Summary
The Ninth Circuit reversed the dismissal with prejudice of Mark Trammell’s putative class action against KLN Enterprises concerning allegedly misleading licorice-product labels stating that the product was free of artificial flavors and colors. The court held that the complaint sufficiently pleaded the alleged artificial nature of malic acid under Federal Rule of Civil Procedure 9(b) and plausibly alleged that a reasonable consumer could be deceived under California law. The case was remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the complaint pleaded the alleged labeling fraud with sufficient particularity under Federal Rule of Civil Procedure 9(b).
- Whether the complaint plausibly alleged under California's reasonable-consumer standard that the product's representation that it was free of artificial flavors was false or misleading.
- Whether dismissal of the unjust-enrichment and breach-of-express-warranty claims was proper when those claims were premised on the same alleged labeling fraud.
Holdings
- The complaint satisfied Rule 9(b) because it identified the who, what, when, where, and how of the alleged fraud, explained what was false and why, and supplied laboratory-testing details providing KLN notice of the theory of liability and assurance that the theory had a factual basis.
- The complaint plausibly alleged that a reasonable consumer was likely to be deceived by a product labeled free of artificial flavors when the product allegedly contained an artificial flavor in the form of DL malic acid.
- Because the unjust-enrichment and breach-of-express-warranty claims were premised on the same alleged labeling fraud as the CLRA claim, dismissal of those claims was also improper.
Key quotations
“The allegations set out: the “who” of the fraud (KLN); the “what” (KLN’s representation that its Product is free of artificial colors and flavors); the “when” (around the time Trammell purchased the Product in May 2023); the “where” (the purchase occurred at a Target in Encinitas, California); and the “how” (the statements on the Product’s label represented that the Product is “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors”).” (8)
“Trammell plausibly pleaded that a reasonable consumer is likely to be deceived by a product that claims to be free of artificial flavors when that claim is (allegedly) not true.” (10)
“But whatever category malic acid falls under in the FDA’s regulatory scheme, the question is what a reasonable consumer expects, not what a regulatory expert in the food-and-beverage industry knows.” (13)
Factual background
KLN manufactured Wiley Wallaby Very Berry Licorice whose packaging stated that the product was naturally flavored and free of artificial colors and flavors. Mark Trammell alleged that he purchased the product after reviewing its labels and that the product contained malic acid in its artificial DL form. He alleged that laboratory testing detected the D isomer of malic acid, which he claimed indicated that the flavoring was artificially synthesized from a petroleum substrate.
Procedural history
Trammell filed an individual and putative California class action against KLN. The district court granted KLN's motion to dismiss with prejudice, concluding that the complaint did not satisfy Federal Rule of Civil Procedure 9(b) and did not plausibly allege that a reasonable consumer would be deceived. The Ninth Circuit reversed and remanded.
Remand instructions
The district court's judgment dismissing the complaint with prejudice was reversed, and the case was remanded for further proceedings consistent with the opinion.