Any San Diego or California company that makes or sells any consumer product must be very careful with packaging and labeling. A massive number of false advertising and improper labeling cases have been filed over the last few years and there seems to be no decline. Generally, plaintiffs’ lawyers are citing three statutes in their various lawsuits:

• Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”),
• Unfair Competition Law, Cal. Bus. & Prof. Code, § 17200 et seq. and
• False Advertising Law, Business and Professions Code § 17500 et seq.

These are all consumer protection statutes. Generally speaking, individually and together they prohibit “unfair competition” and statements/advertising/labeling which is false or misleading. The Unfair Competition Law, for example, prohibits “any unlawful, unfair or fraudulent business act or practice.” The False Advertising Law makes it unlawful to make or disseminate any statement concerning property or services that is “untrue or misleading.” And the CLRA prohibits “unfair methods of competition and unfair or deceptive acts or practices.”

The courts have held that the three statutes prohibit not only directly false statements and advertising, but also statements that are misleading. When dealing with misleading statements, the courts are tasked with determining whether a statement or a label or an advertisement “has a capacity, likelihood or tendency to deceive or confuse the public.” Under this standard, the courts use what is called the “reasonable consumer standard.” That is, would a reasonable consumer be confused or misled by this statement, this advertising or this labeling? See Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (Cal. App. 1st Dist. 2003) (reasonable consumer standard requires “that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled”).

Under the reasonable consumer standard test, there are four types of cases identified in the Brady v. Bayer Corporation case (which we discussed here):

• Cases where a statement or labeling or advertising is literally false
• Cases involving “common sense”
• Cases involving “bait-and-switch” issues with respect to the front and back of the packaging (this also covers so-called “fine print”) and
• Nature of the brand name

The recently decided case of Brown v. Starbucks Corporation, Case No. 18cv2286 JM (WVG) (US Dist. S.D. Cal. March 1, 2019), gives a good illustration. The case involved Starbucks’ sour gummies. The plaintiff alleged in her lawsuit that the labeling was misleading and that she was under the impression that the gummies contained only natural ingredients and natural flavoring.

However, that is not what the packaging stated. The front of the packaging stated—”Apple, watermelon, tangerine and lemon-flavored candies.” Importantly, the packaging did NOT state “naturally flavored” or “natural flavors only.” On the back of the package, an ingredients list stated that the Gummies contain “sugar, cornstarch, fumaric acid, citric acid, fruit juice concentrates (tangerine, apple, lemon), pectin, sodium citrate, color added (saffron, annatto, vegetable and spirulina extracts), natural flavors.” The ingredient list contains artificial ingredients including fumaric acid (the ingredient that makes the gummies “sour”).

Given the four possible methods of proving a false labeling/advertising claim and given what the packaging actually said, the court was quickly and easily able to dismiss the case. With respect to “literal truth,” Starbucks made no claim that the gummies were “natural-flavored” or that was “no artificial flavoring.” The fact that Brown “believed” or “was under the impression” that the gummies were “all-natural” was not sufficient when the labeling clearly did not state that.

With respect to “common sense,” the court held that no reasonable consumer would be misled by the packaging into thinking that the gummies were “all natural.” Aside from the fact that the packaging did not SAY the gummies were all natural and did not even claim “naturally-flavored,” the packaging was see-through. The gummies were brightly colored and, as the court noted, “[n]othing about the product itself —a brightly-colored, gelatinous candy—would lead a reasonable consumer to conclude that the Gummies contain only natural ingredients.”

With respect to the bait-and-switch, again the judge held there to be no deception. The front of the packaging did not make a claim of being “all natural” and the ingredient list plainly showed artificial ingredients. Finally, the court noted that no reasonable consumer could be misled by the name of the product into thinking “Starbucks’ sour gummies” were all natural.

Contact San Diego Corporate Law Today

For more information on legal issues with respect to advertising and avoiding false advertising, contact attorney Michael Leonard of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” four years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.

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