The Ninth Circuit, by virtue of geography, periodically has to rule on claims based upon California's consumer protection laws. In Ebner v. Fresh, Inc. (Sept. 27, 2016), the Ninth Circuit reviewed a District Court's dismissal with prejudice of a putative class action alleging that the defendant deceived consumers about the quantity of lip balm in the defendant's product line.
After dividing the liability theories into two categories, label-based and packaging-based, the Ninth Circuit first examined California's safe harbor doctrine and its impact on the labeling claims. The Court recognized that unfair competition claims are subject to a safe harbor, which precludes claims based on “actions the Legislature permits.” Slip op., at 8, citing Cel-Tech. The core of plaintiff's theory was that, since some of the lip balm was inaccessible, the quantity statement on the package was false. The court concluded that the factually accurate net weight label placed on the package as a regulatory requirement could not form the basis of a false representation claim, but an omission-based theory would not fall within the safe harbor protection, since the omission of supplemental, clarifying statements was not expressly permitted by law, the safe harbor doctrine would not impact those claims. Slip op., at 9-10.
Next, the Court rejected the District Court's holding that the FDCA preempted the plaintiff's claims, since "the state-law duty that Plaintiff seeks to enforce under the Sherman Law is identical to Fresh’s federal duty under the FDCA. . . ." Slip op., at 11.
Nevertheless, even though the Court rejected the safe harbor and preemption-based reasons offered by the District Court, the Court found that the dismissal was correct on the merits:
Plaintiff cannot plausibly allege that the omission of supplemental disclosures about product weight rendered Sugar’s label “false or misleading” to the reasonable consumer. Plaintiff’s claims under the California consumer protection statutes are governed by the “reasonable consumer” test. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008).
Slip op., at 12. The Court held that reasonable consumers understand how screw mechanism lip balm dispensers operate because they are commonplace. Consumer, the Court said, can decide for themselves if they want to scrape out the small amount of product left in the base when the dispenser is fully raised:
Although the consumer may not know precisely how much product remains, the consumer’s knowledge that some additional product lies below the tube’s opening is sufficient to dispel any deception; at that point, it is up to the consumer to decide whether it is worth the effort to extract any remaining product with a finger or a small tool. A rational consumer would not simply assume that the tube contains no further product when he or she can plainly see the surface of the bullet.
Slip op., at 13. The Court rejected the plaintiff's attempt to analogize the case to Williams, concluding that "Williams stands for the proposition that if the defendant commits an act of deception, the presence of fine print revealing the truth is insufficient to dispel that deception." Slip op., at 14. But, "unlike in Williams, there is no deceptive act to be dispelled."
The Court was similarly not persuaded that plaintiff's claim that the heavy packaging used by the Sugar tube lip balm would deceive a consumer into believing that there was more product in the tube than was actually present. The Court noted that the product was a high-end cosmetic, with packaging commensurate to the expectations of the consumers buying the product. The Court affirmed the District Court's judgment.
Stephen R. Smerek, Drew A. Robertson, and Shawn Rieko Obi, of Winston & Strawn LLP, represented Fresh, Inc.