Federal Court Dismisses Some But Not All Claims in False-Advertising Class Action Against Maker of Guacamole Dip

A federal district court in California has dismissed some but not all of the claims in a class action against a food manufacturer alleging that the labeling on guacamole and bean dip is deceptive in violation of California consumer protection laws. Henderson v. Gruma Corp., No. 10-04173, 2011 WL 1362188 (C.D. Cal. April 11, 2011). 

The plaintiffs argued that the labels on Gruma’s Mission Guacamole and Gruma’s Bean Dip were misleading because (i) the labels stated that the dips had “0 g trans fat,” when the products actually contained a small amount of trans fat, (ii) the phrases “With Garden Vegetables” and “The Authentic Tradition” were misleading descriptions of the Guacamole’s contents, (iii) the emphasis on the word “Guacamole” in “Guacamole Flavored Dip” falsely implied that the product contained significant amounts of guacamole, and (iv) “0 g cholesterol” and “All Natural” were misleading statements of the Bean Dip’s contents. 

The plaintiffs contended that these statements violated California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA). Gruma moved to dismiss all claims. The court first held that the plaintiffs had standing to sue under the UCL and FAL because they had adequately alleged injury and reliance. The court concluded that, under the California Supreme Court’s recent decision in Kwikset Corp. v. Superior Court, it was sufficient for plaintiffs to allege that they had “paid more for [the products], and would have paid less for the products, if they had not been misled by the allegedly false and misleading labeling.” (Please see our article on the Kwikset decision.) The district court also held that, under In re Tobacco II Cases, only the named plaintiffs—not the absent class members—must allege reliance to satisfy the UCL’s and FAL’s standing requirements. (Please see our article on the Tobacco II decision.)

The court next addressed the allegedly misleading statements on the labels, and held that most of them failed to state a claim:

• The phrase “The Authentic Tradition” was non-actionable “puffery”—i.e., an advertising claim that is non-specific, subjective, and/or not measurable.
• The phrase “With Garden Vegetables” was not misleading as a matter of law because it was “accurate in the context of the label as a whole.”
• State law challenges to the phrases “0 grams transfat” and “0 grams cholesterol” were held to be expressly preempted by the Nutrition Labeling and Education Act (NLEA), because those labeling statements are addressed by the NLEA and implementing FDA regulations, and state law may not impose non-identical requirements. (Please see our discussion of other recent cases here and here holding that federal regulations on trans fat disclosures preempt state law claims.)
• The court permitted the claim challenging the phrase “All Natural” to proceed, concluding that the presence of artificial trans fats in the dips is arguably “unnatural.”
• The court also allowed a challenge to the phrase “GUACAMOLE flavored dip” (with the word “guacamole” emphasized), accompanied by pictures of avocados. The court determined that, although it was literally true that the product contained guacamole flavoring, “a reasonable consumer could interpret [the] label to imply that the product is indeed guacamole, which it is not, as it allegedly contains less than 2% avocado powder.”

Henderson is one of an increasing number of class actions that have been filed under California’s consumer protection laws to challenge a food manufacturer’s labeling and nutritional claims. The decision highlights the types of arguments available to businesses to defend against these lawsuits—including express preemption that applies to certain FDA labeling regulations—as well as the litigation risks that businesses face when expansively interpreted California consumer statutes are used to challenge labeling statements.