Squeo v. Campbell Soup Company

Background

Joe Squeo and Tiffany Taylor brought a proposed class action against Campbell Soup Company and Snyder’s-Lance, Inc. The plaintiffs alleged that the defendants manufacture, distribute, advertise, and sell Cape Cod potato chips whose packaging states, “No Artificial Colors, Flavors or Preservatives.” They alleged that the chips nevertheless contained citric acid, which they said was artificially produced and functioned as a preservative. Squeo purchased the chips in California, and Taylor purchased them in New York. They alleged that they would not have bought the chips, or would have paid less for them, if they had known about the citric acid.

The plaintiffs asserted five claims: violation of California’s Consumers Legal Remedies Act; violation of California’s Unfair Competition Law; breach of express warranty under California law; violation of Section 349 of the New York General Business Law; and violation of Section 350 of the New York General Business Law. They sought damages and equitable relief, including an injunction.

Motion to Dismiss

The defendants moved under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) concerns subject-matter jurisdiction, including standing. Rule 12(b)(6) tests whether a complaint states a legally sufficient claim. Because the California claims were based on alleged fraud, the court also applied Rule 9(b), which requires fraud allegations to identify the misconduct’s who, what, when, where, and how.

False and Misleading Advertising Claims

The defendants argued that the plaintiffs had not adequately alleged that the citric acid was artificial, that it functioned as a preservative in the chips, or that a reasonable consumer would be misled by the label. The court rejected all three arguments.

The court concluded that the plaintiffs’ allegations and supporting citations permitted a reasonable inference that the chips contained manufactured rather than naturally occurring citric acid. The court also found that the allegations and cited materials supported an inference that citric acid functioned as a preservative when added to food, including the chips at issue. Whether the ingredient actually functioned as a preservative in the chips was, in any event, a factual question not suitable for resolution at the pleading stage.

The court further held that the plaintiffs plausibly alleged that a reasonable consumer could be misled by a package stating that the chips contained no artificial preservatives when, according to the allegations, the chips contained an artificial preservative. The court therefore declined to dismiss the four consumer-protection claims.

Standing and Injunctive Relief

The court held that the plaintiffs adequately alleged an injury sufficient to pursue their claims. They alleged that they relied on the challenged labels and would have paid less or would not have purchased the chips had they known the truth. Those allegations were sufficient at the pleading stage.

The court reached a different conclusion about injunctive relief. It held that the plaintiffs had not shown a likelihood of being deceived in the same way again because they now knew they could check the ingredient list to determine whether the chips contained citric acid. The court dismissed the request for injunctive relief without leave to amend, concluding that the plaintiffs could not cure this problem without fundamentally changing their allegations.

Express Warranty and Campbell’s Role

The defendants argued that the express-warranty claim should be dismissed for the same reasons as the consumer-protection claims. Because those claims survived, the court allowed the express-warranty claim to survive as well.

The defendants also argued that Campbell should be dismissed because Snyder’s-Lance manufactured and marketed the Cape Cod brand. The court found that the allegations and a Campbell press release supported a reasonable inference that, after Campbell acquired Snyder’s-Lance in 2018, Campbell played more than a passive role in the manufacture and marketing of the brand. The court therefore declined to dismiss Campbell and did not need to address the defendants’ alter-ego argument.

Disposition

The court granted in part and denied in part the motion to dismiss. Specifically, the court declined to dismiss the plaintiffs’ claims, dismissed the request for injunctive relief without leave to amend, and declined to dismiss Campbell from the action. The court also denied the defendants’ request for judicial notice as moot, finding that consideration of the documents would not change the result. The court ordered the parties to appear for an initial case-management conference on December 10, 2024, and to submit a joint case-management statement by December 3, 2024.