Starratt v. Fermented Sciences, Inc.

Background

Lisa Starratt and Thomas Simmons alleged that Fermented Sciences, Inc.’s labels and marketing for Flying Embers Hard Seltzer were misleading and unlawful. The product was promoted as containing “ANTIOXIDANT VIT C + LIVE PROBIOTICS” and as being “BREWED WITH SUPERFRUITS.” Plaintiffs alleged that alcohol interferes with nutrient absorption and kills probiotics, meaning consumers would not receive the represented benefits of the vitamin C or probiotics. They also alleged that the labeling violated the Food and Drug Administration’s fortification policy, 21 C.F.R. § 104.20, and therefore violated California’s Sherman Law requirements.

Plaintiffs asserted claims under California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, along with fraud and unjust enrichment. They also sought an injunction barring the alleged deceptive and unlawful practices. Fermented Sciences moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint in its entirety.

Standing for Injunctive Relief

The company argued that the plaintiffs could avoid future deception simply by reading the product label and therefore lacked standing to seek an injunction. The court explained that a previously deceived consumer may seek an injunction in a false-advertising case if the consumer plausibly alleges a real and immediate risk of similar future harm.

Plaintiffs alleged that they wanted to purchase alcohol products again, including the defendant’s products, if the products were reformulated and properly labeled, and that they regularly visited stores selling the products and similar hard seltzers. The court found these allegations sufficient at the motion-to-dismiss stage because plaintiffs alleged that they could not rely on the labels when deciding whether to buy the products.

Equitable Relief

Fermented Sciences argued that plaintiffs could not seek equitable relief under the California consumer-protection laws because they had not shown that their other legal remedies were inadequate. The court distinguished the Ninth Circuit’s decision in Sonner v. Premier Nutrition Corp., emphasizing that the case involved a different procedural setting and did not eliminate the rule that damages and equitable claims may coexist when based on different theories.

The court found that plaintiffs had expressly alleged that legal remedies were inadequate to stop the alleged practices and ensure future compliance. Those allegations were sufficient at this stage to support prospective equitable relief.

Consumer-Protection Claims

The court rejected the company’s argument that the plaintiffs’ Unfair Competition Law claim was impliedly preempted—that is, displaced by federal law—to the extent it relied on California’s adoption of federal food-labeling rules. The court followed its prior reasoning that claims based on violations of the California Sherman Law were not impliedly preempted.

The court also held that plaintiffs plausibly alleged that the federal fortification policy applied to the product and that Fermented Sciences violated it. The policy identifies limited circumstances in which adding nutrients to foods is appropriate, and Food and Drug Administration guidance states that adding vitamins and minerals to alcoholic beverages is not considered appropriate. The company argued that the policy applied only to specified nutrient-content terms and that the plus symbol in “VIT C + LIVE PROBIOTICS” merely served as a stylistic substitute for “and.” Plaintiffs argued that the symbol signified that the nutrients had been added and therefore amounted to a regulated claim.

The court stated that it was not deciding the correct or most likely interpretation of the labels on a motion to dismiss. It found that plaintiffs plausibly alleged that the policy applied and that the company violated it, while noting that the actual violation would be better decided on a fuller factual record.

The court separately applied the “reasonable consumer” test to the Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law claims. That test asks whether a significant portion of reasonable consumers could be misled. Plaintiffs alleged that the product’s vitamin C and probiotics did not provide the expected health benefits because of the effects of alcohol and that the labeling could lead consumers to believe otherwise. The court found those allegations sufficient at this stage. It noted that the company could challenge their accuracy and present expert evidence during discovery.

Unjust Enrichment

The company argued that unjust enrichment is not a separate cause of action under California law. The court agreed that unjust enrichment is not itself a cause of action but held that a court may treat such a claim as a quasi-contract claim seeking restitution. Because the company did not explain why that treatment was inappropriate here, the court construed plaintiffs’ claim that way rather than dismissing it.

Disposition

Judge Haywood S. Gilliam, Jr. denied Fermented Sciences’ motion to dismiss in its entirety. The order did not finally decide whether the labels were actually deceptive or whether the defendant ultimately violated the fortification policy. The court also set a telephonic case-management conference and directed the parties to meet and confer and submit a revised joint case-management statement.