Saturday, April 28, 2012

Supplement’s “Healthy Fats” Labeling Could Be Deceptive

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

A supplement purchaser sufficiently alleged that a supplement manufacturer’s packaging of its protein drinks and bars was misleading in violation of the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA), the federal district court in Oakland, California, has held.

The manufacturer’s “Muscle Milk Ready-to-Drink” and “Muscle Milk Bars” were advertised as “an ideal blend of protein, healthy fats, [and] good carbohydrates.” These statements on the label were allegedly false and deceptive because the products actually contained 11 grams of total fat, 8 grams of saturated fat, almost no vitamins or minerals, and some unhealthy ingredients.

A reasonable consumer was likely to believe that the product contained healthy, unsaturated fats rather than saturated fats and was more similar to a nutritional shake, according to the court.

Deceptive Product Labeling

To state California consumer protection law claims based on deceptive product labeling, the purchaser needed to allege that a reasonable consumer was likely to be deceived by the label. The claims on the packaging went beyond claiming the supplement was healthy. Although “healthy” is difficult to define, a reasonable consumer would assume that “healthy fats” and “nutritious snack” referred to unsaturated fats rather than saturated fats. The nutrient label did not negate the finding that the labeling was misleading because the packaging contained affirmative misrepresentations, and manufacturers cannot rely of the small-print nutritional label to contradict and cure that misrepresentation.

The purchaser’s claims that other statements were misleading were denied, as they were not specific enough to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b).

Loss of Money or Property

In order to state UCL and FAL claims, the purchaser needed to show she lost money or property as a result of the violations. The purchaser alleged that she was denied the benefit of her bargain based on paying more for the supplement than a healthier, less expensive product because of the misrepresentations.

The purchaser also needed to show that she would not have purchased the product but for the misrepresentations on the product’s label. There was sufficient evidence that the purchaser read and relied on the misleading label on the packaging and that she suffered economic harm, according to the court.

The court held that the California Supreme Court would adopt the approach to unfairness under the UCL that the consumer injury must be substantial, the injury must not be outweighed by any countervailing benefits to consumers or competition, and it must be an injury that could not have been avoided. Misleading labels may qualify as unfair business practices if found to be misleading and the injury to the consumer class was substantial.

The decision is Delacruz v. Cytosports, Inc., CCH State Unfair Trade Practices Law ¶32,442.

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