New York Court Finds It Suspicious That False Labeling Allegations Ignore Context | ideas

A federal district court in New York has sent a clear message that “context matters” when evaluating a false labeling claim.¹ In dismissing another supposed class asserting violations of federal and state consumer protection laws, fraud and unlawful enrichment, the court addressed Plaintiff’s claims that the algae wafer intended for pleco (sucking catfish) was incorrectly labeled because its primary ingredients were in fact fish meal and starch. The plaintiff objected that the product description included a green “algae wafer-shaped tablet” mixed with descriptions such as “a perfect balance of vegetables and proteins” and “a natural green color from multiple beneficial algae,” noting that the algae ingredients promised on the front labels were far less than a meal. Fish and starch predominate.

The bottom line inquiry was whether the product label was deceptive by overestimating the presence of algae. In assessing claims under New York General Business Code Sections 349 (deceptive acts) and 350 (false advertising), the court emphasized that the plaintiff must reasonably allege that a substantial portion of consumers, who act reasonably in the circumstances, could be misled. In its motion to dismiss, the defendant argued that the label does not make it clear that the chips do not contain ingredients other than algae, contain a specific amount of algae or only contain a substance minimum Amount of non-algae ingredients. The court agreed, building on the precedent of the US Court of Appeals for the Second Circuit, that the presence of one ingredient on a product’s label does not imply the exclusion of others – thus negating any claim of false labeling.

In the context of the assertion, the Court noted that no reasonable consumer could conclude that algae was the exclusive ingredient or that it was present in an amount greater than that specified in the ingredient list: “in the absence of any acknowledgment whatsoever that the product contains a specified amount of algae (let alone that misrepresentation), the plaintiff cannot reasonably allege that labeling the defendant would mislead a reasonable consumer.” The Court noted that even assuming that the front label created ambiguity regarding the ingredients, this ambiguity was resolved by the packaging as a whole and the list of ingredients on the label. Here, the ingredient list—where consumers are trained to look for—clearly identifies all ingredients in their order of prevalence. In the appropriate context, a reasonable consumer can easily discern the chip’s composition.

Likewise, the court was not affected by guarantee claims, fraud and unjust enrichment. In evaluating claims under the federal Magnuson-Moss Warranty Act (MMWA), the Court noted that the law requires the plaintiff to adequately defend a cause of action for violation of an implied or express warranty under state law. There was no express warranty claim because no reasonable consumer would be misled. With regard to the implied warranty, the court found that there was no claim that the juice was unfit for ordinary purposes – that is, the consumption of plecostomus fish. Likewise, allegations of fraud fail to reasonably allege a material misrepresentation or intent to defraud. The court considered the unlawful enrichment lawsuit a duplication of the other lawsuit.

The court has identified the current lawsuits as one of many across this country that verges on frivolity insofar as it requires courts to read labels in a way that smacks of credulity. “Responsible consumers don’t read words that describe a product in isolation. They read statements in the context of a label, advertisement, or website as a whole, and with an understanding of the product they are buying.” The Court’s frustration with these types of mislabeling allegations was evident, and it took the opportunity to provide sure introductory evidence for future litigants by noting that “context matters and the entire label must be read.”

notes

¹ Van Orden v. Hikari Sales USA, Inc.No. 1:22-cv-504, 2023 WL 5336813 (NDNY Aug 18, 2023)