Don’t Fudge Consumer Fraud Pleadings
What does “chocolate” mean to the reasonable consumer? Would a reasonable consumer expect chocolate to contain certain essential ingredients? Or is this question best left to the confectioner community? The Northern District of Illinois says the relevant opinion is that of the reasonable consumer when pleading a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act), 815 ILCS 505/1, et seq.
Within the past few months, the Northern District of Illinois dismissed two different, but delectably similar, claims under the Consumer Fraud Act for failing to show how a product label would deceive the reasonable consumer. In Karlinski v. Costco Wholesale Corp., Case No. 1:21‑cv‑03813, 2022 WL 2867383 (N.D.Ill. July 21, 2022), the complainant argued that a label for chocolate-dipped ice cream bars created a consumer expectation that the ice cream would be covered with cacao-bean-based chocolate rather than covered, as it allegedly was, with an oil-based substance that left a waxy coating in the mouth. Similarly, in Lederman v. Hershey Co., Case No. 21‑cv‑4528, 2022 WL 3573034 (N.D.Ill. Aug. 19, 2022), a complainant alleged that the Hershey’s Hot Fudge Topping label deceived consumers because the ingredients lacked dairy-based fats, an allegedly essential ingredient to fudge. Although both plaintiffs compiled evidence supporting their definitions of “chocolate” and “fudge,” respectively, the court held both pleadings did not contain enough support to show that the reasonable consumer would have been misled by the labels.
The Consumer Fraud Act is intended to protect consumers against fraud and unfair business practices. See Siegel v. Shell Oil Co., 612 F.3d 932, 934 (7th Cir. 2010). For a claim under the Consumer Fraud Act, a plaintiff must allege that (1) the defendant committed an unfair or deceptive act (2) in the course of trade, business, or commerce (3) with the intent that others rely on the deception, (4) resulting in actual damages. 612 F.3d at 934 – 935. The “deceptive conduct” standard requires the plaintiff show the label would plausibly deceive a “reasonable consumer.” Karlinski, supra, 2022 WL 2867383 at *3. A product statement is not misleading as a matter of law if the plaintiff’s claims are based on “fanciful interpretations” of the label. Id., quoting Bell v. Publix Super Markets, Inc., 982 F.3d 468, 477 (7th Cir. 2020). Rather, there must be enough facts to show there is a likelihood that “a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Beardsall v. CVS Pharmacy, Inc., 953 F.3d 969, 973 (7th Cir. 2020).
When a Consumer Fraud Act claim involves allegations of fraud, pleadings are subject to a heightened pleading standard under Federal Rule of Civil Procedure 9(b). See Vanzant v. Hill’s Pet Nutrition, 934 F.3d 730, 738 (7th Cir. 2019) (“If the claim rests on allegations of deceptive conduct, then Rule 9(b) applies and the plaintiff must plead with particularity the circumstances constituting fraud.”). To survive a motion to dismiss, the plaintiff must state with detail the circumstances of the fraudulent act. United States Lusby v. Rolls-Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009).
Chocolate, the Reasonable Consumer, and a Survey that Fell Short
In Karlinski, a consumer sued Costco for misleading consumers with a product labelled as chocolate-dipped ice cream bars. 2022 WL 2867383 at *1. The plaintiff claimed the label deceived consumers into believing the ice cream was dipped in chocolate when the coating did not have the proper ingredients and ingredient ratios to constitute “chocolate.” Id. The plaintiff alleged the ice cream bar coating was mainly comprised of vegetable oils rather than cacao beans, which cannot qualify as chocolate. Id. To support this assertion, the plaintiff offered dictionary definitions of chocolate, state and federal regulatory definitions of chocolate, an estimated composition of the chocolate dip derived from the order the ingredients appear on the package, and a survey of people who viewed the label in question. See generally id.
However, despite the evidence the plaintiff supplied in his complaint, the Honorable Charles R. Norgle granted the defendant’s motion to dismiss, concluding that the plaintiff had “not alleged sufficient facts to show that his definition of chocolate aligns with a reasonable consumer’s expectations.” 2022 WL 2867383 at *5. The court described the issue as “whether the alleged predominance of vegetable oils over cacao bean ingredients renders the Product’s coating not ‘chocolate’ in the eyes of a reasonable consumer.” 2022 WL 2867383 at *4. Although the plaintiff asserted a reasonable consumer would expect chocolate to be mainly comprised of cacao beans, the court noted that on a motion to dismiss it need not accept such a conclusion as true. 2022 WL 2867383 at *5. In fact, the court found that the label did not promise the chocolate would be comprised of mostly cacao beans and that a reasonable consumer would not expect chocolate to be made only of cacao beans. Id.
Moreover, the court found the survey the plaintiff provided did not support their conclusions. The survey required respondents to view the product’s front label and answer questions. See id. About 60 percent of respondents stated that after reading the products’ front label they expected it would contain more cacao bean ingredients. Yet, the court noted the respondents’ expectation of more cacao bean ingredients was different from respondents believing that the lack of cacao bean ingredients made the ice cream coating something other than chocolate. Id. Moreover, the respondents did not state that chocolate had to be comprised mostly of cacao beans. See id.
The court also examined the question of whether a reasonable consumer could have nevertheless been deceived because the coating contained more vegetable oil than chocolate. Id. On this issue, the court again identified weaknesses in the plaintiff’s allegations, mainly that reasonable consumers likely expect ingredients other than cacao beans in the chocolate and so a comparison between the ratio of cacao bean to vegetable oil alone was insufficient. See 2022 WL 2867383 at **5 – 6. Even the definitions the plaintiff included in his complaint suggested that chocolate indeed includes ingredients other than cacao beans, such as sugar and dairy products. Id. By the plaintiff’s own approximation of the ingredient ratios, his argument failed because the cacao beans and the “Other Chocolate Ingredients” such as sugar and milk combined to total twice the amount of the vegetable oils. 2022 WL 2867383 at *6.
Notably, Judge Norgle dismissed the plaintiff’s claims with prejudice, holding that efforts to amend the complaint would be “futile” and “no set of alleged facts could change the Court’s ruling.” 2022 WL 2867383 at *10.
Mrs. Rorer’s Fudge Recipe and Other Insufficient Support
Similarly, approximately a month after the Karlinski opinion, the Honorable Robert M. Dow, Jr., dismissed a Consumer Fraud Act claim in Lederman, in which a plaintiff alleged the front label on Hershey’s “Hot Fudge Topping” deceived consumers. Lederman, 2022 WL 3573034 at *1. The plaintiff claimed the product did not contain “real fudge” ingredients essential to hot fudge and was merely a “chocolate sauce.” Id.
According to the ingredients list on the product, it was comprised of high-fructose corn syrup, sweetened condensed milk (made of skim milk and sugar), corn syrup, water, hydrogenated coconut oil, cocoa, skim milk, and less than two percent of various ingredients, one of which was whey. The plaintiff claimed she expected the product to contain “ingredients essential to hot fudge — cream and whole milk” rather than the vegetable oils, skim milk, and whey that were listed in its ingredients. Id.
The main shortcoming identified by Judge Dow was the lack of evidence in the complaint supporting the plaintiff’s claim that the word “fudge” in the label would have deceived the reasonable consumer. The plaintiff relied on recipes created by experts, the opinion of a fudge expert, a “1902 fudge recipe from Mrs. Rorer’s New Cook Book,” and dictionary and encyclopedia definitions of fudge. 2022 WL 3573034 at *3. The court concluded these sources of information demonstrated what experts believe fudge should be comprised of rather than what a “reasonable 21st century consumer” believes fudge should be. [Emphasis omitted.] 2022 WL 3573034 at *4.
Moreover, the court pointed out the complaint conflated the ingredients of fudge with those of “hot fudge.” Id. For instance, the plaintiff defined fudge as a “soft candy” comprised of sugar, butter, and milk or cream, yet admitted that hot fudge recipes typically replace the butter with heavy cream to create a pourable consistency. 2022 WL 3573034 at **2, 4. But, as the court noted, the plaintiff was not arguing that heavy cream was an essential ingredient of hot fudge. 2022 WL 3573034 at *4.
The court’s opinion was not written on a fudge-free slate, as the court relied on prior opinions that examined other “fudge”-labelled products. In one such case, the Central District of Illinois dismissed a complaint alleging Kellogg’s Frosted Chocolate Fudge Pop-Tarts did not contain enough milkfat. Reinitz v. Kellogg Sales Co., No. 21‑cv‑1239‑JES‑JEH, 2022 WL 1813891, *1 (C.D.Ill. June 2, 2022). In that case, the court also held the plaintiff failed to show that the “average consumer” believes fudge must contain milkfat. Lederman, 2022 WL 3573034 at *4, quoting Reinitz, supra, 2022 WL 1813891 at *3. In analogizing to the complaint in Reinitz, Judge Dow further criticized the plaintiff’s use of experts’ opinions and noted that the plaintiff conceded the fat in fudge is sometimes comprised of vegetable oils. 2022 WL 3573034 at *4 (quoting plaintiff as averring fudge’s “fat ingredients are typically from dairy or vegetable oils”).
Ultimately, the court dismissed the complaint for failing to plead sufficient facts to establish that the “Hershey’s Hot Fudge Topping” label would deceive the reasonable consumer. However, unlike in Karlinski, the court gave the plaintiff leave to amend the complaint, allowing until September 19, 2022, to do so. 2022 WL 1813891 at *7.
The Northern District of Illinois Wants More
When pleading a violation of the Consumer Fraud Act premised on a product label, the allegations must focus on the viewpoint of the reasonable consumer. The plaintiffs in Karlinski and Lederman fell short of the reasonable consumer standard by, according to the court, relying on evidence of opinions that may not necessarily align with those of reasonable consumers, such as confectionary expert opinions, government regulations, and the plaintiffs’ own expectations. Although it can be easy to see how homemade recipes might reflect public opinion on how to make chocolate, recipes created by experts were not closely related to the expectations of the reasonable consumer. The complaints may have survived if each included evidence that connected more closely with reasonable consumers, such as carefully crafted consumer surveys that directly supported the allegations in the complaint rather than the expert opinions and definitions included in the dismissed complaints. These case dismissals further demonstrate that complaints under the Consumer Fraud Act must align with the intent of the statute: to protect the average reasonable consumer from deceptive business practices.
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