Dismissal of Movie Candy Slack-Fill Case Leaves Sour Aftertaste: New York Federal Court Rejects Labeling Disclosure Defense
"Slack-fill" cases are on the rise across the country. Consumers have filed suits alleging that non-transparent packaging - involving everything from household cleaning and personal care products to food and pharmaceuticals - consists of extra space that serves no functional purpose and otherwise deceives purchasers into believing that they are buying more than what is actually in the container. Plaintiffs often file suit relying on state unfair business practice statutes and common law claims, seeking injunctive relief and monetary damages, as well as class certification.
For defendant manufacturers, there are a number of defenses that have been successfully raised at the motion to dismiss stage; for example, plaintiffs' counsel have generally had trouble adequately pleading causes of action under the standards set forth in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). See, e.g., Bautista v. Cytosport, Inc., Case No. 15-cv-9081 (S.D.N.Y. Dec. 12, 2016). But other defenses proffered during Fed. R. Civ. P. 12(b) proceedings have received mixed reviews from the courts, including the argument that, as a matter of law, a reasonable consumer cannot be deceived by purportedly non-functional slack-fill where the label expressly discloses the amount of contents, whether by net weight or the number of servings or product units. A recent decision issued by the United States District Court for the Southern District of New York illustrates the foregoing points.
In Izquierdo v. Mondelez, Case No. 16-cv-04697 (S.D.N.Y.), Plaintiff Jose Izquierdo filed a putative class action against various Mondelez entities claiming that the company marketed and sold misbranded Sour Patch Watermelon candy because the packaging contained non-functional slack-fill. The candy was contained in a sealed plastic bag which was then sold in a thin, non-transparent cardboard box. Plaintiff alleged that he bought the item at a movie theater and that the size of the box misled him to believe that it contained more candy than it actually held. While the box contained 28 pieces of candy, Plaintiff argued that it could hold up to 50 pieces, thus allegedly leaving 44 percent of the box empty and serving no other purpose but to deceive consumers. Plaintiff maintained that he was misled despite the fact that the box was clearly labeled with the net weight and number of pieces.
Plaintiff's suit requested certification of a nationwide class based on various state and common law claims. Of particular interest were Plaintiff's demands for injunctive relief and money damages under New York's General Business Law § 349 ("GBL"), which makes it unlawful to engage in any "[d]eceptive acts or practices in the conduct of any business, trade or commerce." Plaintiff maintained that Mondelez's slack-fill violations were based on a New York misbranding law, which provides that "[f]ood shall be deemed to be misbranded . . . [i]f its container is so made, formed, colored or filled as to be misleading." N.Y. Agric. & Mkts. Law § 201-4.
In its motion to dismiss, Mondelez countered that a reasonable consumer would not be misled by the product's packaging. Under New York's GBL, a plaintiff must demonstrate, among other things, that the challenged conduct was misleading in a material way. Because the packaging clearly stated the net weight and number of pieces contained in the box, Plaintiff knew exactly what he was buying, regardless of any purportedly non-functional slack-fill. The company cited several recent decisions from both New York and California granting motions to dismiss slack-fill claims where courts found that a reasonable consumer would not be deceived as to the amount of contents based on the size of the packaging given that the labels themselves listed the net weight and/or number of product units. See, e.g., Fermin v. Pfizer Inc., Case No. 15-cv-2133 (E.D.N.Y. Oct. 18, 2016); Bush v. Mondelez Int'l, Inc., Case No. 16-cv-02460 (N.D. Cal. Oct. 7, 2016); Ebner v. Fresh Inc., Case No. 13-00477 (C.D. Cal. Sept. 11, 2013).
The district court granted Mondelez's motion and dismissed the case, but not on grounds of Mondelez's labeling defense. The court held that an obligation to label a product accurately and to package products in a non-misleading way are "independent of one another." Looking to federal law for guidance, the court noted that the U.S. Food and Drug Administration ("FDA"), in adopting a regulation prohibiting non-functional slack-fill as misleading, stated that "[t]o rule that an accurate net weight statement protects against misleading fill would render the prohibition against misleading fill. . . redundant." 58 Fed. Reg. 64123, 64129 (Dec. 6, 1993); see also 21 C.F.R. § 100.100. The court found that the other decisions cited by Mondelez were not controlling and that it was "unwilling" to establish precedent in this case whereby "food packaging is incapable of being materially misleading if it displays the net weight and lists the number of pieces inside of the package."
As noted, the court went on to grant Mondelez's motion to dismiss on other grounds - e.g., lack of standing and insufficient pleading regarding the alleged injury under the GBL; the absence of any "special relationship" between Plaintiff and the company needed to support a negligent misrepresentation claim; and insufficient pleading under Fed. R. Civ. P. 9(b) as required for Plaintiff's common law fraud cause of action. The takeaway here is that manufacturers should not assume that simply disclosing on a label the amount of product contained in a package will result in the quick dismissal of a slack-fill suit. Rather, consumer perception may be viewed as a fact-intensive inquiry requiring, at a minimum, further discovery and summary judgment proceedings. Nevertheless, manufacturers should seriously consider vigorous defenses against these claims given the favorable decisions to date.