23 May 2011
by Amy Kolz
To Nestlé USA's popular slogan "Good Food, Good Life," the outside lawyers for the Glendale, California-based food company might fairly add "good litigation results." Last Thursday, a Los Angeles federal district court judge dismissed with prejudice two consumer class actions against Nestlé over the marketing of Juicy Juice drinks. The dismissals are the latest in a string of victories for a pair of former Howrey partners in defeating false advertising class action claims for the food company and its affiliates.
Carmine Zarlenga and Dale Giali, who moved to Mayer Brown following Howrey's dissolution in March, have won dismissals for Nestlé in four separate class actions alleging false and deceptive advertising in the last ten months. Those cases are part of what Zarlenga described to us as a growing "tidal wave" of consumer false advertising claims over the past two to three years.
Zarlenga said the increase has been spurred on by plaintiffs-side setbacks in securities and antitrust cases, an increased number of public warning letters from the U.S. Food and Drug Administration relating to false labeling and advertising, and certain rich settlements. Most notably, Dannon struck a $35 million deal with plaintiffs in September 2009 in a consumer class action in federal district court in Ohio alleging that the company made false claims about the health benefits of its Activia and DanActive yogurts.
In the consolidated cases that were dismissed last week, the plaintiffs alleged that Nestlé had engaged in false and deceptive advertising under California consumer protection laws. The claims concerned two Juicy Juice drinks that contained DHA and other nutrients and were marketed to boost "brain development" and "immunity", according to the second amended complaint. The plaintiffs argued that the products contained insufficient amounts of the nutrients to claim those benefits, and that "claims regarding Brain Development and Immunity are unsubstantiated by fact."
In an earlier complaint, the plaintiffs had also argued that fruit labels on the juice constituted false advertising implying that 100 percent of the juice was derived from that fruit. Los Angeles federal district court judge George Wu threw out the labeling claims in a ruling last October on the grounds that they were preempted under the federal food and drug labeling standards.
The plaintiffs didn't have any better luck with their other claims. Judge Wu's May 2 tentative ruling, which was adopted as final after a telephone conference last Thursday, stated with some apparent frustration that "as with previous versions of the Plaintiff's pleading...[the complaint] lumps together distinct products and multiple factual allegations without giving the reader a clear sense of which allegations support which specific claims." Judge Wu went on to point out that the plaintiffs did not "adequately explain why the identified [labeling] statements are false or misleading" and that "none of the statements are alleged to be actually or identifiably false." Wu also rejected the plaintiffs' "lack of substantiation" theory of liability, finding it to be incompatible with California law that places to onus of proving or disproving advertising claims on the plaintiff.
Scott & Scott partners Hal Cunningham and Joseph Guglielmo, who represented the plaintiffs in the conference last Thursday, did not return messages. Class counsel from Kiesel Boucher & Larson also did not return messages.
Mayer Brown's Zarlenga cited Judge Wu's decision as another pleading-stage victory for defendants in wake of the U.S. Supreme Court's rulings in Twombly and Iqbal. But putting aside Nestlé's recent track record, the success rate for food companies in recent false advertising cases is decidedly mixed. Two recent losses include the U.S. Court of Appeals for the Eleventh Circuit March decision affirming the certification of class claims against General Mills Inc., and a federal district court in New Jersey denying a motion to dismiss claims against Campbell Soup Co. that same month.
"It's a little bit of a gray area, in terms of where the line is for properly pleading false and misleading advertising cases," said Joanne Lichtman, who worked on the Nestlé litigation as a partner at Howrey before joining Baker & Hostetler. But for Nestlé, at least last week, the line was clear enough.
Reprinted with permission from the May 23, 2011 edition of Am Law Litigation Daily © 2011 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.