Howard v. Hain Celestial Group, Inc.

Background

The plaintiffs alleged that Hain Celestial violated a Food and Drug Administration regulation generally prohibiting nutrient-content claims on foods “intended specifically for use by infants and children less than 2 years of age.” The challenged products included cookies, crackers, corn puffs, and pureed food pouches. The plaintiffs asserted a claim under the unlawful prong of California’s Unfair Competition Law, which allows certain violations of other laws to serve as the basis for an unfair-competition claim. They also brought fraud-based claims alleging that the nutrient-content statements were misleading.

Judicial Notice and Standing

The court granted Hain Celestial’s request for judicial notice of the product packaging, several website pages, and a page from the Centers for Disease Control and Prevention’s website.

The court also held that the plaintiffs had standing under Article III of the Constitution. Because the alleged nutrient-content statements could potentially mislead consumers, the plaintiffs were not merely suing over a technical or “bare procedural” violation of the FDA’s regulations.

Unlawful Claim

Hain Celestial argued that the products were not “intended specifically” for children under two. The court stated that the FDA’s guidance suggested that the phrase meant something like “intended primarily” for children under two. The complaint plausibly alleged that standard based on allegations that Hain Celestial:

- labeled some products as suitable for “Stage 3,” defined to include children older than nine months; - called the products “toddler food” on its website; - showed babies eating the products on social media; - used “#babyfood” in captions; - sent free samples to consumers with children under two and featured their reviews; - suggested on some labels that toddlers able to chew solid foods should eat the products; and - sold the products in retailers’ baby-food aisles.

The court rejected Hain Celestial’s argument that disclaimers stating the products were for ages two and up defeated the claim as a matter of law. The court noted that the disclaimers were in small text and often appeared on the back of the label. Considering the complaint as a whole, the court found it plausible that the products were intended specifically or primarily for children under two.

Specific Statements

The court separately examined several statements.

For “made with real yogurt,” the court explained that a statement about an ingredient perceived to add value generally is not a nutrient-content claim. The plaintiffs did not allege facts showing that the reference to yogurt implied that the product contained a particular nutrient. The court therefore held that the plaintiffs had not adequately alleged that this statement was actionable.

The court held that “full serving of fruit per pouch” was a nutrient-content claim. The words “full serving” implied that the product contained a specific amount of an ingredient and suggested that it contained a specific amount of nutrients associated with fruit. The claim was therefore actionable at the motion-to-dismiss stage.

The court also held that the “excellent source” statements were authorized by the FDA’s regulations. Those regulations allow certain statements describing the percentage of a vitamin or mineral in relation to a Reference Daily Intake, unless another regulation expressly prohibits the statement. The plaintiffs did not appear to argue that the products were “meal products” or “main dish products,” categories for which the regulation could impose different limits.

Fraud-Based Claims

The plaintiffs alleged that the nutrient-content statements could mislead reasonable consumers by suggesting that increased intake of the advertised nutrients was beneficial, that the products were healthful sources of nutrients for children under two, and that the products were sufficient to meet children’s nutritional needs.

The court held that the plaintiffs had plausibly alleged that the nutrient-content claims could mislead a reasonable consumer. The court relied in part on the FDA’s conclusion that even accurate nutrient-content claims can imply that a food is useful for maintaining healthy dietary practices, especially because consumers may have limited knowledge of their nutritional needs.

The court rejected the plaintiffs’ theory that consumers might compare Hain Celestial’s products with competing products and believe Hain Celestial’s products were more nutritious because other companies were following the law and not making prohibited nutrient-content claims. The court stated that this theory was barred by a California appellate decision concerning truthful statements that did not mention or otherwise refer to competing products. The court said it was bound by that decision at the motion-to-dismiss stage.

Because the “excellent source” and “made with real yogurt” statements were not nutrient-content claims, the plaintiffs did not show that those statements could independently support the fraud-based claims.

Disposition

The court stated: “The motion is granted as to the ‘excellent source’ and ‘made with real yogurt’ statements, but it is denied as to the remaining claims.” Dismissal was with leave to amend if the plaintiffs could add allegations supporting the dismissed claims. An amended complaint was due within 14 days. The court also stated that the plaintiffs could seek leave to amend later if discovery on the surviving claims revealed information supporting the dismissed claims.

Judge Vince Chhabria set a case-management conference for November 9, 2022, and required a case-management statement by November 2, 2022.