) (state law claims preempted where they are dependent on a violation of federal law). Therefore, plaintiff’s claims based on the unlawful prong of the UCL are dismissed with prejudice.
We have been anticipating this expansion into food-related litigation since Nexus was decided. California is a hotbed of food-related litigation thanks in most part to the Farm Fresh Salmon decision by the California Supreme Court which is essentially the antithesis of Nexus. Nexus is not controlling in state court, but we are hopeful it can be used to cut back on the plethora of bogus food class actions in California federal court. Collyer may be the first, but we doubt it will be the last.