December 22, 2015
Authored by: Eric Schroeder, Christian Bromley and Aiten McPherson
In this post, we take a look at three recent decisions in which food industry defendants were accused of falsely advertising their food products as “fresh”. As discussed in our prior post, a clear-cut, consensus definition for “fresh” has yet to emerge in the United States, leaving food and beverage companies exposed to significant false advertising litigation. These three decisions highlight the risks of using “fresh” without a full understanding of what regulators and the court have previously considered truthful or misleading uses of the term.
The use of “fresh” to describe “fresh baked” bread has become the subject of litigation. At least one foreign court definitively ruled that “fresh baked” means baked from dough, and not re-heating fully or partially baked bread.
In 2014, Australia’s Federal Court fined Coles Supermarkets $2.5 million for improperly advertising bread as “Baked Fresh” and “Freshly Baked”. The court found Coles’ use of “fresh” to describe its par-baked bread (bread that is previously baked, then frozen, and re-heated in the store before being sold) to be in violation of multiple sections of Australian Consumer Law. Judgment at 37. In the judge’s view:
to use the words ‘freshly baked’, and especially ‘baked fresh’, in the context of the in-store bakeries displayed in the evidence, connotes that there has been baking of fresh dough. In these circumstances, I consider the use of those words on the packaging and signage when the baking process has been of par-baked frozen product to be misleading or deceptive, likely to mislead or deceive, and liable to mislead the public. What is sought to be conveyed is a fresh baking process, not a baking process of par-baked frozen product.
Judgment at 35. The Federal Court of Australia’s rationale and lesson is fairly straightforward: don’t parse, as Coles did, when using the term “Fresh” – if a store in Australia describes something as “freshly baked”, the product must be fully baked, that day, in the store.
In 2015, similar claims were alleged against stores in New Jersey. Three class action lawsuits filed in a New Jersey federal district court accused Whole Foods Market Group Inc., and two other grocery chains of falsely advertising their bread as “freshly baked” when it was actually baked at another location. As in the Coles lawsuit, the complaint alleged that bread cannot be advertised as “freshly baked” when it is only “par-baked” and/or partially baked on the supermarket premises.
The district court did not reach the merits of the claim, however, because it dismissed the case for vagueness. The plaintiffs failed to identify the specific products or advertisements at issue, when the advertisements were used, or how the individual plaintiffs were injured. The district court ruled that:
Plaintiffs, claiming to be health-conscious consumers, do not even allege that the relevant products lacked nutritional value or were somehow less nutritious due to their not being made from scratch in store. Plaintiffs’ apparent dissatisfaction in the bread and bakery products they purchased, without more, does not suffice.”
Order at 25. Still, the lawsuit is a cautionary tale. Although the grocery chains denied these claims and escaped the lawsuit (for now – the decision is being appealed), any allegation that they falsely advertised their “freshly baked bread” is something that should be avoided.
Finally, this case shows that misleading uses of “fresh” can be subtle, but no less actionable. The defendant is facing a class action for suggesting that its coffee pods contained “fresh” coffee, when they were actually made of instant coffee.
As stated in the Seventh Circuit’s 2014 ruling:
This case is about coffee. Not just any coffee—it is about the individual coffee pods that are used in the popular Keurig coffeemakers. The Keurig system solved a problem with which coffee drinkers had struggled for years: how to make individual portions of fresh-brewed coffee in a tidy, flavorful, easy, and relatively inexpensive way.”
Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 750 (7th Cir. 2014). Sturm Foods, wanting entry into the K-Cup market, but without the K-Cup filter technology, introduced Grove Square Coffee in 2010. While the product looked like a K-cup, it did not have a filter on the inside.
Without a filter, Sturm could not use fresh coffee grounds, and instead used instant coffee in its pods. Sturm’s packaging, however, described the product as “naturally roasted soluble and microground Arabica coffee” – not simply as “instant” coffee. Id. at 753. The packaging further showed fresh beans on the front, and set forth a “Coffee Lover’s Bill of Rights” that included the right to a “fresh cup.” Id.
Plaintiff sued Sturm Foods in an Illinois federal district court in 2011 claiming that Sturm’s marketing violated state consumer protection statutes. In 2013, the district court dismissed the suit on summary judgment, ruling that the plaintiffs failed to show that every class member was harmed by Sturm’s alleged mislabeling or deception, because consumers might have bought the coffee due to its (relatively) low price, because it was a new product, or several other reasons.
In the 2014 ruling quoted above, the Seventh Circuit reversed and revived the case, finding that factual disputes about the packaging called for a trial rather than summary judgment, and remanded class certification to the district court.
In November 2015, the district court certified the case as a class action, ruling that whether or not the Grove Street Coffee packaging was likely to deceive a reasonable consumer, the commonality and typicality requirements for class action status were met because plaintiffs’ claimed that they would not have purchased Grove Square Coffee pods, or paid as much as they did, but for the misleading packaging. The district court also ruled that plaintiffs had alleged a viable damage theory, as there was “plenty of evidence in the record suggesting that consumers would not have purchased Grove Street Coffee but for its deceptive labeling that created and/or failed to correct the misimpression that it was premium, ground – not instant – coffee.”
As with the FDA regulations discussed on our prior post, the above cases do not offer a black and white definition of when using “fresh” is misleading or not. Forgive the bad pun, but any use of the term deserves a “fresh” look.