Kristen Mantikas, Kristin Burns, and Linda Castle, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
Kellogg Company, Defendant-Appellee.
Submitted: May 4, 2018
Plaintiffs
appeal from a judgment of the United States District Court
for the Eastern District of New York (Sandra J. Feuerstein,
J.) granting Defendant's motion to dismiss
Plaintiffs' complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6). Plaintiffs, consumers who purchased
Cheez-It crackers labeled "whole grain" or
"made with whole grain," filed a class action
complaint against Defendant, Kellogg Company, alleging that
the whole grain labels were false and misleading in violation
of New York and California consumer protection laws.
Plaintiffs alleged that the whole grain labels falsely
communicated to consumers that the grain in whole grain
Cheez-Its was predominantly whole grain, when in fact the
primary grain ingredient was enriched white flour. The
district court held that the whole grain labels would not
mislead a reasonable consumer, and therefore dismissed
Plaintiffs' complaint for failure to state a claim. Held,
the district court erred in dismissing Plaintiffs'
complaint because, under the proper standards for reviewing a
motion to dismiss pursuant to Rule 12(b)(6), Plaintiffs
plausibly alleged that the whole grain labels would lead a
reasonable consumer to believe, incorrectly, that the grain
in whole grain Cheez-Its was wholly or predominantly whole
grain. VACATED and REMANDED.
Michael R. Reese, George V. Granade, Reese LLP, New York,
N.Y., for Plaintiffs-Appellants.
Kenneth K. Lee, Christina A. Aryafar, Jenner & Block LLP,
Los Angeles, CA, Dean N. Panos, Jenner & Block LLP,
Chicago, IL, Kelly M. Morrison, Jenner & Block LLP,
Washington D.C. for Defendant-Appellee
Before: LEVAL, SACK, and DRONEY, Circuit Judges.
LEVAL,
Circuit Judge.
Plaintiffs
Kristen Mantikas, Kristin Burns, and Linda Castle
("Plaintiffs") appeal from a judgment entered on
August 21, 2017 in the United States District Court for the
Eastern District of New York (Sandra J. Feuerstein,
J.), granting Defendant Kellogg Company's motion
to dismiss Plaintiffs' complaint for failure to state a
claim, as provided in Fed.R.Civ.P. 12(b)(6). Plaintiffs are
residents of New York and California who purchased
Defendant's Cheez-It crackers that were labeled
"whole grain" or "made with whole grain."
They filed a class action complaint (the
"Complaint") against Defendant alleging that the
whole grain labels were false and misleading in violation of
New York and California consumer protection laws. They
alleged that such labeling would cause a reasonable consumer
to believe that the grain in whole grain Cheez-Its was
predominantly whole grain, when, in fact, it was not. The
primary grain content was enriched white flour. The district
court dismissed the Complaint pursuant to Rule 12(b)(6). It
held that the whole grain labels would not mislead a
reasonable consumer, and that Plaintiffs therefore failed to
state a claim.
We
conclude that the district court erred in dismissing
Plaintiffs' complaint. Reviewed under the proper
standards for a Rule 12(b)(6) motion, the Complaint plausibly
alleged that a reasonable consumer would be misled by
Defendant's whole grain labels to believe that the grain
in whole grain Cheez-Its was predominantly whole grain.
Accordingly, we vacate the judgment of the district court and
remand for further proceedings.
BACKGROUND
The
Complaint alleges as follows. Defendant produces Cheez-It
crackers and sells the brand in a variety of flavors,
including "original" and "whole grain."
During the relevant time period, Defendant packaged and sold
the "whole grain" variety in two boxes, each with
slightly different labeling. One version contained the words
"WHOLE GRAIN" in large print in the center of the
front panel of the box, and "Made with 5g of WHOLE GRAIN
per serving" in small print on the bottom. The other
version contained the words "Made With WHOLE GRAIN"
in large print in the center of the box, with "Made with
8g of WHOLE GRAIN per serving" in small print on the
bottom. Both versions also contained a "Nutrition
Facts" panel on the side of the box, which revealed in
much smaller print that a serving size of the snack was 29
grams and that the first ingredient on the ingredients list
was "enriched white flour." "Whole wheat
flour" was listed on the ingredients list as either the
second or third ingredient. As required by federal
regulation, the ingredients were listed in order of their
predominance, with the primary ingredient listed first.
See 21 C.F.R § 101.4 (generally requiring
ingredients to be listed "in descending order of
predominance by weight").
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Omitted)
Plaintiffs
purchased one or both versions of the Cheez-Its labeled
"WHOLE GRAIN," believing on the basis of that label
that the grain content was predominantly whole grain.
Contrary to their belief, however, the grain content was not
predominantly whole grain, but rather enriched white flour.
Plaintiffs assert that they would not have purchased the
crackers had they known that the grain content was not
predominantly whole grain. Plaintiffs filed the Complaint in
the United States District Court for the Eastern District of
New York, asserting claims for false advertising and
deceptive business practices in violation of New York and
California consumer protection laws, [1] as well as for unjust
enrichment under Michigan law. They sought declaratory and
injunctive relief, as well as monetary damages, on behalf of
a putative class of all persons residing in the United States
and its territories who purchased whole grain Cheez-Its since
May 19, 2010.
Defendant
moved to dismiss the Complaint pursuant to Rule 12(b)(6). It
argued that the "Made With WHOLE GRAIN" version of
the Cheez-Its packaging was not false and misleading, because
that statement was factually accurate and, in addition, was
qualified by the more detailed "Made with 8g of WHOLE
GRAIN per serving" label. Defendant did not specifically
address whether the "WHOLE GRAIN" version of the
packaging was false and misleading. Defendant also argued
that Plaintiffs' claims were preempted by federal law,
that Plaintiffs failed to state a claim for unjust enrichment
under Michigan law, and that Plaintiffs lacked standing to
pursue injunctive relief because they failed to allege any
likelihood of continuing or future harm.
The
district court granted Defendant's motion. It held,
first, that both the "Made With WHOLE GRAIN" and
"WHOLE GRAIN" labels would not mislead a reasonable
consumer, because both statements were true and were
qualified by further accurate language detailing the number
of grams of whole grain per serving. The court dismissed
Plaintiffs' Michigan law unjust enrichment claim for lack
of standing, a ruling which Plaintiffs do not appeal.
Finally, the court concluded that, because Plaintiffs failed
to show that the packaging was misleading, they could not
demonstrate injury and therefore lacked standing to pursue
injunctive relief. Having dismissed the Complaint on other
grounds, the district court expressly did not consider
Defendant's alternative argument that Plaintiffs'
state law claims were ...