Mccausland v. PepsiCo, Inc.

Background

Ian Mccausland, Carlo Garcia, and Michael Zurl alleged that PepsiCo deceptively marketed Gatorade Protein Bars through statements and imagery emphasizing protein, muscle rebuilding, athleticism, science, and professional sports. They alleged that the bars contained high levels of total and added sugar and that the “Protein Bar” name was misleading because sugar was the primary characterizing ingredient. They asserted claims under California’s Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law, as well as New York General Business Law sections 349 and 350.

PepsiCo moved to dismiss under Federal Rules of Civil Procedure 12(b)(1), which addresses federal subject-matter jurisdiction, and 12(b)(6), which addresses whether a complaint adequately states a claim. PepsiCo argued that federal food-labeling law preempted the claims, that the alleged advertising was not likely to deceive a reasonable consumer, that the California Unfair Competition Law claims were inadequately pleaded, that the plaintiffs had an adequate remedy at law, and that they lacked standing to seek an injunction.

Judicial Notice

The court granted PepsiCo’s request for judicial notice of the complete packaging and labels for the Gatorade Protein Bars because the complaint extensively discussed those materials, they were central to the claims, and their authenticity was not challenged.

Federal Preemption

The court held that the plaintiffs’ claims were not entirely preempted by the federal Food, Drug, and Cosmetic Act and related regulations. The claims were preempted to the extent they sought to impose labeling requirements that differed from federal requirements, including labeling sugar in teaspoons rather than grams or adding a Daily Value for sugar itself. Those omissions could not serve as the substantive basis for the claims, although the court stated they could remain relevant to what a reasonable consumer might understand from the bars’ labeling.

The court also held that claims challenging health or nutrient-content statements allowed by federal regulations were preempted. But it concluded that other challenged statements—such as “Backed by Science,” “Used by the Pros,” professional sports logos, and statements that the bars were formulated and tested at the Gatorade Sports Science Institute—could not reasonably be treated as federally regulated health or nutrient-content claims at the pleading stage. The court further declined to resolve whether “protein” or sugar was a characterizing ingredient under the federal naming regulations because that issue involved factual questions. It denied PepsiCo’s motion to dismiss to the extent it was based on federal preemption. The denial was without prejudice to PepsiCo’s ability to renew its preemption arguments at summary judgment or trial under the circumstances described by the court.

Consumer-Deception and Unfair Competition Claims

The court held that the plaintiffs plausibly alleged that reasonable consumers were likely to be deceived by PepsiCo’s advertising, marketing, and labeling. It treated whether consumers would understand the athletic-recovery context, the bars’ sugar content, and the relationship between the marketing and the disclosed sugar information as factual questions inappropriate for resolution on a Rule 12(b)(6) motion.

The court also held that the plaintiffs plausibly stated claims under the “unlawful” and “unfair” prongs of California’s Unfair Competition Law. The alleged violations of state law, the federal food-misbranding statute, and the federal characterizing-ingredient regulation could support an “unlawful” claim. Whether the plaintiffs could reasonably have avoided their alleged injuries by reading the labels was a factual dispute that did not support dismissal of the “unfair” claim at this stage.

Injunctive Relief

The court held that the existing complaint did not establish Article III standing to seek prospective injunctive relief under the California Unfair Competition Law and Consumer Legal Remedies Act. Although the plaintiffs alleged that they would consider buying the bars again if they were marketed lawfully and without deception, the court found that they had not alleged a concrete threat of future harm. The plaintiffs now knew the relationship between the sugar amounts disclosed on the labels and their health concerns and could review the labels before any future purchase.

The court therefore granted, with leave to amend, PepsiCo’s motion to dismiss the plaintiffs’ requests for injunctive relief under Rule 12(b)(1).

Equitable Monetary Relief

The plaintiffs also sought disgorgement and restitution, which the court treated as equitable monetary relief. The court held that plaintiffs seeking equitable relief in federal court must plead that their legal remedies are inadequate. Because the plaintiffs had not done so, the court dismissed their claims for equitable monetary relief under the Unfair Competition Law and Consumer Legal Remedies Act with leave to amend.

Disposition

Judge Pitts granted in part and denied in part PepsiCo’s motion to dismiss. The court dismissed the requests for injunctive relief and equitable monetary relief with leave to amend, denied the motion insofar as it relied on preemption to dispose of the claims entirely, and allowed the adequately pleaded consumer-deception and Unfair Competition Law theories to proceed. Any amended complaint was due within 21 days of the order.