“Even technically correct labels can be misleading,” the panel wrote in an unpublished order Wednesday, reversing and remanding U.S. District Judge Lucy Koh’s dismissal.
Natalia Bruton sued Gerber and Nestle in 2012, claiming they misbrand their food for babies and toddlers. She challenged the labels that describe the food as “excellent source,” “good source,” “as healthy as fresh,” “no added sugar” and “natural.”
The products include a variety of snack foods that allegedly mislead consumers about being good sources of vitamins C and E, iron and zinc, and support “healthy growth and development.”
Koh dismissed Bruton’s claims against Nestle in 2013 and denied class certification, with leave to amend.
Bruton appealed, and on Wednesday a three-judge Ninth Circuit panel reversed and remanded, with one judge dissenting in part and concurring in part.
“Bruton’s theory of deception does not rely on proving that any of Gerber’s labels were false,” the panel wrote, finding she had a viable claim for deception.
“Rather, Bruton contends that the combination of (a) the presence of the claims on Gerber’s products (in violation of FDA regulations), and (b) the lack of claims on competitors’ products (in compliance with FDA regulations), made Gerber’s labeling likely to mislead the public into believing that Gerber’s products were of a higher quality than its competitors’ products.
“Doubtless, Bruton’s theory of deception is unusual. But even technically correct labels can be misleading.”
If it is true that Gerber did not comply with FDA regulations that prevent its competitors from making claims like “as healthy as fresh,” the labels’ implications are misleading, the panel found.
“Shoppers in a supermarket aisle look for cues about quality in the products they buy. If a shopper sees two products on a shelf and one says ‘Supports Healthy Growth & Development,’ while the other makes no similar claim and is cheaper, a likely inference is that the first product will be viewed as healthier, explaining why it costs more.”
Sitting on the panel were Ninth Circuit Judges Ronald M. Gould and Milan Smith, and Senior Circuit Judge Diarmuid F. O’Scannlain, who wrote a partial dissent.
O’Scannlain took issue with the majority’s conclusion that a reasonable consumer would be deceived by Gerber’s labels.
“There is nothing inherent in Gerber’s labels that would support an inferential leap from factually correct nutritional statements to deceptive claims about product quality,” O’Scannlain wrote. “This is especially so because both Gerber’s and its competitors’ labels included detailed information about their ingredients and nutritional contents.”
Despite the panel’s ruling, a Gerber representative said the company expects the case will ultimately be dismissed.
“The court acknowledged in its majority and dissenting opinions that there is no evidence that Gerber’s statements on its labels were not truthful. Unfortunately, the district court, both in denying plaintiff’s motion for class certification and granting Gerber’s motion to dismiss plaintiff’s claim for unjust enrichment, relied on cases that appellate courts have since overruled and, thus, the Ninth Circuit had no choice but to return those issues in this case to the district court for further proceedings. We are confident that the district court will again rule in Gerber’s favor,” the Gerber representative said.