New York Court Finds It Fishy That False Labeling Claims Ignore Context

A New York federal district court has sent a clear message that "context matters" when assessing a false labeling claim.¹ In dismissing another putative class asserting violations of state and federal consumer protection laws, fraud and unjust enrichment, the court addressed plaintiff's claims that an algae wafer intended for plecos (suckermouth catfish) was improperly labeled because its primary ingredients were actually fish meal and starch. Plaintiff took issue that the product description included a green "wafer shaped algae disc" combined with descriptions such as "A Perfect Balance of Vegetables & Proteins" and "Natural Green Color From Multiple Beneficial Algaes," noting that the algae ingredients promised on the front label were far less than the predominant fish meal and starch.

The threshold inquiry was whether the product's label was deceptive by overstating the presence of algae. In assessing the claims under New York General Business Law Sections 349 (deceptive acts) and 350 (false advertising), the court emphasized that a plaintiff must plausibly allege that a significant portion of consumers, acting reasonably in the circumstances, could be misled. In moving to dismiss, defendant argued that the label did not represent that the wafers contained no ingredients other than algae, contained a specific amount of algae or included only a de minimis amount of non-algae ingredients. The court agreed, relying on precedent by the U.S. Court of Appeals for the Second Circuit that the presence of one ingredient on a product label does not imply the exclusion of other ingredients – thus negating a claim for false labeling.

In emphasizing context, the court noted that no reasonable consumer would glean that algae is the exclusive ingredient or present in an amount greater than that identified in the ingredient list: "Absent any representation whatsoever that the Product contains a specific amount of algae (let alone a misrepresentation), Plaintiff cannot plausibly allege that Defendant's labeling would mislead a reasonable consumer." The court noted that, even assuming that the front label created ambiguity as to ingredients, such ambiguity was resolved by the package as a whole and the label's ingredient list. Here, the ingredient list – where consumers are trained to look – clearly identified all ingredients in order of predominance. In proper context, a reasonable consumer easily discerns the composition of the wafer.

The court was similarly unmoved by the warranty, fraud and unjust enrichment claims. In evaluating the claims under the federal Magnuson-Moss Warranty Act (MMWA), the court noted that the statute required plaintiff to adequately plead a cause of action for breach of an implied or express warranty under state law. There was no express warranty claim because a reasonable consumer would not be misled. As to implied warranty, the court found there was no allegation that the juice was unfit for ordinary purposes – i.e., plecostomus fish consumption. Similarly, the fraud claims failed to plausibly allege a materially false representation or an intent to defraud. The court deemed the unjust enrichment claim as duplicative of the others.

The court identified the present litigation as one of many around the country that are bordering on frivolous in so far as they ask courts to read the labels in manners that strain credulity. "Reasonable consumers do not read words describing a product in isolation. Rather, they read statements in the context of the label, advertisement, or website as a whole, and with an understanding of the product that they are purchasing." The court's frustration as to these types of mislabeling claims was evident, and it took an opportunity to provide an emphatic primer for future litigants by noting that "CONTEXT MATTERS and that a label should be read in its entirety."

Notes

¹ Van Orden v. Hikari Sales U.S.A., Inc., No. 1:22-cv-504, 2023 WL 5336813 (N.D.N.Y. Aug. 18, 2023)