Hanson v. Welch Foods Inc.

Background

Curtis Hanson alleged that Welch Foods Inc. sold three grape-juice products labeled “Helps Support a Healthy Heart” or “Helps Promote a Healthy Heart.” He alleged that fruit juice consumed in typical quantities increases the risk of cardiovascular disease and related conditions, and that he purchased Welch’s 100% Grape Juice once or twice a week since at least the beginning of 2016 because of the heart-health representation. He claimed that he paid more for the product than he otherwise would have, or would not have bought it, without the representation. He sought to represent a California class of consumers who purchased the products with the heart-health labels since March 23, 2016.

Hanson asserted claims under California’s False Advertising Law, Consumer Legal Remedies Act, and Unfair Competition Law, as well as claims for breach of express warranty and breach of the implied warranty of merchantability. Welch’s moved to dismiss under Rule 12(b)(6), which allows dismissal for failure to state a legally sufficient claim. Welch’s also argued that the claims involving alleged false advertising had to satisfy Rule 9(b), which requires fraud allegations to identify details such as who made the representation, what it was, when and where it was seen, and how it was misleading.

False-advertising claims

The court held that Hanson’s complaint did not clearly identify the representation on which he personally relied. Although he alleged that he relied on Welch’s representation that the product “Helps Support a Healthy Heart,” he did not specify where he saw that statement. His opposition brief said that he relied on the product labels, but the court ruled that arguments in a brief could not substitute for sufficiently specific allegations in the complaint.

The court therefore granted Welch’s motion in part as to Hanson’s claims under the False Advertising Law, Consumer Legal Remedies Act, and Unfair Competition Law. The court dismissed those claims with leave to amend so Hanson could specify that he saw and relied on the 100% Grape Juice product labels when he purchased that product.

The court otherwise found Hanson’s allegations sufficient for the pleading stage. It concluded that he identified what he purchased, where he purchased it, when he purchased it, and how the representations allegedly misled him. The court also held that Hanson could plead economic injury without alleging that he personally developed heart disease or another physical condition, and did not need to provide a detailed economic model at this stage. Whether the products were sufficiently similar for Hanson to represent purchasers of the other products was left for possible class-certification proceedings.

Warranty claims

The court denied Welch’s motion as to Hanson’s express-warranty claim. It held that the statement that the product “helps support a healthy heart” could be understood as a representation that the product tends to improve overall cardiovascular health, rather than merely as non-actionable general praise. Hanson alleged that the product did not provide that benefit and instead increased health risks when consumed in typical serving amounts. The court also rejected Welch’s argument that Hanson had to allege that he actually suffered the health conditions at issue.

The court likewise denied the motion as to Hanson’s implied-warranty claim. Hanson relied on California Commercial Code section 2314(2)(f), which provides that merchantable goods must conform to promises or factual statements on their containers or labels. The court treated that claim as paralleling the express-warranty claim and denied dismissal for the same reasons.

Disposition

Welch’s motion to dismiss was granted in part and denied as to the warranty claims. Hanson’s False Advertising Law, Consumer Legal Remedies Act, and Unfair Competition Law claims were dismissed with leave to amend. His express- and implied-warranty claims remained pending. Judge Joseph C. Spero set July 24, 2020, as the deadline for an amended complaint. The order did not resolve the truth of the health claims or disputed factual issues.