Federal Court Dismisses "Diet Coke Plus" Class Action
If at first you don't succeed in getting an action dismissed, try, try again. The Coca Cola Company proved the truth of this old addage last Thursday when it finally won a dismissal with prejudice in its "Diet Coke Plus" litigation. See Mason v. The Coca-Cola Company, Civ. No. 09-0220, Slip op. (D.N.J. Mar. 31, 2011).
In Mason, plaintiffs brought a putative nationwide class action against the defendant for allegedly misbranding its "Diet Coke Plus" product, which was Diet Coke fortified with 10% of the USRDA of a number of vitamins and minerals. The amounts were listed with the Nutrition Facts on the label.
The FDA had sent a letter to the defendant, warning that it considered "Diet Coke Plus" to be in violation of its policy against fortifying snack food with vitamins and minerals, and labeling the product "plus" without providing a comparison product. Plaintiffs attached the FDA's letter to their complaint, and complained that the term "Plus" had misled them to believe that the product was "healthy," causing them to spend more for the beverage than it was worth.
The defendant had previously moved to dismiss, although the court had rejected its arguments about primary jurisdiction and preemption, it had held that plaintiffs failed to properly plead fraud and ascertainable loss. I had described this opinion in a prior post. But that opinion had allowed plaintiffs another bite at the apple.
So the defendant moved again to dismiss the complaint, and this time the district court not only granted the motion, but made it stick. It refused to revisit its conclusions on primary jurisdiction and preemption, but it analyzed (and ultimately dismissed) plaintiffs' causes of action.
In considering the claim pled under the New Jersey Consumer Fraud Act, the court first concluded that plaintiffs had failed to allege fraudulent or deceptive conduct by the defendant:
In order for these claims to amount to a NJCFA violation for an affirmative act of deception or fraud, plaintiffs must show that defendant's statements on its product are false. . . . [The FDA's warning letter itself] shows that it is not false that Diet Coke Plus contains vitamins and minerals, and plaintiffs have failed to allege with particularity what further expectations beyond these ingredients they had for the product or how it fell short of those expectations. Instead, plaintiffs simply make a broad assumption that defendant intended for Diet Coke Plus's vitamin and mineral content to deceive plaintiffs into thinking that the beverage was "healthy." Without more specificity as to how defendant made false or deceptive statements to plaintiffs regarding the healthiness or nutritional value of the soda, plaintiffs have failed to plead the "affirmative act" element with sufficient particularity to state a viable NJCFA claim.
Slip. op. at 7-8 (citations omitted).
The court also held that plaintiffs failed to plead the second element of an NJCFA claim: ascertainable loss. Citing New Jersey case law, the court noted that the loss must be "quantifiable or measurable." And yet, all the plaintiffs pled was that they paid "money for a product that never should have been marketed to consumers in a misleading manner," and "money for a product that was of lesser value than what was represented." Slip op. at 9. The court held that this was hogwash:
When plaintiffs purchased Diet Coke Plus, they received a beverage that contained the ingredients listed on its label. Plaintiffs have not explained how they experienced any out-of-pocket loss because of their purchases, or that the soda they bought was worth an amount of money less than the soda they consumed. At most, plaintiffs simply claim that their expectations of the soda were disappointed. Dissatisfaction with a product, however, is not quantifiable loss that can be remedied under the NJCFA.
Id. at 9-10 (citations omitted).
The court also dismissed plaintiffs' claims for negligent and intentional misrepresentation because they had not pled an ascertainable loss of money or property. Id. at 12.
In a footnote, the court made this observation:
At its core, the complaint is an attempt to capitalize on an apparent and somewhat arcane violation of FDA food labeling regulations. But not every regulatory violation amounts to an act of consumer fraud. It is simply not plausible that consumers would be aware of FDA regulations regarding "nutrient content" and restrictions on the enhancement of snack foods. The distinction is a fine but important one. The complaint does not allege that consumers bought the product because they knew of and attributed something meaningful to the regulatory term "Plus" and therefore relied on it. Rather, they allege merely that they thought they were buying a "healthy" product that happened to apparently run afoul of FDA regulations.
Id. at 12 n.4. The latter, the court clearly implied, simply is not consumer fraud.
Mason is part of a growing trend of cases that take on consumer fraud allegations at the pleading stage, weeding out those complaints that ultimately fail to plead an actionable falsehood -- particularly in light of the disclosures made on the label of the product itself.
