Davidson v. Sprout Foods Inc.

Background

Gillian and Samuel Davidson filed a proposed class action against Sprout Foods Inc., which sells baby and toddler food products. They alleged that Sprout placed statements such as “3g of Protein,” “4g of Fiber,” and “300mg Omega-3 from Chia ALA” on the front of products intended for children under two. The complaint alleged that these were nutrient-content claims prohibited by Food and Drug Administration regulations and that the labels misled purchasers into thinking the products were healthier than competing products.

The Davidsons alleged claims under the California Consumers Legal Remedies Act, California’s False Advertising Law, the California Unfair Competition Law, common-law fraud, and unjust enrichment. They bought two types of Sprout pouches but challenged statements on 26 products.

Standing

Sprout argued that the Davidsons lacked standing to challenge products they had not seen or purchased. The court rejected that argument at the pleading stage. It concluded that the purchased and unpurchased products involved the same basic alleged mislabeling practice and similar statements about protein, fiber, or Omega-3. The court stated that concerns about differences among products could be addressed later, at the class-certification stage.

Unlawful-practice theory under the Unfair Competition Law

The Davidsons pursued an “unlawful” theory under California’s Unfair Competition Law. That theory permits a claim based on an alleged violation of a federal or California statute or regulation.

The applicable Food and Drug Administration regulation prohibits nutrient-content claims, subject to regulatory exceptions, on food intended specifically for infants and children younger than two. Sprout did not dispute that the challenged products were intended for that age group. The court concluded that statements about nutrient amounts placed on the front of the packages could qualify as nutrient-content claims even though the same information also appeared in the Nutrition Facts Panel. Relying in part on Ninth Circuit precedent, the court held that the Davidsons adequately alleged that Sprout violated the regulation. The motion to dismiss was therefore denied as to this theory.

Consumer-protection and fraud claims

The court analyzed the claims under the Consumers Legal Remedies Act, False Advertising Law, fraudulent theory of the Unfair Competition Law, and common-law fraud together because each required the Davidsons to plausibly allege that the challenged practices would mislead a reasonable consumer.

The Davidsons offered two theories of deception. First, they argued that the nutrient statements suggested that increased intake of those nutrients benefited children, even though the claims were prohibited because supporting evidence was lacking. The court found that the complaint did not adequately allege that no current evidence supported benefits from the nutrients. Second, the Davidsons argued that the statements suggested Sprout’s products were superior to competing products without similar statements. The court rejected that theory because the statements were facially truthful, did not refer to competing products, and repeated information found elsewhere on the packaging. It concluded that a reasonable consumer would not make the inferences necessary to find the labels misleading.

The court therefore granted the motion to dismiss the False Advertising Law, Consumers Legal Remedies Act, and common-law fraud claims, as well as the fraudulent theory of the Unfair Competition Law.

Unjust enrichment and equitable relief

The court explained that California does not recognize unjust enrichment as a standalone cause of action but may treat such a claim as one seeking restitution under a quasi-contract theory. Because the Davidsons adequately stated an unlawful-practice claim and Sprout did not separately challenge the substance of the unjust-enrichment claim, the court allowed that claim to proceed at this stage.

The court did not reach Sprout’s arguments about whether equitable relief was available because the claims seeking legal remedies had not been adequately pleaded. Those arguments were moot at that point.

Disposition

The court denied the motion to dismiss as to the Unfair Competition Law’s unlawful-practice theory and the unjust-enrichment claim. It granted the motion to dismiss in all other respects and granted the Davidsons leave to amend. Any amended complaint was due within 30 days after the order was filed.