Granola maker must face claims of misleading packaging

(CN) — Laquisha Scott of San Jose says she purchased Lakanto’s low-sugar Keto cinnamon almond crunch granola because it was advertised as being predominantly sweetened with monk fruit.

Monk fruit, also known as Luo Han Guo, is 250 times sweeter than sucrose and is considered a premium fruit that has nutritional value and does not affect blood sugar levels.

But in a federal class action filed last year, Scott claims she instead received a product sweetened primarily with erythritol, a sugar alcohol that can lead to side effects such as digestive problems, diarrhea, nausea, headaches and an increased chance of heart attack and stroke.

On Monday, Senior U.S. District Judge William H. Orrick agreed with Scott that Saraya USA Inc., the maker of Lakanto granola, may have misled consumers and allowed all six class claims against the company to continue.

At the heart of the complaint is the packaging of the granola, which claims it is “sugar free,” has “no sugar added,” and is “zero sugar.”

Saraya said in its defense that Scott’s claims about the allegedly misleading packaging were not enough to pursue a class action and sought a dismissal of the case, arguing that the label of the product does not say the granola is sweetened only with monk fruit or that a specific amount of monk fruit is present. The company further argued Scott could have seen the true ingredient list if she had looked at the back label.

But Orrick, a Barack Obama appointee, disagreed and cited the Ninth Circuit's 2008 decision in Williams v. Gerber.

“Reasonable consumers are not ‘expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print’ elsewhere on the box. Although Williams articulated this principle in context of the reasonable consumer test, it applies here as well," the judge wrote. “As a result, the ingredient label on the back of the product does not impede Scott’s common law fraud claim, at least at this point.”

Orrick ultimately found Scott's allegations about misleading consumers can move forward after rejecting Saraya’s remaining arguments. He pointed to the phrases "“sweetened with monk fruit” or “monk fruit sweetened" in particular.

“Scott has plausibly alleged that these statements, read alongside the statements ‘sugar free,’ ‘no sugar added,’ or ‘zero sugar’ also appearing on the products’ front labels, would mislead a reasonable consumer to believe that they were solely or predominantly sweetened with monk fruit,” Orrick wrote.  “This supports her claims under California’s Unfair Competition Law, Consumers Legal Remedies Act and False Advertising Law.  The alleged misrepresentations also support her common law fraud, breaches of warranty, and unjust enrichment claims."

According to the First Amendment complaint filed by Scott last year in San Jose federal court, consumers seek out monk fruit products because of the health benefits. She said she would not have purchased the Lakanto granola if she had known about the alternative sweetener.

“In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court accepts her allegations as true and draws all reasonable inferences in her favor,” Orrick wrote in Monday's ruling.

Lawyers for Scott and Saraya did not immediately respond to requests for comment Tuesday morning.

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