Becerra v. Dr Pepper/Seven Up, Inc.

August T. Horvath*

Why It Made The List

Motions to dismiss cases that are part of the current wave of food and beverage advertising and labeling class action litigation often hinge on whether the plaintiffs have plausibly pled that a reasonable consumer will be deceived by the allegedly implied meaning of some marketing or labeling content that is challenged in the suit. This “reasonable consumer” standard is fairly consistently interpreted across U.S. states and federal districts, and courts can decide whether it has been adequately pled on an early motion to dismiss. When a leading Circuit Court of Appeals issues a decision providing guidance on this standard in this context, it is therefore of great interest to litigants in these cases. The Ninth Circuit Court of Appeals did so on December 30, 2019, in the appeal of a dismissal in Becerra v. Dr Pepper/Seven Up, Inc.[1] In that decision, the Ninth Circuit examined the plausibility of the plaintiffs’ allegations that the word “Diet” as part of the name of a beverage such as “Diet Dr Pepper” implies not just that the so-labeled soft drink contains less sugar or calories relative to its non-”Diet” counterpart, but promised “that the product would ‘assist in weight loss’ or at least ‘not cause weight gain.’” The Ninth Circuit’s decision provided useful guidance on the application of the reasonable-consumer standard generally, as well as a specific, definitive ruling on the viability of “diet” soda cases, one of the major currents in the ongoing food labeling litigation wave.

Discussion

Numerous consumer class action lawsuits have been litigated in various federal districts around the United States in recent years concerning the labeling of foods and beverages, including the construction of these products’ names as presented on the front or primary display panel (PDP) of their packaging. These suits often allege that the labeling communicates to consumers something misleading about the presence, absence, absolute amount, or relative amount of one or more ingredients or nutrients, or about the general nutritional quality of the food or beverage. One of the major strains of this litigation has been cases that focus on “diet” and related designations, principally of beverages, but sometimes of food products. Defendants typically seek to dismiss these cases through a motion filed under Federal Rule of Civil Procedure 12(b)(6), in lieu of a pleading in response to the complaint, contending that the complaint does not plausibly allege that a reasonable consumer, acting reasonably under the circumstances, would interpret the product’s labeling as alleged by the plaintiffs. Even though the suits in question are brought under state consumer protection laws which, by their nature, create something of a patchwork, the case law under these statutes has tended to adopt a consistent expression of this “reasonable consumer” standard. Therefore, the Ninth Circuit’s ruling on this standard is cited as persuasive authority in cases across the United States, and potentially has broad influence beyond the California laws that it interprets.

The Reasonable Consumer Standard

Consumer false-advertising lawsuits in the United States generally are filed under state consumer protection or unfair/deceptive acts and practices (UDAP) statutes, there being no federal statute providing a purchaser cause of action for most false-advertising violations. When these suits are lodged against national brands, they commonly are filed in the U.S. District Court in which the plaintiff resides, in anticipation that the defendant likely would seek to remove them to federal court anyway under the Class Action Fairness Act (CAFA).[2] Even when an advertising class action’s qualification for federal jurisdiction under CAFA is dubious, plaintiffs’ counsel often file the cases in federal court, and defendant food companies, preferring that venue, do not object. Therefore, most of the recent cases, and case law, interpreting these state false-advertising law in the class action context occurs in the federal courts.

California has been the most active jurisdiction in consumer class-action false-advertising lawsuits in recent decades for several reasons, including: (1) the expansive scope and generous private rights of action provided by California’s Unfair Competition Law (UCL),[3] False Advertising Law (FAL),[4] and Consumer Legal Remedies Act (CLRA);[5] (2) its perceived consumer-sympathetic judiciary and favorable case law for plaintiffs; and (3) the size of the state’s population and economy, which can lead to large estimates of damages even when only a class of California consumers is alleged or certified. Substantively, there is overlap between the required elements of a false-advertising claim under the UCL, FAL, and CLRA, and advertising suits typically are brought under all three, as well as appurtenant common-law causes of action, under a single pled set of facts and allegations.

One common element of a false-advertising case under the UCL, FAL, and CLRA, as well as other laws around the U.S., is that the plaintiffs must initially plead, and later prove, that “members of the public are likely to be deceived” by the challenged advertisements or labels.[6] Analytically, there are two parts to establishing that someone is deceived. First, the person must have been persuaded to believe something to be true. Second, that belief must, in reality, be false. The “reasonable consumer” standard relates to the first of these two parts. Unless the marketing statement challenged has only a single, unambiguous, literal meaning, plaintiffs must plead and prove that it implies something to consumers that plaintiffs can then demonstrate is false. Whether members of the public are likely to perceive a particular meaning “must be evaluated from the vantage of a reasonable consumer.”[7]

The question of whether reasonable consumers might infer a particular message from an advertisement or label is generally factual in the sense that consumers either do or do not receive the alleged message. At trial, the issue usually is proven through an expert witness who has conducted a consumer survey finding that some percentage of consumers allegedly report inferring the challenged message. But this does not immunize allegations of implied meaning from scrutiny on a motion to dismiss. Even as to matters of fact, the plaintiff must “allege enough facts to state a claim to relief that is plausible on its face.”[8] And while factual allegations pled in a complaint generally are taken as true and construed in the light most favorable to the plaintiff for purposes of a motion to dismiss,[9] a plaintiff cannot plead just any baseless, conclusory, unsupported, or implausible set of facts in a complaint and expect to have them credited.[10] Determining whether the facts pled by a plaintiff are plausible is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”[11]

The definition of a “reasonable” consumer itself has two aspects. It is generally acknowledged that not all consumers are reasonable. In the ultimate proof at trial, establishing “reasonable” consumer reactions through surveys is basically a numbers game. If at least some percentage, generally around 20% to 25%, of consumers are established to have received a particular message, as shown by competent surveys using appropriate controls, then it is assumed, at least presumptively, that among the misled are some reasonable consumers. Courts, however, can and do override, discard, or preclude such survey findings if, on the exercise of their judicial experience and common sense, they find that a challenged message clearly and unambiguously does not have the implied meaning alleged by the plaintiffs, in the context in which it is used.[12]

Courts generally have been reluctant to second-guess plaintiffs’ allegations of the implied meanings of advertising and marketing claims at the motion-to-dismiss stage. Prior to Becerra, the leading case from the Ninth Circuit Court of Appeals was Williams v. Gerber,[13] in which the Court overturned a decision dismissing, on implausibility grounds, a suit alleging that packing a juice product with the claim “fruit juice,” juxtaposed with images of particular fruits, implied that the juice primarily consisted of the juice of the fruits pictured, rather than the juice of some other, less desirable fruit. Williams made it difficult, in the Ninth Circuit, to dismiss a case for the implausibility of its allegations as to the meanings consumers receive from advertising and labeling.

Class-action plaintiffs, however, seemed to respond to Williams pushing the envelope of how implausible their claims of implied meaning could be before a court acknowledged that there are some limits to the generous position articulated in Williams. In Becerra, they appear to have found such a limit.

The Becerra Case

Background

The defendant in Becerra makes several popular beverages, including the soda Dr Pepper and its variant, Diet Dr Pepper. Diet Dr Pepper, marketed since 1962, contains no sugar and has no calories; it is sweetened with the no-calorie sweetener aspartame. Diet Dr Pepper is labeled, like many other diet sodas, to denote these characteristics relative to regular Dr Pepper, which is sweetened with sugar and has about 150 calories per 12-ounce serving. The class representative plaintiff, Shana Becerra, alleged that she believed that the term “Diet” in “Diet Dr Pepper” promised her that the beverage would help her to lose weight or to maintain a healthy weight, as if consuming the product were tantamount to going on a diet, in the sense of adopting a disciplined weight-control plan. She further alleged that not only does Dr Pepper fail to produce the claimed benefit of weight loss or maintenance, but on the contrary, aspartame-sweetened sodas have been shown to contribute to weight gain. As a class representative, she also asserted that she was typical of reasonable California consumers, who allegedly were similarly misled.

It took a total of four complaints to get the ultimate decision by the assigned District Judge in the U.S. District Court for the Northern District of California, the Hon. William H. Orrick. The original and first amended complaints had to be amended further because of technical and procedural defects, so the Second Amended Complaint was the first to be considered on the merits relevant here. In a March 2018 decision, Judge Orrick dismissed the complaint, agreeing with the defendant’s contention that “it is not plausible that a reasonable consumer would believe that drinking Diet Dr Pepper would assist in weight loss, beyond the fact that it has no calories.”[14] Judge Orrick first recited the law discussed above, and added that in California, where false advertising claims “sound in fraud,” pleadings are subject to Federal Rule of Civil Procedure 9(b)’s requirement that they “state with particularity the circumstances constituting fraud or mistake” that are alleged.

Judge Orrick cited two Ninth Circuit cases that had been decided since Williams v. Gerber dismissing advertising cases on grounds that the alleged deception was implausible, Ebner v. Fresh, Inc.[15] and Forouzesh v. Starbucks Corp.[16] In Ebner, the Ninth Circuit had affirmed dismissal of an advertising case alleging that a cosmetics company’s “lip product was deceptive because the net weight accurately indicated the included product, but the tube design’s screw mechanism only allowed 75% of the product to advance up the tube, leaving the remaining 25% inaccessible” because “it was implausible that a rational consumer would make the assumption that there was no further product in the tube once using up the initial 75% when the remainder was plainly visible.”[17] In the Starbucks case, decided just days before this first Becerra decision, the Ninth Circuit affirmed “as a matter of law” that “no reasonable consumer would think (for example) that a 12-ounce ‘iced’ drink, such as iced coffee or iced tea, contains 12 ounces of coffee or tea and no ice.”[18] Further, another Northern District of California judge had recently dismissed a similar case by the same plaintiff against Diet Coke on the same grounds.[19]

After reviewing these precedents, Judge Orrick concluded:

Diet Dr Pepper is a “diet” product relative to regular Dr Pepper, because Diet Dr Pepper contains zero calories. A reasonable consumer knows that this is and always has been true of soft drinks generally—”diet” soft drinks are simply lower calorie or calorie-free versions of their sugar-laden counterparts. A reasonable consumer would have no basis to infer anything more from Diet Dr Pepper’s label or advertising than that it is a calorie-free soft drink.[20]

Judge Orrick gave the Becerra plaintiffs a chance to amend. In their third amended complaint, it became more clear that the fundamental fault with the plaintiff’s implausible deception theory was an out-of-context interpretation of the word “diet” to mean a disciplined weight-loss or weight management program, an interpretation for which the plaintiffs provided dictionary definitions and similar evidence. Their theory turned out to be, or perhaps evolved into, the idea that putting “diet” on a soda can is telling consumers that consuming the product is tantamount to going on a diet, or at least would be part of such a process. Of course, as Judge Orrick point out, the word “diet” does mean a weight loss or weight management program in some contexts—just not when it is printed on a soda can.[21] In that context, a “diet” soda has been understood by reasonable consumers for more than half a century to mean a no- or low-sugar, and/or no- or low-calorie, soft drink, usually relative to the same brand’s non-”diet” product. The fact that “diet” can have the meaning ascribed by the plaintiffs in another context did not compel the court to defer judgment on whether such other meaning was plausible in the context in which it was alleged. After all, the word “diet” can have still other meanings—it can mean, for example, the totality of a person’s or a community’s nutritional intake, as in, “The American diet contains too much fat,” or “Jeanine’s diet consists almost entirely of caviar and boxed red wine,” but such meanings make no sense on a soda can. It was mainly because of this important element, the context of the claim, that Judge Orrick again held, “After analyzing each of these new factual allegations, the result does not change. Becerra has not pleaded a plausible claim that reasonable consumers would be deceived by the use of “diet” in the Diet Dr Pepper label.”[22]

One of the unsuccessful additions to the Becerra complaint deserving of special mention is the inclusion of results of a consumer survey that plaintiffs’ counsel had commissioned, purporting to show that a substantial proportion of consumers view diet sodas as weight-loss products. Introducing such a survey in a pleading would appear, superficially, a potent strategy, given the importance of consumer surveys for deciding questions of advertising interpretation later in the case and assuming that the court must credit the results of the survey for purposes of a motion to dismiss. This latter assumption, however, turns out to be wrong; a court is not required to accept the results of a survey at face value when deciding a motion to dismiss. On the contrary, Judge Orrick held that such a survey, when offered in support of allegations that are otherwise implausible, does not carry much weight at all. The plaintiffs did not provide sufficient backup materials for the court to evaluate their survey—”it appears in the complaint without reference to methodology, what questions were asked, or who administered it”—and in the framework of a pleading, it may be difficult or impossible to do so. It certainly is impossible to provide the defendant with the opportunity to critique or rebut the survey in briefing a pleading motion. Further, even if the survey were taken as “true,” the wording of its questions was such that it did not lend itself to the interpretation put on the results by the plaintiffs’ counsel who had commissioned it.

The Ninth Circuit Decision

Because review of a decision dismissing a case requires reference only to the case pleadings and the parties’ arguments, dismissal of a complaint for failure to state a claim is reviewed de novo.[23] In considering the deception allegations, the Ninth Circuit assigned the same importance to the context of the challenged claims that Judge Orrick had:

When considering the term in its proper context, no reasonable consumer would assume that Diet Dr Pepper’s use of the term “diet” promises weight loss or management. In context, the use of “diet” in a soft drink’s brand name is understood as a relative claim about the calorie content of that soft drink compared to the same brand’s “regular” (full-caloric) option.[24]

The Circuit Court noted that the plaintiff had been selective and misleading in her selection of dictionary definitions of “diet” in the third amended complaint, quoting definitions in which “diet” was used as a noun and as a verb, but omitting the more on-point definitions from the same dictionaries of diet when used as an adjective—”For example, the Merriam Webster Dictionary defines the adjective ‘diet’ as ‘reduced in or free from calories[—]a diet soft drink.’”[25]

The Ninth Circuit generally agreed with the District Court on the handling of the survey added to the third amended complaint, with perhaps one nuance:

Although we must accept the allegations surrounding the survey as true at this stage of the litigation, a reasonable consumer would still understand ‘diet’ in this context to be a relative claim about the calorie or sugar content of the product. The survey does not address this understanding or the equally reasonable understanding that consuming low-calorie products will impact one’s weight only to the extent that weight loss relies on consuming fewer calories overall.”[26]

Judge Orrick did not appear to agree with the qualification at the beginning of this passage. However, the Ninth Circuit’s statement that “we must accept the allegations surrounding the survey as true at this stage of the litigation” differs less from Judge Orrick’s conclusion and carries less value for plaintiffs than might appear, given the rest of the Ninth Circuit’s analysis. The Ninth Circuit seems to have held that while it must accept as true the allegations that the survey existed, that respondents answered the questions as alleged in the complaint, and possibly even that the survey was scientifically credible, the court clearly is not required to accept the plaintiff’s interpretation of the survey results as support for the other complaint allegations. Thus, the Ninth Circuit held, “the survey does not shift the prevailing reasonable understanding of what reasonable consumers understand the word ‘diet’ to mean or make plausible the allegation that reasonable consumers are misled by the term ‘diet.’”[27]

Implications, Impact, and Related Cases

Becerra comes after a recent, consistent decision by the Second Circuit Court of Appeals in Excevarria v. Dr Pepper Snapple Group, Inc.,[28] in which, as in Becerra, the plaintiffs alleged that the word “diet” in the name of Diet Dr Pepper “is misleading because it conveys certain promises about the beverage’s usefulness in assisting with weight loss or healthy weight management, when in fact (plaintiffs allege, based on a number of studies) the aspartame in Diet Dr Pepper likely causes weight gain.” The Second Circuit upheld dismissal of the case, but in a way that was less satisfying and useful for plaintiffs seeking to dismiss such cases. Firstly, the Second Circuit’s decision was a Summary Order that does not have precedential effect and may only be cited as persuasive authority. More importantly, the Second Circuit declined to decide whether “a reasonable consumer would understand the word ‘diet’ to convey promises about weight loss or management,” instead focusing on whether there was a plausible basis for the plaintiffs’ allegations that aspartame in sodas causes weight gain, which it concluded—based on reviews of the plaintiffs’ cited studies by District Courts within the Circuit—there was not.[29] Besides being non-precedential, then, these decisions were confined to cases involving aspartame-based diet soft drinks, and did not squarely address the reasonable consumer’s interpretation.

Other courts followed the Becerra holding with respect to other, substantially identical, attacks on “diet” soda labeling, even without waiting for the Ninth Circuit to affirm Judge Orrick. In Geffner v. The Coca-Cola Company,[30] the Second Circuit Court of Appeals affirmed such a dismissal, addressing the issue that they had declined to decide in Excevarria. Citing the two Orrick decisions but writing before the Becerra appeal was decided, the Second Circuit held that:

[c]onsistent with the rulings of every court that has addressed this issue, we hold that when included in a soft drink title, the adjective “diet” (1) refers specifically to caloric content rather than a generic promise of weight-loss, and (2) carries a primarily relative (in relation to the non-diet soft drink equivalent), rather than an absolute, meaning.[31]

This decision established the meaning of a “diet” soda as a matter of law in the Second Circuit, leaving no apparent room for plaintiffs to introduce survey or other evidence purporting to show that it has any other meaning.

The Becerra and Geffner appellate decisions have put an end to cases challenging the designation of a “diet” soda as a weight loss or weight maintenance claim in the two most active circuits for food labeling litigation, and it is difficult to foresee such cases gaining traction in other circuits. Taken together, the various District Court and Circuit Court of Appeals decisions about diet soda provide a case study in how courts achieve consensus that a widespread false-advertising theory is devoid of merit. The first necessary step is for a District Court judge to brave the general appellate disapproval of dismissing this type of claim by writing a reasoned opinion, applying common sense to the allegations of deception and giving the “reasonable consumer” some credit for having cognitive ability and an understanding of context. This creates space for other District Court judges to agree, and if a plaintiff is inclined to appeal, the appellate courts—again, citing each other, as well as the trial courts—can, possibly in stages starting with the easier aspects of the decision, solidify the consensus. It may take a few years, but an implausible theory that has cost the food industry substantial resources, and that potentially might have cost much more, can, in this way, be consigned to the legal scrap heap.

* August Horvath is a Partner and Co-Chair of the Advertising and Marketing Law Practice at Foley Hoag LLP in New York. He handles all aspects of investigations and litigations involving marketing, advertising, and labeling of consumer products and services, including food, beverages, and pharmaceuticals.

[1]    935 F.3d 1225 (9^th Cir. 2019), appealed from Becerra v. Dr Pepper/Seven Up Inc., No. 17-cv-05921-WHO (N.D. Cal. Aug. 21, 2018).

[2]    28 U.S.C. §§ 1332(d), 1453, 1711-1715.

[3]    Cal. Bus. & Prof. Code §§ 17200 et seq.

[4]    Cal. Bus. & Prof. Code §§ 17500 et seq.

[5]    Cal. Civ. Code §§ 1750 et seq.

[6]    Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9^th Cir. 2008).

[7]    Id.

[8]    Turner v. City & Cty. of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015).

[9]    Ebner v. Fresh, Inc., 838 F.3d 958, 962 (9th Cir. 2016).

[10]  In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

[11]  Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

[12]  See, e.g., Pernod Ricard USA, LLC v. Bacardi U.S.A., 653 F.3d 241 (3d Cir. 2011); Abbott Labs. v. Mead Johnson & Co., 201 F.3d 883 (7th Cir. 2000), amended, 209 F.3d 1032 (7th Cir. 2000).

[13]  552 F.3d 934 (9^th Cir. 2008).

[14]  Becerra v. Dr Pepper/Seven Up, Inc., No. 17-cv-05921-WHO (N.D. Cal. March 30, 2018) (Order Denying Motion to Transfer and Granting Motion to Dismiss).

[15]  838 F.3d 958 (9th Cir. 2016).

[16]  No. 16-56355 (9^th Cir. March 12, 2018).

[17]  Becerra, No. 17-cv-05921-WHO (N.D. Cal. March 30, 2018).

[18]  Id.

[19]  Becerra v. Coca-Cola Co., No. C-17-05916-WHA, 2018 WL 1070823, at *3 (N.D. Cal. Feb. 27, 2018).

[20]  Id.

[21]  Becerra v. Dr Pepper/Seven Up, Inc., No. 17-cv-05921-WHO (N.D. Cal. Aug. 21, 2018) (Order Granting Motion to Dismiss).

[22]  Id.

[23]  Ebner, 838 F.3d at 962.

[24]  Becerra, 945 F.3d at 1229.

[25]  Id.

[26]  Id. at 1231.

[27]  Id.

[28]  No. 18-1492 (2d Cir. Apr. 17, 2018) (Summary Order).

[29]  Id. The Second Circuit had held similarly, again in Summary Order format, earlier in 2019 in Manuel v. Pepsi-Cola Co., No. 19-1748 (2d Cir. March 15, 2019) (Summary Order).

[30]  928 F.3d 198 (2d Cir. 2019).

[31]  Id.