False Advertising Class Actions And The Reasonable Consumer Standard: The Ninth Circuit's Whiteside Decision Complicates The Analysis Under Federal Rule 12

I. Introduction to Consumer-Driven False Advertising Class Actions

When a consumer brand goes to market and formulates its brand strategy, it must decide, among other things, how it will differentiate itself and its products from other brands and products in its category. To this end, the brand may use descriptive phrases (i.e., plant-based, organic, reef-friendly, Made in the U.S.A.) or "romance" language and puffery (luxurious and smooth, best ever) as differentiators. When making branding decisions, companies should bear in mind that their advertising claims are regulated (federally by FTC and/or FDA) and there is significant enforcement activity focused on marketing statements. Consumers are among these "enforcers," as they can file putative class action lawsuits alleging that false or misleading marketing claims violate state consumer protection statutes or common law. Depending on the claim asserted, consumers can seek equitable relief such as an injunction to stop or change the marketing statement, or may be able to pursue money damages. Companies can also be liable for the attorneys' fees of a successful consumer-plaintiff.

Consumer-plaintiffs target labeling or advertising statements that they claim are either actually untrue (the product is labeled as "free of" an ingredient but testing shows it contains that ingredient), or that have the tendency to mislead even if true (marketing claims that a product is recyclable and while technically true, no recycling centers can actually accept and process the product). These putative class actions may target express claims appearing on packaging as well as product claims that may reasonably be inferred or implied by elements of the product's marketing (the packaging gives the overall impression that a food item is healthy to eat, but in fact it contains so much sugar as to be unhealthy; i.e., "health halo" litigation). Hundreds of these putative class actions are filed every year and for high volume products in particular, place at risk millions of dollars on certified class claims.¹ This article will address the "reasonable consumer" standard which is used to evaluate these consumer class action claims, including the trajectory and application of this standard in the Ninth Circuit at the motion to dismiss phase.

II. The "Reasonable Consumer" Standard

Putative class action plaintiffs in California commonly assert that the brand has violated California's Unfair Competition Law (UCL) and/or Consumers Legal Remedies Act (CLRA). The UCL prohibits any "unlawful, unfair or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. Similarly, the CLRA prohibits "unfair methods of competition and unfair or deceptive acts or practices." Cal. Civ. Code § 1770. Claims for violation of these statutes are governed by the reasonable consumer standard.² Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008), citing Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 506-07 (2003).

The reasonable consumer test is an objective one. The reasonable consumer is not the "least sophisticated consumer" or an "unwary consumer," but rather the standard is meant to approximate the interpretation or perspective of "the ordinary consumer within the larger population." Hill v. Roll International Corp., 195 Cal. App. 4th 1295, 1300-01 (2011). Thus there must be a likelihood that the consumer-plaintiff's proffered interpretation of a challenged claim will be shared by "a significant portion of the general consuming public or of targeted customers, acting reasonably in the circumstances." Lavie, 105 Cal. App. 4th at 508.

To state a claim for relief, plaintiffs must allege that the reasonable consumer would be deceived by the alleged false or misleading marketing. Deficient pleading of this standard creates opportunities for defendant-companies to seek dismissal of putative class action complaints at the motion to dismiss phase.

III. Trajectory and Application of the Reasonable Consumer Standard in the Ninth Circuit Through Motion To Dismiss Caselaw

Because alleging that the reasonable consumer would be deceived is a pleading requirement, it goes without saying that a failure to plead this entirely opens a claim to attack and dismissal under Federal Rule 12(b)(6). When the consumer-plaintiff does plead the reasonable consumer would be deceived, but the brand asserts that the allegations are implausible under Twombly, the motion to dismiss analysis becomes more complicated. In this respect, the Ninth Circuit has shifted its guidance over time, expanding (and most recently, contracting, see infra) what the district courts may consider as part of the Rule 12(b)(6) analysis.

The leading Ninth Circu it case in this area is Williams, supra, and it arguably sets a high bar for obtaining dismissal at the pleadings phase. There, the consumer-plaintiffs challenged a fruit snack product that used the words "Fruit Juice" juxtaposed with images of oranges, peaches, strawberries, and cherries on the front of the packaging. 552 F.3d at 936. The plaintiffs contended that this juxtaposition was misleading because the product contained no juice from any of the pictured fruit. Id. Instead, the only juice was from white grape juice from concentrate. Id. The -False Advertising: Continued from page 3- complaint was dismissed under Rule 12(b)(6) and the Ninth Circuit reversed. The Ninth Circuit noted that "whether a business practice is deceptive will usually be a question of fact not appropriate for decision" and this was not one of the "rare" situations where "granting a motion to dismiss is appropriate." Id., at 938- 39. Critical to the reasonable consumer analysis, the court concluded that the consumer should not "be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box." Id. at 939.

Nearly a decade later, the Ninth Circuit again addressed the reasonable consumer standard in its Ebner decision. Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016). In that case, the plaintiff asserted that the product net weight statement on a twist-up lip balm product was misleading because not all of the balm was accessible and usable due to product design. Id., at 962. Thus, the plaintiff argued, she was deprived of the full value of her purchase. Id. Applying the reasonable consumer standard, Judge Selna dismissed the complaint. The Ninth Circuit affirmed the dismissal, finding that the "reasonable consumer understands the general mechanics of these dispenser tubes and further understands that some product may be left in the tube to anchor [it] in place." Id., at 965. The court distinguished Williams, finding it inapplicable because in this set of facts, "[a]part from the accurate weight label, there are no other words, pictures, or diagrams adorning the packaging, as there were in Williams, from which any inference could be drawn or on which any reasonable belief could be based about how much of the total lip product can be accessed by using the screw mechanism." Id., at 966. In other words, the plaintiff's interpretation of the net weight statement was "not plausible." Id.

Another notable development came in the Ninth Circuit's decision f Moore v. Trader Joe's Co., 4 F.4th 874 (2021). This case dealt with a specialty food product, 100% New Zealand Manuka Honey. The plaintiff asserted that the product label was false and deceptive because it "actually consists of only between 57.3% and 62.6% honey derived from Manuka flower nectar." Id., at 876. Relevant to the outcome here, Manuka Honey producers "have created a scale to grade the purity" of this honey, which scales from 5+ to 26+. Id., at 877. Higher grades are more expensive. Id., at 878. Trader Joe's Honey had a grade of 10+ and sold "for the comparatively low price of $13.99 per jar." Id. In affirming dismissal of the complaint, the Ninth Circuit determined that the reasonable consumer "should take into account all the information available to consumers and the context in which that information is provided and used." Id., at 882 (internal citations omitted). The full context available to the consumer, including price point, precluded the plausible conclusion that the honey in the product was 100% sourced from a single floral source. Id., at 882-83.

Then last summer, the Ninth Circuit issued its McGinity decision. McGinity v. P&G, 69 F.4th 1093 (9th Cir. 2023). That case involved a putative greenwashing claim wherein the plain tiff asserted that the statement "Nature Fusion" on a bottle of Pantene Pro-V shampoo misled him into believing the product was "natural" and did not contain synthetic ingredients. Id., at 1096. The Ninth Circuit affirmed dismissal of the complaint, finding that the meaning of "Nature Fusion" was at best ambiguous and therefore the additional context ofthe ingredientslist could be considered to dispel the ambiguity. Id., at 1098. The court distinguished Williams, determining that there was no misleading statement on the front of pack, i.e., the Pantene bottle did not say "all natural" or "100% natural." Id. In context, the complaint failed to state a claim.

From these decisions, the Ninth Circuit collectively has instructed that inaccurate information on the front of a package cannot be cured by information found elsewhere (Williams), the brand must speak for liability to attach (Ebner), context counts (Moore), and when a label is ambiguous, the consumer should read information on the back of the packaging to clarify meaning (McGinity).

IV. The Ninth Circuit's Whiteside Adds A New Dimension To The Analysis

While the Ninth Circuit's more recent reasonable consumer decisions have permitted district courts to consider an expanding amount of information to assess whether a pleaded claim of deception is plausible, the Ninth Circuit's recent Whiteside decision takes a step backwards. Whiteside v. Kimberly Clark Corp., 108 F.4th 771 (9th Cir. 2024). This case involved a baby wipe product that was labeled as "plant-based." The district court had dismissed the action after applying Ebner and Moore, finding that the context provided by the statement of ingredients on the back-of-pack dispelled any plausible consumer confusion that the product was entirely plant-based.

The Ninth Circuit reversed in part. Relevant to this article, the Court noted that "a product's back label may be considered at the pleadings stage if the front label is ambiguous," citing McGinity. Id., at 778. But, how should the courts determine that the front label is ambiguous? Id, at 780. The court set out this criteria:

Id. In other words, even if a label claim could have two meanings (i.e., could "plant-based" mean all plant-derived or mean that it has some plant-derived ingredients), the district courts should effectively ignore one of those meanings if the plaintiff plausibly alleges that the reasonable consumer wouldn't infer it. This decision seems to ask judges to set legal pleadings -False Advertising: Continued from page 8- above commonsense when deciding Rule 12 motions. It remains to be seen how the district courts will make sense of, and apply, this latest authority. For companies, though, whereas the prior seminal cases provided guidance for planning and managing class action risks, Whiteside would seem to make it more difficult to do so, short of using language that the Ninth Circuit doesn't think means anything (McGinity), or by intentionally creating ambiguity on front of pack (i.e., by using asterisks near potentially ambiguous terms, as discussed in Whiteside).

V. Conclusion

The reasonable consumer standard plays an important gatekeeping role at the Rule 12(b) phase of federal litigation. The historical aspects of the standard are navigable with case outcomes being driven by the unique set of statements that a company has actually made about its product. Whitesidemuddles the area of law and may make it harder to achieve Rule 12 dismissals. The consumer class action plaintiffs' bar has already begun to respond to the Whiteside decision by sending pre-litigation CLRA demand letters to many companies that use "plant-based" on their packaging, demanding significant individual settlements. Thus while the reasonable consumer standard may be academically interesting and important for class action litigators, it has real, tangible impact on businesses and therefore warrants attention by these stakeholders too.

Footnotes

1. In this context, damages are based on the "price premium" or additional amount that a brand was able to charge for a product due to its purportedly false or misleading marketing, and this price premium is multiplied by the volume of sales for the time period at issue.

2. And others as well, including California's False Advertising Law and New York's General Business Law.

Originally published by Association Of Business Trial Lawyers

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