Reese Richman Mounts Assault on Quaker Oats
Regular readers will recall that last year Michael Reese and his colleagues at Reese Richman earned the title of Torts Twit of the Month for their suit against the chocolaty beverage Yoo-hoo for its alleged failure to disclose the presence of partially-hydrogenated soybean oil -- even though it was printed right on the label.
Well, they are at it again with another ridiculous food-based lawsuit in which they hope to ring the class action bell. This time they have sued Quaker Oats, once again complaining about the presence of partially hydrogenated oil in food. According to the complaint, Quaker Oats committed fraud by calling its foods "low fat," a "good source of calcium," "heart healthy," "made with whole grain oats," and containing "no high fructose corn syrup." Compl. para. 3. Reese does not allege that these statements are untrue individually. Rather, he alleges that the manufacturer's failure to disclose on the front of the packaging the presence of trace amounts of partially hydrogenated oil -- which he compares to poison and alleges causes "cancer, birth defects, heart disease, diabetes, and many other fatal diseases" (Compl. para. 4) -- makes any statement about health misleading.
Of course, the FDA allows the use of partially hydrogenated oils -- or so-called "trans fats" -- in food, and has established regulations and guidance for how trans fats should be disclosed on product labeling. Moreover, Quaker Oats places required nutritional information on the product label itself. For example, the label for Quaker Chewy Granola Bars discloses that a 1-bar serving has 0 grams of trans fats. Plaintiff does not plead that Quaker Oats fails to comply with FDA rules and regulations in listing the amount of trans fat at 0 grams per serving. Rather, he complains that, under the FDA rules, there could be "nearly 5 [grams] of trans fat overall" in a 10-serving box. But this is plainly consistent with FDA regulations, which talk of nutrition information in terms of individual servings.
Surprisingly, plaintiff -- a New York resident -- had his New York lawyers sue Quaker Oats at its headquarters in Chicago, seeking to apply the Illinois Consumer Fraud Act to the claims of a nationwide class customers who bought Quaker Oats products. Of course, if counsel had read the decisions of the Illinois Supreme Court from Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill.2d 100 (2005) through Barbara's Sales, Inc. v. Intel Corp. (Ill. 2007) and beyond, they would know that the Illinois Supreme Court has definitively held that Illinois's Consumer Fraud Act cannot be used by nonresidents to recover in consumer fraud actions, even against defendants domiciled in Illinois. Simply put, Illinois has no interest in the extraterritorial application of its law to sales transactions in other states. Quaker Oats ought to be awarded its costs for even having to move to dismiss that count.
Similarly, the express warranty and implied warranty claims should be dismissed on the pleadings as well. FDA regulations allow much more trans fats than Quaker Oats has in its products. The fact that there may be some trace amounts does not make the goods unmerchantable in the trade or unfit for human consumption. Moreover, plaintiff cannot plead or prove that the express statements made about the goods are untrue. And they comply with FDA rules and regulations. Put simply, there is no reasonable ground for a breach of warranty action.
Plaintiff's "unjust enrichment" theory is equally flawed. Although the complaint pleads that plaintiff paid an inflated or "premium" price for the foodstuffs because he believed they contained no trans fats, he will be just as unable to establish any sort of "premium" price for such products as the plaintiffs were in Weiner v. Snapple Beverage Corp. (S.D.N.Y. 2010), in which Judge Denise Cote dismissed similar claims for failure to establish any pricing differential and, thus, any injury.
In the end, this is yet another attempt by the plaintiffs' bar to achieve regulation through financially lucrative litigation. Let's hope the courts in the Northern District of Illinois are as quick as other courts have been in deeming such misuse of the class action mechanism impermissible.
It's also mysterious to me why anyone would voluntarily choose to bring a class action in the circuit that just issued the Thorogood v. Sears series of decisions.